10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission File Number 1-6075

UNION PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)

UTAH	13-2626465
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1400 DOUGLAS STREET, OMAHA, NEBRASKA

(Address of principal executive offices)

68179

(Zip Code)

(402) 544-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Name of each exchange on which registered
Common Stock (Par Value $2.50 per share)	New York Stock Exchange, Inc.

§ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☑ Yes   ☐ No

§ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐ Yes   ☑ No

§ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes   ☐ No

§ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☑ Yes   ☐ No

§ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

☑

§ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☑ Accelerated filer☐ Non-accelerated filer☐ Smaller reporting company☐

§ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐ Yes   ☑ No

As of June 30, 2015, the aggregate market value of the registrant’s Common Stock held by non-affiliates (using the New York Stock Exchange closing price) was $82.7 billion.

The number of shares outstanding of the registrant’s Common Stock as of January 29, 2016 was 846,414,350.

Documents Incorporated by Reference – Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 12, 2016, are incorporated by reference into Part III of this report. The registrant’s Proxy Statement will be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

UNION PACIFIC CORPORATION

TABLE OF CONTENTS

	Chairman’s Letter	3
	Directors and Senior Management	4
PART I
Item 1.	Business	5
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	14
Item 2.	Properties	14
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures	18
	Executive Officers of the Registrant and Principal Executive Officers of Subsidiaries	19
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	20
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Critical Accounting Policies	43
	Cautionary Information	48
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 8.	Financial Statements and Supplementary Data	50
	Report of Independent Registered Public Accounting Firm	51
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	85
Item 9A.	Controls and Procedures	85
	Management’s Annual Report on Internal Control Over Financial Reporting	86
	Report of Independent Registered Public Accounting Firm	87
Item 9B.	Other Information	88
PART III
Item 10.	Directors, Executive Officers, and Corporate Governance	88
Item 11.	Executive Compensation	88
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	88
Item 13.	Certain Relationships and Related Transactions and Director Independence	89
Item 14.	Principal Accountant Fees and Services	89
PART IV
Item 15.	Exhibits, Financial Statement Schedules	90
	Signatures Certifications	91 101

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February 5, 2016

Fellow Shareholders:

This past year was a difficult one in many respects, but our team did outstanding work in the face of dramatic declines in volumes and shifts in our business mix.  Although our earnings per share of $5.49 fell short of last year’s record of $5.75 per share, we were able to improve our operating ratio to a record low 63.1 percent, 0.4 points better than 2014.  Our return on invested capital* of 14.3 percent also fell short of last year’s all-time high of 16.2 percent. Despite these shortfalls, Union Pacific was able to increase the cash returned to shareholders in 2015.  We increased our quarterly declared dividend per share by 10 percent, with total dividends declared per share for 2015 growing 15 percent compared to the full year 2014. We also repurchased $3.5 billion in Union Pacific shares, a 7 percent increase compared to 2014.

Union Pacific experienced a 6 percent decline in volume last year.  Carloadings declined in five of our six commodity groups.  Low natural gas prices and high coal inventory levels led to a significant reduction in our Coal volumes.  Declines in shale drilling activity due to lower energy prices drove reductions in frac sand shipments. Steel shipments also declined due to lower drilling activity as well as from the strength of the U.S. dollar.  Lower grain commodity prices, abundant worldwide inventories, and a strong U.S. Dollar negatively impacted grain shipments. International intermodal shipments declined as a result of the West Coast port work disruptions and higher than normal retail inventory levels.  Crude oil shipments declined as a result of lower crude oil prices and unfavorable spreads, while fertilizer shipments also declined year-over-year due to the uncertainty of grain commodity prices.  Increased auto production and vehicle sales drove strong growth in Automotive, our only business group which experienced volume growth in 2015.

As volumes began to decrease from 2014 levels, we were effective in aligning our resources to meet demand, while safely and efficiently serving our customers.  Our operating metrics showed a step function improvement throughout last year. Average system velocity, as reported to the AAR, increased 6 percent and average terminal dwell decreased 3 percent when compared to 2014. By year end, our velocity was at an all-time best for that level of demand, and we continue to drive toward further network improvement.

2015 was a strong year for employee safety performance.  Our reportable personal injury rate of 0.87 declined 11 percent from last year, and was an all-time record low. As we move forward, we continue to utilize our safety strategy to yield record results on our way toward achieving our ultimate goal of an incident free environment. We have an unrelenting focus on risk reduction through internal programs such as Courage to Care and Total Safety Culture.  This is the cornerstone of our safety strategy so that every employee returns home safely at the end of each day.

Our robust capital program helps ensure we have the resources and network capacity required to efficiently handle our current volumes and future growth, while improving our network fluidity and generating returns for our shareholders.  We invested $4.3 billion in 2015 strengthening the franchise.  This included $1.9 billion in replacement capital to harden our infrastructure, and to improve the safety and resiliency of our network.  In addition, we spent $1.1 billion on locomotives and other equipment, and nearly $700 million on new capacity and commercial facilities.  We also spent almost $400 million toward completing the federally mandated Positive Train Control project.  The deadline for completing PTC was extended to December 31, 2018, and we will continue to work diligently to safely complete this mandate.

Overall economic conditions, uncertainty in the energy markets, commodity prices, and the strength of the U.S. dollar will continue to have a major impact on our business this year.  We are well-positioned to serve customers in existing markets as they rebound.  The strength and diversity of the Union Pacific franchise also will provide tremendous opportunities for new business development as both domestic and global markets evolve.

When combined with our unrelenting focus on safety, productivity, and service, these opportunities will translate into an excellent experience for our customers and strong value for our shareholders in the years ahead.

Chairman, President and Chief Executive Officer

*See Item 7 of this report for reconciliations to U.S. GAAP.

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DIRECTORS AND SENIOR MANAGEMENT

BOARD OF DIRECTORS
Andrew H. Card, Jr.	Judith Richards Hope	Thomas F. McLarty III
President	Emerita Professor of Law and	President
Franklin Pierce University	Distinguished Visitor from Practice	McLarty Associates
Board Committees: Audit,	Georgetown University Law Center	Board Committees: Finance,
Compensation and Benefits	Board Committees: Corporate	Corporate Governance and
	Governance and Nominating,	Nominating
Erroll B. Davis, Jr.	Finance
Former Chairman,		Steven R. Rogel
President & CEO	Charles C. Krulak	Former Chairman
Alliant Energy Corporation	General, USMC, Ret.	Weyerhaeuser Company
Board Committees: Compensation	Board Committees: Audit, Finance	Lead Independent Director
and Benefits (Chair), Corporate		Board Committees: Compensation
Governance and Nominating	Michael R. McCarthy	and Benefits, Corporate Governance
	Chairman	and Nominating (Chair)
David B. Dillon	McCarthy Group, LLC
Former Chairman	Board Committees: Corporate	Jose H. Villarreal
The Kroger Company	Governance and Nominating,	Advisor
Board Committees: Audit,	Finance (Chair)	Akin, Gump, Strauss, Hauer &
Compensation and Benefits		Feld, LLP
	Michael W. McConnell	Board Committees: Audit,
Lance M. Fritz	General Partner and	Compensation and Benefits
Chairman, President and	Former Managing Partner
Chief Executive Officer	Brown Brothers Harriman & Co.
Union Pacific Corporation and	Board Committees: Audit (Chair),
Union Pacific Railroad Company	Finance

SENIOR MANAGEMENT
Lance M. Fritz	Robert M. Knight, Jr.	Todd M. Rynaski
Chairman, President and	Executive Vice President–Finance	Vice President and Controller
Chief Executive Officer	and Chief Financial Officer	Union Pacific Corporation
Union Pacific Corporation and	Union Pacific Corporation
Union Pacific Railroad Company		Cameron A. Scott
	Scott D. Moore	Executive Vice President –
Eric L. Butler	Senior Vice President–	Operations
Executive Vice President-	Corporate Relations	Union Pacific Railroad Company
Marketing and Sales	Union Pacific Corporation
Union Pacific Railroad Company		Lynden L. Tennison
	Joseph E. O’Connor, Jr.	Senior Vice President and
Diane K. Duren	Vice President–Labor Relations	Chief Information Officer
Executive Vice President and	Union Pacific Railroad Company	Union Pacific Corporation
Corporate Secretary
Union Pacific Corporation	Patrick J. O’Malley	James J. Theisen, Jr.
	Vice President–Taxes and General	Associate General Counsel and
Mary Sanders Jones	Tax Counsel	Interim Chief of Legal Staff
Vice President and Treasurer	Union Pacific Corporation	Union Pacific Corporation
Union Pacific Corporation
	Michael A. Rock
D. Lynn Kelley	Vice President–External Relations
Senior Vice President–Supply and	Union Pacific Corporation
Continuous Improvement
Union Pacific Railroad Company

.

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PART I

Item 1. Business

GENERAL

Union Pacific Railroad Company is the principal operating company of Union Pacific Corporation. One of America's most recognized companies, Union Pacific Railroad Company links 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain.  The Railroad’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.

Union Pacific Corporation was incorporated in Utah in 1969 and maintains its principal executive offices at 1400 Douglas Street, Omaha, NE 68179. The telephone number at that address is (402) 544-5000. The common stock of Union Pacific Corporation is listed on the New York Stock Exchange (NYSE) under the symbol “UNP”.

For purposes of this report, unless the context otherwise requires, all references herein to “UPC”, “Corporation”, “Company”, “we”, “us”, and “our” shall mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which we separately refer to as “UPRR” or the “Railroad”.

Available Information – Our Internet website is www.up.com. We make available free of charge on our website (under the “Investors” caption link) our Annual Reports on Form 10-K; our Quarterly Reports on Form 10-Q; eXtensible Business Reporting Language (XBRL) documents; our current reports on Form 8-K; our proxy statements; Forms 3, 4, and 5, filed on behalf of our directors and certain executive officers; and amendments to such reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act). We provide these reports and statements as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). We also make available on our website previously filed SEC reports and exhibits via a link to EDGAR on the SEC’s Internet site at www.sec.gov. Additionally, our corporate governance materials, including By-Laws, Board Committee charters, governance guidelines and policies, and codes of conduct and ethics for directors, officers, and employees are available on our website. From time to time, the corporate governance materials on our website may be updated as necessary to comply with rules issued by the SEC and the NYSE or as desirable to promote the effective and efficient governance of our Company. Any security holder wishing to receive, without charge, a copy of any of our SEC filings or corporate governance materials should send a written request to: Secretary, Union Pacific Corporation, 1400 Douglas Street, Omaha, NE 68179.

We have included the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) certifications regarding our public disclosure required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits 31(a) and (b) to this report.

References to our website address in this report, including references in Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7, are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website. Therefore, such information should not be considered part of this report.

OPERATIONS

The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide revenue by commodity group, we analyze the net financial results of the Railroad as one segment due to the integrated nature of our rail network. Additional information regarding our business and operations, including revenue and financial information and data and other information regarding environmental matters, is presented in Risk Factors, Item 1A; Legal Proceedings, Item 3; Selected Financial Data, Item 6; Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7; and the Financial Statements and Supplementary Data, Item 8 (which include information regarding revenues, statements of income, and total assets). 

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Operations – UPRR is a Class I railroad operating in the U.S. We have 32,084 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and eastern U.S. gateways and providing several corridors to key Mexican gateways. We serve the Western two-thirds of the country and maintain coordinated schedules with other rail carriers to move freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. Export and import traffic moves through Gulf Coast and Pacific Coast ports and across the Mexican and Canadian borders. Our freight traffic consists of bulk,

2015 Freight Revenue

manifest, and premium business. Bulk traffic primarily consists of coal, grain, soda ash, ethanol, rock and crude oil shipped in unit trains – trains transporting a single commodity from one source to one destination. Manifest traffic includes individual carload or less than train-load business involving commodities such as lumber, steel, paper, food and chemicals. The transportation of finished vehicles, auto parts, intermodal containers and truck trailers are included as part of our premium business. In 2015, we generated freight revenues totaling $20.4 billion from the following six commodity groups:

Agricultural Products – Transportation of grains, commodities produced from these grains, and food and beverage products generated 17% of the Railroad’s 2015 freight revenue. We access most major grain markets, linking the Midwest and Western U.S. producing areas to export terminals in the Pacific Northwest and Gulf Coast ports, as well as Mexico. We also serve significant domestic markets, including grain processors, animal feeders and ethanol producers in the Midwest, West, South and Rocky Mountain states. Unit trains, which transport a single commodity between producers and export terminals or domestic markets, represent approximately 40% of our agricultural shipments.

Automotive – We are the largest automotive carrier west of the Mississippi River and operate or access over 40 vehicle distribution centers. The Railroad’s extensive franchise serves five vehicle assembly plants and connects to West Coast ports, Mexico gateways and the Gulf of Mexico to accommodate both import and export shipments. In addition to transporting finished vehicles, UPRR provides expedited handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U.S. and Canada. The automotive group generated 11% of Union Pacific’s freight revenue in 2015.

Chemicals – Transporting chemicals generated 17% of our freight revenue in 2015. The Railroad’s unique franchise serves the chemical producing areas along the Gulf Coast, where roughly 60% of the Company’s chemical business originates, terminates or travels. Our chemical franchise also accesses chemical producers in the Rocky Mountains and on the West Coast. The Company’s chemical shipments include six categories:  industrial chemicals, plastics, fertilizer, petroleum and liquid petroleum gases, crude oil and soda ash. Currently, these products move primarily to and from the Gulf Coast region. Fertilizer movements originate in the Gulf Coast region, the western U.S. and Canada (through interline access) for delivery to major agricultural users in the Midwest, western U.S., as well as abroad. Soda ash originates in southwestern Wyoming and California, destined for chemical and glass producing markets in North America and abroad.

Coal – Shipments of coal and petroleum coke accounted for 16% of our freight revenue in 2015. The Railroad’s network supports the transportation of coal and petroleum coke to independent and regulated power companies and industrial facilities throughout the U.S. Through interchange gateways and ports, UPRR’s reach extends to eastern U.S. utilities, Mexico, Europe and Asia. Water terminals allow the Railroad to move western U.S. coal east via the Mississippi and Ohio Rivers, as well as the Great Lakes. Export coal moves through West Coast ports to Asia and through the Mississippi River and Houston to Europe.  Coal traffic originating in the Southern Powder River Basin (SPRB) area of Wyoming is the largest segment of the Railroad’s coal business.

Industrial Products – Our extensive network facilitates the movement of numerous commodities between thousands of origin and destination points throughout North America. The Industrial Products group consists of several categories, including construction products, minerals, consumer goods, metals, lumber, paper, and other miscellaneous products.  In 2015, this group generated 19% of our total freight revenue. Commercial, residential and governmental infrastructure investments drive shipments of steel,

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aggregates (cement components), cement and wood products.  Oil and gas drilling generates demand for raw steel, finished pipe, frac sand, stone and drilling fluid commodities. Industrial and light manufacturing plants receive steel, nonferrous materials, minerals and other raw materials. Paper and packaging commodities, as well as appliances, move to major metropolitan areas for consumers. Lumber shipments originate primarily in the Pacific Northwest and western Canada and move throughout the U.S. for use in new home construction and repair and remodeling.

Intermodal – Our Intermodal business includes two segments: international and domestic. International business consists of import and export container traffic that mainly passes through West Coast ports served by UPRR’s extensive terminal network. Domestic business includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents and logistics companies), as well as truckload carriers. Less-than-truckload and package carriers with time-sensitive business requirements are also an important part of domestic shipments. Together, our international and domestic Intermodal business generated 20% of our 2015 freight revenue.

Seasonality – Some of the commodities we carry have peak shipping seasons, reflecting either or both the nature of the commodity and the demand cycle for the commodity (such as certain agricultural and food products that have specific growing and harvesting seasons). The peak shipping seasons for these commodities can vary considerably each year depending upon various factors, including the strength of domestic and international economies and currencies and the strength of harvests and market prices for agricultural products. In response to an annual request from the Surface Transportation Board (STB) to all of the Class I railroads operating in the U.S., we submit a publicly available letter during the third quarter detailing our plans for handling traffic during the third and fourth quarters each year and provide other information requested by the STB.

Working Capital – At December 31, 2015 and 2014, we had a modest working capital surplus, which provides enhanced liquidity. In addition, we believe we have adequate access to capital markets to meet any foreseeable cash requirements, and we have sufficient financial capacity to satisfy our current liabilities.

Competition – We are subject to competition from other railroads, motor carriers, ship and barge operators, and pipelines. Our main railroad competitor is Burlington Northern Santa Fe LLC. Its primary subsidiary, BNSF Railway Company (BNSF), operates parallel routes in many of our main traffic corridors. In addition, we operate in corridors served by other railroads and motor carriers. Motor carrier competition exists for five of our six commodity groups (excluding most coal shipments). Because of the proximity of our routes to major inland and Gulf Coast waterways, barges can be particularly competitive, especially for grain and bulk commodities in certain areas where we operate. In addition to price competition, we face competition with respect to transit times, quality and reliability of service from motor carriers and other railroads. Motor carriers in particular can have an advantage over railroads with respect to transit times and timeliness of service.  However, railroads are much more fuel-efficient than trucks, which reduces the impact of transporting goods on the environment and public infrastructure, and we have been making efforts to convert certain truck traffic to rail.  Additionally, we must build or acquire and maintain our rail system; trucks and barges are able to use public rights-of-way maintained by public entities. Any of the following could also affect the competitiveness of our transportation services for some or all of our commodities: (i) improvements or expenditures materially increasing the quality or reducing the costs of these alternative modes of transportation, (ii) legislation that eliminates or significantly reduces the size or weight limitations applied to motor carriers, or (iii) legislation or regulatory changes that impose operating restrictions on railroads or that adversely affect the profitability of some or all railroad traffic. Finally, many movements face product or geographic competition where our customers can use different products (e.g. natural gas instead of coal, sorghum instead of corn) or commodities from different locations (e.g. grain from states or countries that we do not serve, crude oil from different regions). Sourcing different commodities or different locations allows shippers to substitute different carriers and such competition may reduce our volume or constrain prices.For more information regarding risks we face from competition, see the Risk Factors in Item 1A of this report.

Key Suppliers – We depend on two key domestic suppliers of high horsepower locomotives. Due to the capital intensive nature of the locomotive manufacturing business and sophistication of this equipment, potential new suppliers face high barriers of entry into this industry. Therefore, if one of these domestic suppliers discontinues manufacturing locomotives for any reason, including insolvency or bankruptcy, we could experience a significant cost increase and risk reduced availability of the locomotives that are necessary to our operations. Additionally, for a high percentage of our rail purchases, we utilize two steel producers (one domestic and one international) that meet our specifications. Rail is critical for

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maintenance, replacement, improvement, and expansion of our network and facilities. Rail manufacturing also has high barriers of entry, and, if one of those suppliers discontinues operations for any reason, including insolvency or bankruptcy, we could experience cost increases and difficulty obtaining rail.

Employees  – Approximately 85% of our 47,457 full-time-equivalent employees are represented by 14 major rail unions. On January 1, 2015, current labor agreements became subject to modification and we began the current round of negotiations with the unions. Existing agreements remain in effect until new agreements are reached or the Railway Labor Act’s procedures (which include mediation, cooling-off periods, and the possibility of Presidential Emergency Boards and Congressional intervention) are exhausted.  Contract negotiations historically continue for an extended period of time and we rarely experience work stoppages while negotiations are pending.

Railroad Security – Our security efforts consist of a wide variety of measures including employee training, engagement with our customers, training of emergency responders, and partnerships with numerous federal, state, and local government agencies.  While federal law requires us to protect the confidentiality of our security plans designed to safeguard against terrorism and other security incidents, the following provides a general overview of our security initiatives. 

UPRR Security Measures – We maintain a comprehensive security plan designed to both deter and respond to any potential or actual threats as they arise.  The plan includes four levels of alert status, each with its own set of countermeasures.  We employ our own police force, consisting of more than 250 commissioned and highly-trained officers. Our employees also undergo recurrent security and preparedness training, as well as federally-mandated hazardous materials and security training. We regularly review the sufficiency of our employee training programs. We maintain the capability to move critical operations to back-up facilities in different locations.

We operate an emergency response management center 24 hours a day.  The center receives reports of emergencies, dangerous or potentially dangerous conditions, and other safety and security issues from our employees, the public, law enforcement and other government officials.  In cooperation with government officials, we monitor both threats and public events, and, as necessary, we may alter rail traffic flow at times of concern to minimize risk to communities and our operations.  We comply with the hazardous materials routing rules and other requirements imposed by federal law.  We also design our operating plan to expedite the movement of hazardous material shipments to minimize the time rail cars remain idle at yards and terminals located in or near major population centers.  Additionally, in compliance with Transportation Security Agency regulations, we deployed information systems and instructed employees in tracking and documenting the handoff of Rail Security Sensitive Materials with customers and interchange partners.

We also have established a number of our own innovative safety and security-oriented initiatives ranging from various investments in technology to The Officer on the Train program, which provides local law enforcement officers with the opportunity to ride with train crews to enhance their understanding of railroad operations and risks. Our staff of information security professionals continually assesses cyber security risks and implements mitigation programs that evolve with the changing technology threat environment. To date, we have not experienced any material disruption of our operations due to a cyber threat or attack directed at us.

Cooperation with Federal, State, and Local Government Agencies – We work closely on physical and cyber security initiatives with government agencies, including the DOT and the Department of Homeland Security (DHS) as well as local police departments, fire departments, and other first responders.  In conjunction with the Association of American Railroads (AAR), we sponsor Ask Rail, a mobile application which provides first responders with secure links to electronic information, including commodity and emergency response information required by emergency personnel to respond to accidents and other situations.  We also participate in the National Joint Terrorism Task Force, a multi-agency effort established by the U.S. Department of Justice and the Federal Bureau of Investigation to combat and prevent terrorism. 

We work with the Coast Guard, U.S. Customs and Border Protection (CBP), and the Military Transport Management Command, which monitor shipments entering the UPRR rail network at U.S. border crossings and ports.  We were the first railroad in the U.S. to be named a partner in CBP’s Customs-Trade Partnership Against Terrorism, a partnership designed to develop, enhance, and maintain effective security processes throughout the global supply chain.

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Cooperation with Customers and Trade Associations –  Through TransCAER (Transportation Community Awareness and Emergency Response) we work with the AAR, the American Chemistry Council, the American Petroleum Institute, and other chemical trade groups to provide communities with preparedness tools, including the training of emergency responders.  In cooperation with the Federal Railroad Administration (FRA) and other interested groups, we are also working to develop additional improvements to tank car design that will further limit the risk of releases of hazardous materials.

GOVERNMENTAL AND ENVIRONMENTAL REGULATION

Governmental Regulation – Our operations are subject to a variety of federal, state, and local regulations, generally applicable to all businesses.  (See also the discussion of certain regulatory proceedings in Legal Proceedings, Item 3.)

The operations of the Railroad are also subject to the regulatory jurisdiction of the STB.  The STB has jurisdiction over rates charged on certain regulated rail traffic; common carrier service of regulated traffic; freight car compensation; transfer, extension, or abandonment of rail lines; and acquisition of control of rail common carriers. In 2015, the STB continued its efforts to explore whether to expand rail regulation. The STB requested parties to discuss the STB’s methodology for determining railroad revenue adequacy and the possible use of a revenue adequacy constraint in regulating railroad rates. The STB conducted a hearing on expanding and easing procedures for grain rate complaints.

The Surface Transportation Board Reauthorization Act of 2015 became law on December 18, 2015. The legislation increased the number of STB board members from three to five, requires the STB to post quarterly reports on rate reasonableness cases and maintain a database on service complaints, and grants the STB authority to initiate investigations, among other things.

The operations of the Railroad also are subject to the regulations of the FRA and other federal and state agencies.  On January 12, 2010, the FRA issued initial rules governing installation of Positive Train Control (PTC) by the end of 2015. The final regulation was issued on August 8, 2014. Although still under further development, PTC is a collision avoidance technology intended to override engineer controlled locomotives and stop train-to-train and overspeed accidents, misaligned switch derailments, and unauthorized entry to work zones. Through 2015, we have invested approximately $2.0 billion in the ongoing development of PTC.

Following the issuance of the initial rules, the FRA acknowledged that projected costs will exceed projected benefits by a ratio of at least 22 to one, and we estimate that our final costs will be higher than those assumed by the FRA. On October 29, 2015, Congress extended the December 31, 2015 PTC implementation deadline until December 31, 2018.  The PTC implementation deadline may be extended to December 31, 2020, provided certain other criteria are satisfied. We are planning to submit our required PTC safety plan to the FRA in the first half of 2016.

On May 1, 2015, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued final rules governing the transportation of flammable liquids.  The final rule included provisions for improved tank car standards, braking system requirements, community notification, and operating restrictions for certain trains carrying flammable liquids.  Subsequently, Congress enacted the Fixing America’s Surface Transportation Act, which requires the Government Accountability Office (GAO) to conduct an independent study on the rule’s proposed braking system requirements. Pending the outcome of the study, the braking system requirement may be eliminated or revised.  We will participate in and monitor the progress of the GAO study.

DOT, the Occupational Safety and Health Administration, PHMSA and DHS, along with other federal agencies, have jurisdiction over certain aspects of safety, movement of hazardous materials and hazardous waste, emissions requirements, and equipment standards. Additionally, various state and local agencies have jurisdiction over disposal of hazardous waste and seek to regulate movement of hazardous materials in ways not preempted by federal law.

Environmental Regulation – We are subject to extensive federal and state environmental statutes and regulations pertaining to public health and the environment. The statutes and regulations are administered and monitored by the Environmental Protection Agency (EPA) and by various state environmental agencies. The primary laws affecting our operations are the Resource Conservation and Recovery Act, regulating the management and disposal of solid and hazardous wastes; the Comprehensive Environmental Response, Compensation, and Liability Act, regulating the cleanup of

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contaminated properties; the Clean Air Act, regulating air emissions; and the Clean Water Act, regulating waste water discharges.

Information concerning environmental claims and contingencies and estimated remediation costs is set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Environmental, Item 7 and Note 18 to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data.

Item 1A. Risk Factors

The information set forth in this Item 1A should be read in conjunction with the rest of the information included in this report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7, and Financial Statements and Supplementary Data, Item 8.

We Must Manage Fluctuating Demand for Our Services and Network Capacity – If there is significant demand for our services that exceeds the designed capacity of our network, we may experience network difficulties, including congestion and reduced velocity, that could compromise the level of service we provide to our customers. This level of demand may also compound the impact of weather and weather-related events on our operations and velocity. Although we continue to improve our transportation plan, add capacity, improve operations at our yards and other facilities, and improve our ability to address surges in demand for any reason with adequate resources, we cannot be sure that these measures will fully or adequately address any service shortcomings resulting from demand exceeding our planned capacity.  We may experience other operational or service difficulties related to network capacity, dramatic and unplanned fluctuations in our customers’ demand for rail service with respect to one or more commodities or operating regions, or other events that could negatively impact our operational efficiency, any of which could have a material adverse effect on our results of operations, financial condition, and liquidity.  In the event that we experience significant reductions in demand for rail services with respect to one or more commodities or changes in consumer preferences that affect the businesses of our customers, we may experience increased costs associated with resizing our operations, including higher unit operating costs and costs for the storage of locomotives, rail cars, and other equipment; work-force adjustments; and other related activities, which could have a material adverse effect on our results of operations, financial condition, and liquidity.

We Transport Hazardous Materials – We transport certain hazardous materials and other materials, including crude oil, ethanol, and toxic inhalation hazard (TIH) materials, such as chlorine, that pose certain risks in the event of a release or combustion. Additionally, U.S. laws impose common carrier obligations on railroads that require us to transport certain hazardous materials regardless of risk or potential exposure to loss. A rail accident or other incident or accident on our network, at our facilities, or at the facilities of our customers involving the release or combustion of hazardous materials could involve significant costs and claims for personal injury, property damage, and environmental penalties and remediation in excess of our insurance coverage for these risks, which could have a material adverse effect on our results of operations, financial condition, and liquidity.

We Are Subject to Significant Governmental Regulation – We are subject to governmental regulation by a significant number of federal, state, and local authorities covering a variety of health, safety, labor, environmental, economic (as discussed below), and other matters.  Many laws and regulations require us to obtain and maintain various licenses, permits, and other authorizations, and we cannot guarantee that we will continue to be able to do so. Our failure to comply with applicable laws and regulations could have a material adverse effect on us. Governments or regulators may change the legislative or regulatory frameworks within which we operate without providing us any recourse to address any adverse effects on our business, including, without limitation, regulatory determinations or rules regarding dispute resolution, business relationships with other railroads, calculation of our cost of capital or other inputs relevant to computing our revenue adequacy, the prices we charge, and costs and expenses. Significant legislative activity in Congress or regulatory activity by the STB could expand regulation of railroad operations and prices for rail services, which could reduce capital spending on our rail network, facilities and equipment and have a material adverse effect on our results of operations, financial condition, and liquidity. As part of the Rail Safety Improvement Act of 2008, rail carriers were to implement PTC by the end of 2015 (the Rail Safety Improvement Act).  The Surface Transportation Extension Act of 2015 amended the Rail Safety Improvement Act to require implementation of PTC by the end of 2018, which deadline may be extended to December 31, 2020, provided certain other criteria are satisfied.  This implementation could have a material adverse effect on our ability to make other capital investments. Additionally, one or more consolidations of Class I railroads could also lead to increased regulation of the rail industry.

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We May Be Affected by General Economic Conditions – Prolonged severe adverse domestic and global economic conditions or disruptions of financial and credit markets may affect the producers and consumers of the commodities we carry and may have a material adverse effect on our access to liquidity and our results of operations and financial condition.

We Face Competition from Other Railroads and Other Transportation Providers – We face competition from other railroads, motor carriers, ships, barges, and pipelines. In addition to price competition, we face competition with respect to transit times and quality and reliability of service. We must build or acquire and maintain our rail system, while trucks, barges and maritime operators are able to use public rights-of-way maintained by public entities. Any future improvements or expenditures materially increasing the quality or reducing the cost of alternative modes of transportation, or legislation that eliminates or significantly reduces the burden of the size or weight limitations currently applicable to motor carriers, could have a material adverse effect on our results of operations, financial condition, and liquidity. Additionally, any future consolidation of the rail industry could materially affect the competitive environment in which we operate.

We Rely on Technology and Technology Improvements in Our Business Operations – We rely on information technology in all aspects of our business. If we do not have sufficient capital to acquire new technology or if we are unable to develop or implement new technology such as PTC or the latest version of our transportation control systems, we may suffer a competitive disadvantage within the rail industry and with companies providing other modes of transportation service, which could have a material adverse effect on our results of operations, financial condition, and liquidity. Additionally, if a cyber attack or other event causes significant disruption or failure of one or more of our information technology systems, including computer hardware, software, and communications equipment, we could suffer a significant service interruption, safety failure, security breach, or other operational difficulties, which could have a material adverse impact on our results of operations, financial condition, and liquidity.

We May Be Subject to Various Claims and Lawsuits That Could Result in Significant Expenditures – As a railroad with operations in densely populated urban areas and other cities and a vast rail network, we are exposed to the potential for various claims and litigation related to labor and employment, personal injury, property damage, environmental liability, and other matters. Any material changes to litigation trends or a catastrophic rail accident or series of accidents involving any or all of property damage, personal injury, and environmental liability that exceed our insurance coverage for such risks could have a material adverse effect on our results of operations, financial condition, and liquidity.

We Are Subject to Significant Environmental Laws and Regulations – Due to the nature of the railroad business, our operations are subject to extensive federal, state, and local environmental laws and regulations concerning, among other things, emissions to the air; discharges to waters; handling, storage, transportation, disposal of waste and other materials; and hazardous material or petroleum releases. We generate and transport hazardous and non-hazardous waste in our operations, and we did so in our former operations. Environmental liability can extend to previously owned or operated properties, leased properties, and properties owned by third parties, as well as to properties we currently own. Environmental liabilities have arisen and may also arise from claims asserted by adjacent landowners or other third parties in toxic tort litigation. We have been and may be subject to allegations or findings that we have violated, or are strictly liable under, these laws or regulations. We currently have certain obligations at existing sites for investigation, remediation and monitoring, and we likely will have obligations at other sites in the future.  Liabilities for these obligations affect our estimate based on our experience and, as necessary, the advice and assistance of our consultants.  However, actual costs may vary from our estimates due to any or all of several factors, including changes to environmental laws or interpretations of such laws, technological changes affecting investigations and remediation, the participation and financial viability of other parties responsible for any such liability and the corrective action or change to corrective actions required to remediate any existing or future sites. We could incur significant costs as a result of any of the foregoing, and we may be required to incur significant expenses to investigate and remediate known, unknown, or future environmental contamination, which could have a material adverse effect on our results of operations, financial condition, and liquidity.

We May Be Affected by Climate Change and Market or Regulatory Responses to Climate Change – Climate change, including the impact of global warming, could have a material adverse effect on our results of operations, financial condition, and liquidity.  Restrictions, caps, taxes, or other controls on emissions of greenhouse gasses, including diesel exhaust, could significantly increase our operating costs.  Restrictions on emissions could also affect our customers that (a) use commodities that we carry to produce energy, (b) use significant amounts of energy in producing or delivering the commodities we

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carry, or (c) manufacture or produce goods that consume significant amounts of energy or burn fossil fuels, including chemical producers, farmers and food producers, and automakers and other manufacturers.  Significant cost increases, government regulation, or changes of consumer preferences for goods or services relating to alternative sources of energy or emissions reductions could materially affect the markets for the commodities we carry, which in turn could have a material adverse effect on our results of operations, financial condition, and liquidity.  Government incentives encouraging the use of alternative sources of energy could also affect certain of our customers and the markets for certain of the commodities we carry in an unpredictable manner that could alter our traffic patterns, including, for example, the impacts of ethanol incentives on farming and ethanol producers. Finally, we could face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change.  Any of these factors, individually or in operation with one or more of the other factors, or other unforeseen impacts of climate change could reduce the amount of traffic we handle and have a material adverse effect on our results of operations, financial condition, and liquidity.

Severe Weather Could Result in Significant Business Interruptions and Expenditures – As a railroad with a vast network, we are exposed to severe weather conditions and other natural phenomena, including earthquakes, hurricanes, fires, floods, mudslides or landslides, extreme temperatures, and significant precipitation. Line outages and other interruptions caused by these conditions can adversely affect our entire rail network and can adversely affect revenue, costs, and liabilities, which could have a material adverse effect on our results of operations, financial condition, and liquidity.

Strikes or Work Stoppages Could Adversely Affect Our Operations – The U.S. Class I railroads are party to collective bargaining agreements with various labor unions. The majority of our employees belong to labor unions and are subject to these agreements. Disputes with regard to the terms of these agreements or our potential inability to negotiate acceptable contracts with these unions could result in, among other things, strikes, work stoppages, slowdowns, or lockouts, which could cause a significant disruption of our operations and have a material adverse effect on our results of operations, financial condition, and liquidity. Additionally, future national labor agreements, or renegotiation of labor agreements or provisions of labor agreements, could compromise our service reliability or significantly increase our costs for health care, wages, and other benefits, which could have a material adverse impact on our results of operations, financial condition, and liquidity.  Labor disputes, work stoppages, slowdowns or lockouts at loading/unloading facilities, ports or other transport access points could compromise our service reliability and have a material adverse impact on our results of operations, financial condition, and liquidity.  Labor disputes, work stoppages, slowdowns or lockouts by employees of our customers or our suppliers could compromise our service reliability and have a material adverse impact on our results of operations, financial condition, and liquidity.

The Availability of Qualified Personnel Could Adversely Affect Our Operations – Changes in demographics, training requirements, and the availability of qualified personnel could negatively affect our ability to meet demand for rail service. Unpredictable increases in demand for rail services and a lack of network fluidity may exacerbate such risks, which could have a negative impact on our operational efficiency and otherwise have a material adverse effect on our results of operations, financial condition, and liquidity.

We May Be Affected By Fluctuating Fuel Prices – Fuel costs constitute a significant portion of our transportation expenses. Diesel fuel prices can be subject to dramatic fluctuations, and significant price increases could have a material adverse effect on our operating results. Although we currently are able to recover a significant amount of our fuel expenses from our customers through revenue from fuel surcharges, we cannot be certain that we will always be able to mitigate rising or elevated fuel costs through our fuel surcharges. Additionally, future market conditions or legislative or regulatory activities could adversely affect our ability to apply fuel surcharges or adequately recover increased fuel costs through fuel surcharges. As fuel prices fluctuate, our fuel surcharge programs trail such fluctuations in fuel price by approximately two months, and may be a significant source of quarter-over-quarter and year-over-year volatility, particularly in periods of rapidly changing prices. International, political, and economic factors, events and conditions affect the volatility of fuel prices and supplies. Weather can also affect fuel supplies and limit domestic refining capacity. A severe shortage of, or disruption to, domestic fuel supplies could have a material adverse effect on our results of operations, financial condition, and liquidity.  Alternatively, lower fuel prices could have a positive impact on the economy by increasing consumer discretionary spending that potentially could increase demand for various consumer products we transport. However, lower fuel prices could have a negative impact on other commodities we

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transport, such as coal, frac sand and crude oil shipments, which could have a material adverse affect on our results of operations, financial condition, and liquidity.

We Utilize Capital Markets – Due to the significant capital expenditures required to operate and maintain a safe and efficient railroad, we rely on the capital markets to provide some of our capital requirements.  We utilize long-term debt instruments, bank financing and commercial paper from time-to-time, and we pledge certain of our receivables.  Significant instability or disruptions of the capital markets, including the credit markets, or deterioration of our financial condition due to internal or external factors could restrict or prohibit our access to, and significantly increase the cost of, commercial paper and other financing sources, including bank credit facilities and the issuance of long-term debt, including corporate bonds. A significant deterioration of our financial condition could result in a reduction of our credit rating to below investment grade, which could restrict, or at certain credit levels below investment grade may prohibit us, from utilizing our current receivables securitization facility. This may also limit our access to external sources of capital and significantly increase the costs of short and long-term debt financing.

A Significant Portion of Our Revenue Involves Transportation of Commodities to and from International Markets – Although revenues from our operations are attributable to transportation services provided in the U.S., a significant portion of our revenues involves the transportation of commodities to and from international markets, including Mexico and Southeast Asia, by various carriers and, at times, various modes of transportation. Significant and sustained interruptions of trade with Mexico or countries in Southeast Asia, including China, could adversely affect customers and other entities that, directly or indirectly, purchase or rely on rail transportation services in the U.S. as part of their operations, and any such interruptions could have a material adverse effect on our results of operations, financial condition and liquidity. Any one or more of the following could cause a significant and sustained interruption of trade with Mexico or countries in Southeast Asia: (a) a deterioration of security for international trade and businesses; (b) the adverse impact of new laws, rules and regulations or the interpretation of laws, rules and regulations by government entities, courts or regulatory bodies, including taxing authorities, that affect our customers doing business in foreign countries; (c) any significant adverse economic developments, such as extended periods of high inflation, material disruptions in the banking sector or in the capital markets of these foreign countries, and significant changes in the valuation of the currencies of these foreign countries that could materially affect the cost or value of imports or exports; (d) shifts in patterns of international trade that adversely affect import and export markets; and (e) a material reduction in foreign direct investment in these countries.

We Are Subject to Legislative, Regulatory, and Legal Developments Involving Taxes – Taxes are a significant part of our expenses.  We are subject to U.S. federal, state, and foreign income, payroll, property, sales and use, fuel, and other types of taxes. Changes in tax rates, enactment of new tax laws, revisions of tax regulations, and claims or litigation with taxing authorities could result in substantially higher taxes and, therefore, could have a material adverse effect on our results of operations, financial condition, and liquidity.

We Are Dependent on Certain Key Suppliers of Locomotives and Rail – Due to the capital intensive nature and sophistication of locomotive equipment, potential new suppliers face high barriers to entry.  Therefore, if one of the domestic suppliers of high horsepower locomotives discontinues manufacturing locomotives for any reason, including bankruptcy or insolvency, we could experience significant cost increases and reduced availability of the locomotives that are necessary for our operations.  Additionally, for a high percentage of our rail purchases, we utilize two steel producers (one domestic and one international) that meet our specifications.  Rail is critical to our operations for rail replacement programs, maintenance, and for adding additional network capacity, new rail and storage yards, and expansions of existing facilities.  This industry similarly has high barriers to entry, and if one of these suppliers discontinues operations for any reason, including bankruptcy or insolvency, we could experience both significant cost increases for rail purchases and difficulty obtaining sufficient rail for maintenance and other projects.

We May Be Affected by Acts of Terrorism, War, or Risk of War – Our rail lines, facilities, and equipment, including rail cars carrying hazardous materials, could be direct targets or indirect casualties of terrorist attacks. Terrorist attacks, or other similar events, any government response thereto, and war or risk of war may adversely affect our results of operations, financial condition, and liquidity. In addition, insurance premiums for some or all of our current coverages could increase dramatically, or certain coverages may not be available to us in the future.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We employ a variety of assets in the management and operation of our rail business. Our rail network covers 23 states in the western two-thirds of the U.S.

TRACK

Our rail network includes 32,084 route miles.  We own 26,064 miles and operate on the remainder pursuant to trackage rights or leases. The following table describes track miles at December 31, 2015 and 2014.

	2015	2014
Route	32,084	31,974
Other main line	7,012	6,943
Passing lines and turnouts	3,235	3,197
Switching and classification yard lines	9,108	9,058
Total miles	51,439	51,172

HEADQUARTERS BUILDING

We own our headquarters building in Omaha, Nebraska. The facility has 1.2 million square feet of space for approximately 4,000 employees.

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HARRIMAN DISPATCHING CENTER

The Harriman Dispatching Center (HDC), located in Omaha, Nebraska, is our primary dispatching facility. It is linked to regional dispatching and locomotive management facilities at various locations along our network. HDC employees coordinate moves of locomotives and trains, manage traffic and train crews on our network, and coordinate interchanges with other railroads. Approximately 900 employees currently work on-site in the facility. In the event of a disruption of operations at HDC due to a cyber attack, flooding or severe weather or other event, we maintain the capability to conduct critical operations at back-up facilities in different locations.

RAIL FACILITIES

In addition to our track structure, we operate numerous facilities, including terminals for intermodal and other freight; rail yards for building trains (classification yards), switching, storage-in-transit (the temporary storage of customer goods in rail cars prior to shipment) and other activities; offices to administer and manage our operations; dispatching centers to direct traffic on our rail network; crew quarters to house train crews along our network; and shops and other facilities for fueling, maintenance, and repair of locomotives and repair and maintenance of rail cars and other equipment.  The following table includes the major yards and terminals on our system:

Major Classification Yards	Major Intermodal Terminals
North Platte, Nebraska	ICTF (Los Angeles), California
North Little Rock, Arkansas	Joliet (Global 4), Illinois
Englewood (Houston), Texas	East Los Angeles, California
Proviso (Chicago), Illinois	DIT (Dallas), Texas
Fort Worth, Texas	Global I (Chicago), Illinois
Livonia, Louisiana	Marion (Memphis), Tennessee
Roseville, California	Global II (Chicago), Illinois
Pine Bluff, Arkansas	Mesquite, Texas
West Colton, California	City of Industry, California
Neff (Kansas City), Missouri	Lathrop, California

RAIL EQUIPMENT

Our equipment includes owned and leased locomotives and rail cars; heavy maintenance equipment and machinery; other equipment and tools in our shops, offices, and facilities; and vehicles for maintenance, transportation of crews, and other activities. As of December 31, 2015, we owned or leased the following units of equipment:

				Average
Locomotives	Owned	Leased	Total	Age (yrs.)
Multiple purpose	5,917	2,135	8,052	18.7
Switching	273	12	285	35.0
Other	70	57	127	36.6
Total locomotives	6,260	2,204	8,464	N/A

				Average
Freight cars	Owned	Leased	Total	Age (yrs.)
Covered hoppers	12,693	15,189	27,882	20.2
Open hoppers	7,272	3,464	10,736	29.0
Gondolas	5,856	3,674	9,530	25.2
Boxcars	3,147	4,432	7,579	32.9
Refrigerated cars	2,681	4,006	6,687	25.1
Flat cars	2,617	1,447	4,064	29.3
Other	33	352	385	22.2
Total freight cars	34,299	32,564	66,863	N/A

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				Average
Highway revenue equipment	Owned	Leased	Total	Age (yrs.)
Containers	33,633	25,998	59,631	8.0
Chassis	22,086	26,837	48,923	9.6
Total highway revenue equipment	55,719	52,835	108,554	N/A

CAPITAL EXPENDITURES

Our rail network requires significant annual capital investments for replacement, improvement, and expansion. These investments enhance safety, support the transportation needs of our customers, and improve our operational efficiency. Additionally, we add new locomotives and freight cars to our fleet to replace older, less efficient equipment, to support growth and customer demand, and to reduce our impact on the environment through the acquisition of more fuel-efficient and low-emission locomotives.

2015 Capital Program – During 2015, our capital program totaled $4.3 billion. (See the cash capital expenditures table in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources, Item 7.)

2016 Capital Plan – In 2016, we expect our capital plan to be approximately $3.75 billion, which will include expenditures for PTC of approximately $375 million and may include non-cash investments.  We may revise our 2016 capital plan if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on these investments.  (See discussion of our 2016 capital plan in Management’s Discussion and Analysis of Financial Condition and Results of Operations – 2016 Outlook, Item 7.)

OTHER

Equipment Encumbrances – Equipment with a carrying value of approximately $2.6 billion and $2.8 billion at December 31, 2015, and 2014, respectively served as collateral for capital leases and other types of equipment obligations in accordance with the secured financing arrangements utilized to acquire or refinance such railroad equipment.

As a result of the merger of Missouri Pacific Railroad Company (MPRR) with and into UPRR on January 1, 1997, and pursuant to the underlying indentures for the MPRR mortgage bonds, UPRR must maintain the same value of assets after the merger in order to comply with the security requirements of the mortgage bonds. As of the merger date, the value of the MPRR assets that secured the mortgage bonds was approximately $6.0 billion. In accordance with the terms of the indentures, this collateral value must be maintained during the entire term of the mortgage bonds irrespective of the outstanding balance of such bonds.

Environmental Matters – Certain of our properties are subject to federal, state, and local laws and regulations governing the protection of the environment.  (See discussion of environmental issues in Business – Governmental and Environmental Regulation, Item 1, and Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Environmental, Item 7.)

Item 3. Legal Proceedings

From time to time, we are involved in legal proceedings, claims, and litigation that occur in connection with our business. We routinely assess our liabilities and contingencies in connection with these matters based upon the latest available information and, when necessary, we seek input from our third-party advisors when making these assessments. Consistent with SEC rules and requirements, we describe below material pending legal proceedings (other than ordinary routine litigation incidental to our business), material proceedings known to be contemplated by governmental authorities, other proceedings arising under federal, state, or local environmental laws and regulations (including governmental proceedings involving potential fines, penalties, or other monetary sanctions in excess of $100,000), and such other pending matters that we may determine to be appropriate.

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ENVIRONMENTAL MATTERS

As previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, the Illinois Attorney General's Office notified UPRR on January 14, 2013, that it will seek a penalty against the Railroad for environmental conditions caused by its predecessor at a former locomotive fueling facility in South Pekin, Illinois. This former CNW facility discontinued fueling operations in the early 1980s. Subsequent environmental investigation revealed evidence of fuel releases to soil and groundwater. In January 2007, the State rejected UPRR's proposed compliance commitment agreement and responded with a notice of intent to pursue legal action. UPRR continued to perform remedial investigations under the supervision of the Illinois EPA. In June 2012, the Illinois EPA approved UPRR's proposed remedial action plan for the site, consisting of no further action and monitoring for a period of ten years. Subsequently, the State notified UPRR that it would seek to recover a civil penalty, and during early negotiations, it offered to settle its claim for $240,000.  UPRR rejected this offer.  The State sued UPRR on October 26, 2013, in the Circuit Court for the Tenth Judicial Circuit, Tazewell County, Illinois. Through continued settlement negotiations, the parties reached an agreement to settle this matter in exchange for a payment by UPRR of $100,000.  A final agreement was signed by the parties and approved by the Circuit Court and UPRR completed payment of $100,000.

As previously reported in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, a punctured tank car resulted in an accidental release of sulfuric acid in a rail yard in Herington, Kansas in January, 2012. The acid was released on the ground and entered a creek that runs adjacent to the yard. Environmental remediation at the site is complete. Despite negotiations with the federal government, the Assistant U.S. Attorney (District of Kansas) filed a criminal charge against the Railroad on March 30, 2015, in the U.S. District Court for Kansas. The action alleges a misdemeanor charge for negligent violation of the Clean Water Act. The penalty range was $2,500 to $200,000. In addition, the federal government may debar the facility if UPRR were convicted. A debarment would prevent Herington Yard from participating in new government contract work.  On January 12, 2016, the federal judge in the U.S. District Court for Kansas dismissed the charge against the Railroad.  The EPA is considering whether to appeal the case or pursue civil penalties.  We cannot predict the ultimate impact of this proceeding at this time, but the proposed penalty could exceed $100,000.

We receive notices from the EPA and state environmental agencies alleging that we are or may be liable under federal or state environmental laws for remediation costs at various sites throughout the U.S., including sites on the Superfund National Priorities List or state superfund lists. We cannot predict the ultimate impact of these proceedings and suits because of the number of potentially responsible parties involved, the degree of contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the speculative nature of remediation costs.

Information concerning environmental claims and contingencies and estimated remediation costs is set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Environmental, Item 7.

OTHER MATTERS

Antitrust Litigation - As we reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, 20 rail shippers (many of whom are represented by the same law firms) filed virtually identical

antitrust lawsuits in various federal district courts against us and four other Class I railroads in the U.S. Currently, UPRR and three other Class I railroads are the named defendants in the lawsuit. The original plaintiff filed the first of these claims in the U.S. District Court in New Jersey on May 14, 2007. The number of complaints reached a total of 30. These suits allege that the named railroads engaged in price-fixing by establishing common fuel surcharges for certain rail traffic.

In addition to suits filed by direct purchasers of rail transportation services, a few of the suits involved plaintiffs alleging that they are or were indirect purchasers of rail transportation and sought to represent a purported class of indirect purchasers of rail transportation services that paid fuel surcharges. These complaints added allegations under state antitrust and consumer protection laws. On November 6, 2007, the Judicial Panel on Multidistrict Litigation ordered that all of the rail fuel surcharge cases be transferred to Judge Paul Friedman of the U.S. District Court in the District of Columbia for coordinated or consolidated pretrial proceedings. Following numerous hearings and rulings, Judge Friedman dismissed the complaints of the indirect purchasers, which the indirect purchasers appealed. On April 16, 2010, the U.S. Court of Appeals for the District of Columbia affirmed Judge Friedman’s ruling dismissing the indirect purchasers’ claims based on various state laws.

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On June 21, 2012, Judge Friedman issued a decision that certified a class of plaintiffs with eight named plaintiff representatives. The decision included in the class all shippers that paid a rate-based fuel surcharge to any one of the defendant railroads for rate-unregulated rail transportation from July 1, 2003, through December 31, 2008. This was a procedural ruling, which did not affirm any of the claims asserted by the plaintiffs and does not address the ability of the railroad defendants to disprove the allegations made by the plaintiffs. On July 5, 2012, the defendant railroads filed a petition with the U.S. Court of Appeals for the District of Columbia requesting that the court review the class certification ruling. On August 28, 2012, a panel of the Circuit Court of the District of Columbia referred the petition to a merits panel of the court to address the issues in the petition and to address whether the district court properly granted class certification. The Circuit Court heard oral arguments on May 3, 2013. On August 9, 2013, the Circuit Court vacated the class certification decision and remanded the case to the district court to reconsider the class certification decision in light of a recent Supreme Court case and incomplete consideration of errors in the expert report of the plaintiffs. On October 31, 2013, Judge Friedman approved a schedule agreed to by all parties for consideration of the class certification issue on remand.

On October 2, 2014, the plaintiffs informed Judge Friedman that their economic expert had a previously undisclosed conflict of interest. Judge Friedman ruled on November 26, 2014, that the plaintiffs had until April 1, 2015, to file a supplemental expert report to support their motion for class certification. The plaintiffs filed their supplemental expert report on April 1, 2015. Judge Friedman issued a scheduling order on June 19, 2015, scheduling a class certification hearing for November 2, 2015. Judge Friedman then vacated the hearing date in an Order on September 28, 2015 because of the potential impact resulting from the decision of the U.S. Supreme Court case, Tyson Foods v. Bouaphakeo,related to class action certification and damages, which was heard on November 10, 2015. The Order requires the parties to file a joint schedule and briefing statement within fourteen days after the U.S. Supreme Court decision in the Tyson Foods matter, which is expected to be issued during the first half of 2016.

As we reported in our Current Report on Form 8-K, filed on June 10, 2011, the Railroad received a complaint filed in the U.S. District Court for the District of Columbia on June 7, 2011, by Oxbow Carbon & Minerals LLC and related entities (Oxbow). The complaint named the Railroad and one other U.S. Class I Railroad as defendants and alleged that the named railroads engaged in price-fixing and monopolistic practices in connection with fuel surcharge programs and pricing of shipments of certain commodities, including coal and petroleum coke. The complaint sought injunctive relief and payment of damages of over $30 million, and other unspecified damages, including treble damages. Some of the allegations in the complaint were addressed in the existing fuel surcharge litigation referenced above. The complaint also included additional unrelated allegations regarding alleged limitations on competition for shipments of Oxbow’s commodities. Judge Friedman, who presides over the fuel surcharge matter described above, also presides over this matter. On February 26, 2013, Judge Friedman granted the defendants’ motion to dismiss Oxbow’s complaint for failure to state properly a claim under the antitrust laws. However, the dismissal was without prejudice to refile the complaint. Judge Friedman approved a schedule that allowed Oxbow to file a revised complaint, which Oxbow filed on May 1, 2013. The amended complaint alleges that UPRR and one other Class I railroad violated Sections 1 and 2 of the Sherman Antitrust Act and that UPRR also breached a tolling agreement between Oxbow and UPRR. Oxbow claims that it paid more than $50 million in wrongfully imposed fuel surcharges. UPRR and the other railroad filed separate motions to dismiss the Oxbow revised complaint on July 1, 2013. Judge Friedman heard oral arguments on the motions to dismiss filed by UPRR and the other railroad on January 8, 2015. Judge Friedman denied the motions to dismiss on February 24, 2015. This was a procedural ruling, which did not affirm any of the claims asserted by Oxbow and does not affect the ability of the railroad defendants to disprove the allegations made by Oxbow. UPRR filed its answer to Oxbow’s complaint on March 24, 2015, and the parties have commenced discovery.

We deny the allegations that our fuel surcharge programs violate the antitrust laws or any other laws. We believe that these lawsuits are without merit, and we will vigorously defend our actions. Therefore, we currently believe that these matters will not have a material adverse effect on any of our results of operations, financial condition, and liquidity.

Item 4. Mine Safety Disclosures

Not applicable. 

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Executive Officers of the Registrant and Principal Executive Officers of Subsidiaries

The Board of Directors typically elects and designates our executive officers on an annual basis at the board meeting held in conjunction with the Annual Meeting of Shareholders, and they hold office until their successors are elected. Executive officers also may be elected and designated throughout the year, as the Board of Directors considers appropriate. There are no family relationships among the officers, nor is there any arrangement or understanding between any officer and any other person pursuant to which the officer was selected. The following table sets forth certain information current as of February 5, 2016, relating to the executive officers.

			Business
			Experience During
Name	Position	Age	Past Five Years
Lance M. Fritz	Chairman, President and Chief Executive Officer of UPC and the Railroad	53	[1]
Robert M. Knight, Jr.	Executive Vice President – Finance and Chief Financial Officer of UPC and the Railroad	58	Current Position
Eric L. Butler	Executive Vice President – Marketing and Sales of the Railroad	55	[2]
Diane K. Duren	Executive Vice President and Corporate Secretary of UPC and the Railroad	56	[3]
Todd M. Rynaski	Vice President and Controller of UPC and Chief Accounting Officer and Controller of the Railroad	45	[4]
Cameron A. Scott	Executive Vice President – Operations of the Railroad	53	[5]

[1] On July 30, 2015, Mr. Fritz was named Chairman of the Board of UPC and the Railroad effective October 1, 2015. Mr. Fritz was elected President and Chief Executive Officer of UPC and the Railroad effective February 5, 2015. Previously, Mr. Fritz was President and Chief Operating Officer of the Railroad effective February 6, 2014, Executive Vice President – Operations of the Railroad effective September 1, 2010, and Vice President – Operations of the Railroad effective January 1, 2010.

[2] Mr. Butler was elected to his current position effective March 15, 2012. He previously was Vice President and General Manager - Industrial Products effective April 14, 2005.

[3] Ms. Duren was elected Executive Vice President of UPC and the Railroad effective October 1, 2012. In addition, Ms. Duren was elected Corporate Secretary effective March 1, 2013. She previously was Vice President and General Manager - Chemicals effective August 1, 2006.

[4] Mr. Rynaski was elected Vice President and Controller of UPC and Chief Accounting Officer and Controller of the Railroad effective September 1, 2015. He previously was Assistant Vice President – Accounting of the Railroad effective January 1, 2014, and Assistant Vice President – Financial Reporting and Analysis effective April 1, 2011, and General Director – Information Technologies effective September 1, 2008.

[5] Mr. Scott was elected to his current position effective February 6, 2014. He previously was Vice President Network Planning and Operations effective June 30, 2012, Regional Vice President – Western Region effective April 1, 2012, and Assistant Vice President Operations – Western Region effective February 16, 2009.

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PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol “UNP”.  The following table presents the dividends declared and the high and low prices of our common stock for each of the indicated quarters. All amounts are retroactively adjusted to reflect the June 6, 2014 stock split.

2015 - Dollars Per Share		Q1		Q2		Q3		Q4
Dividends	$	0.55	$	0.55	$	0.55	$	0.55
Common stock price:
High		124.52		112.44		99.71		98.28
Low		106.75		94.91		79.31		74.78

2014 - Dollars Per Share		Q1		Q2		Q3		Q4
Dividends	$	0.455	$	0.455	$	0.50	$	0.50
Common stock price:
High		95.24		102.96		110.26		123.61
Low		82.49		90.36		96.76		96.17

At January 29, 2016, there were 846,414,350 shares of common stock outstanding and 32,209  common shareholders of record. On that date, the closing price of the common stock on the NYSE was $72.00. We paid dividends to our common shareholders during each of the past 116 years. We declared dividends totaling $1,906 million in 2015 and $1,714 million in 2014. We are subject to certain restrictions regarding retained earnings with respect to the payment of cash dividends to our shareholders. The amount of retained earnings available for dividends decreased to $13.6 billion at December 31, 2015, from $15.4 billion at December 31, 2014.  (See discussion of this restriction in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources, Item 7.)  We do not believe the restriction on retained earnings will affect our ability to pay dividends, and we currently expect to pay dividends in 2016.

Comparison Over One- and Three-Year Periods – The following table presents the cumulative total shareholder returns, assuming reinvestment of dividends, over one- and three-year periods for the Corporation (UNP), a peer group index (comprised of CSX Corporation and Norfolk Southern Corporation), the Dow Jones Transportation Index (DJ Trans), and the Standard & Poor’s 500 Stock Index (S&P 500).

Period	UNP		Peer Group		DJ Trans		S&P 500
1 Year (2015)	(32.9)	%	(23.9)	%	(16.8)	%	1.4	%
3 Year (2013 - 2015)	32.2		43.9		47.2		52.5

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Five-Year Performance Comparison – The following graph provides an indicator of cumulative total shareholder returns for the Corporation as compared to the peer group index (described above), the DJ Trans, and the S&P 500. The graph assumes that $100 was invested in the common stock of Union Pacific Corporation and each index on December 31, 2010 and that all dividends were reinvested. The information below is historical in nature and is not necessarily indicative of future performance.

Purchases of Equity Securities – During 2015, we repurchased 36,921,641 shares of our common stock at an average price of $99.16. The following table presents common stock repurchases during each month for the fourth quarter of 2015:

Period	Total Number of Shares Purchased [a]	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program [b]	Maximum Number of  Shares Remaining Under the Plan or Program [b]
Oct. 1 through Oct. 31	3,247,731	$	92.98	3,221,153	56,078,192
Nov. 1 through Nov. 30	2,325,865		86.61	2,322,992	53,755,200
Dec. 1 through Dec. 31	1,105,389		77.63	1,102,754	52,652,446
Total	6,678,985	$	88.22	6,646,899	N/A

[a] Total number of shares purchased during the quarter includes approximately 32,086 shares delivered or attested to UPC by employees to pay stock option exercise prices, satisfy excess tax withholding obligations for stock option exercises or vesting of retention units, and pay withholding obligations for vesting of retention shares.

[b] Effective January 1, 2014, our Board of Directors authorized the repurchase of up to 120 million shares of our common stock by December 31, 2017. These repurchases may be made on the open market or through other transactions. Our management has sole discretion with respect to determining the timing and amount of these transactions.

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Item 6. Selected Financial Data

The following table presents as of, and for the years ended, December 31, our selected financial data for each of the last five years. The selected financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7, and with the Financial Statements and Supplementary Data, Item 8. The information below is historical in nature and is not necessarily indicative of future financial condition or results of operations.

Millions, Except per Share Amounts,
Carloads, Employee Statistics, and Ratios		2015	2014		2013		2012		2011
For the Year Ended December 31
Operating revenues [a]	$	21,813	$	23,988	$	21,963	$	20,926	$	19,557
Operating income		8,052		8,753		7,446		6,745		5,724
Net income		4,772		5,180		4,388		3,943		3,292
Earnings per share - basic [b]		5.51		5.77		4.74		4.17		3.39
Earnings per share - diluted [b]		5.49		5.75		4.71		4.14		3.36
Dividends declared per share [b]		2.20		1.91		1.48		1.245		0.965
Cash provided by operating activities		7,344		7,385		6,823		6,161		5,873
Cash used in investing activities		(4,476)		(4,249)		(3,405)		(3,633)		(3,119)
Cash used in financing activities		(3,063)		(2,982)		(3,049)		(2,682)		(2,623)
Cash used for common share repurchases		(3,465)		(3,225)		(2,218)		(1,474)		(1,418)
At December 31
Total assets [c]	$	54,600	$	52,372	$	49,410	$	46,842	$	44,742
Long-term obligations [c] [d]		30,692		27,419		24,395		23,847		22,848
Debt due after one year [c]		13,607		10,952		8,820		8,754		8,650
Common shareholders' equity		20,702		21,189		21,225		19,877		18,578
Additional Data
Freight revenues [a]	$	20,397	$	22,560	$	20,684	$	19,686	$	18,508
Revenue carloads (units) (000)		9,062		9,625		9,022		9,048		9,072
Operating ratio (%) [e]		63.1		63.5		66.1		67.8		70.7
Average employees (000)		47.5		47.2		46.4		45.9		44.9
Financial Ratios (%)
Debt to capital [c] [f]		40.7		35.0		31.0		31.0		32.3
Return on average common shareholders' equity [g]		22.8		24.4		21.4		20.5		18.1

[a] Includes fuel surcharge revenue of $1.3 billion, $2.8 billion, $2.6 billion, $2.6 billion, and $2.2 billion for 2015, 2014, 2013, 2012, and 2011, respectively, which partially offsets increased operating expenses for fuel. (See further discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Operating Revenues, Item 7.)

[b] Earnings per share and dividends declared per share are retroactively adjusted to reflect the June 6, 2014 stock split.

[c] Total assets, long-term obligations, debt due after one year, and debt to capital are retroactively adjusted to reflect the adoption of accounting standard updates on deferred debt issuance costs and deferred taxes. (See further discussion in Financial Statements and Supplementary Data– Accounting Pronouncements, Item 8.)

[d] Long-term obligations is determined as follows: total liabilities less current liabilities.

[e] Operating ratio is defined as operating expenses divided by operating revenues.

[f] Debt to capital is determined as follows: total debt divided by total debt plus common shareholders' equity.

[g] Return on average common shareholders' equity is determined as follows: Net income divided by average common shareholders' equity.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated Financial Statements and applicable notes to the Financial Statements and Supplementary Data, Item 8, and other information in this report, including Risk Factors set forth in Item 1A and Critical Accounting Policies and Cautionary Information at the end of this Item 7.

The Railroad, along with its subsidiaries and rail affiliates, is our one reportable business segment. Although revenue is analyzed by commodity, we analyze the net financial results of the Railroad as one segment due to the integrated nature of the rail network.

EXECUTIVE SUMMARY

2015 Results

· Safety – During 2015, we continued our focus on safety to reduce risk and eliminate incidents for our employees, our customers and the public. We achieved our best ever reportable personal injury incidents per 200,000 employee-hours of 0.87. In addition, we finished 2015 with a 3% improvement in our crossing incident rate per million train miles compared to the prior year. These results demonstrate our employees’ dedication to our safety initiatives and our efforts to further engage the workforce through programs such as Courage to Care, Total Safety Culture, and UP Way (our continuous improvement culture).

· Financial Performance – In 2015, we generated operating income of $8.1 billion, an 8% decrease compared to a record-setting 2014.  Despite a 6% decrease in carloads, it was our second-best financial performance ever. Core pricing gains of 3.7%, productivity, and improved network operations partially offset the lower volumes.  Our operating ratio for 2015 of 63.1% was an all-time best, improving from last year’s operating ratio of 63.5%.  Net income of $4.8 billion translated into earnings of $5.49 per diluted share for 2015.

· Freight Revenues – Our freight revenues declined 10% year-over-year to $20.4 billion as a result of lower volume levels in five of our six commodity groups and overall lower fuel surcharge revenue, partially offset by core pricing gains. Volume declines in coal, international intermodal, frac sand, metals, crude oil, and grain shipments more than offset volume growth in domestic intermodal, finished vehicles, automotive parts, industrial chemicals and plastics shipments.

· Network Operations  –Significantimprovements were made in our operating and service metrics, as our average train speed, as reported to the AAR, increased 6% in 2015 compared to 2014, and our average terminal dwell time decreased 3%, both reflecting the impact of lower volumes and improved network fluidity.

· Fuel Prices – Our average price per gallon of diesel fuel in 2015 decreased 38% from the average price in 2014, as both crude oil and the conversion spreads between crude oil and diesel declined in 2015. The lower price decreased operating expenses by $1.2 billion (excluding any impact from year-over-year volume declines). Gross-ton miles decreased 9%, which also decreased fuel expense.  These declines were partially offset by a 1% increase in our fuel consumption rate, computed as gallons of fuel consumed divided by gross ton-miles in thousands.

· Free Cash Flow – Cash generated by operating activities totaled $7.3 billion, yielding free cash flow of $524 million after reductions of $4.5 billion for cash used in investing activities and a 15% increase in dividends declared per share.In 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter, which resulted in two payments in the first quarter of 2015.Free cash flow is defined as cash provided by operating activities less cash used in investing activities and dividends paid.

Free cash flow is not considered a financial measure under accounting principles generally accepted in the U.S. (GAAP) by SEC Regulation G and Item 10 of SEC Regulation S-K and may not be defined and calculated by other companies in the same manner. We believe free cash flow is important to management and investors in evaluating our financial performance and measures our ability to generate cash without additional external financings. Free cash flow should be considered in addition

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to, rather than as a substitute for, cash provided by operating activities. The following table reconciles cash provided by operating activities (GAAP measure) to free cash flow (non-GAAP measure):

Millions	2015		2014		2013
Cash provided by operating activities	$	7,344	$	7,385	$	6,823
Cash used in investing activities		(4,476)		(4,249)		(3,405)
Dividends paid		(2,344)		(1,632)		(1,333)
Free cash flow	$	524	$	1,504	$	2,085

2016 Outlook

· Safety – Operating a safe railroad benefits all our constituents: our employees, customers, shareholders and the communities we serve.  We will continue using a multi-faceted approach to safety, utilizing technology, risk assessment, quality control, training and employee engagement, and targeted capital investments.  We will continue using and expanding the deployment of Total Safety Culture and Courage to Care throughout our operations, which allows us to identify and implement best practices for employee and operational safety.  We will continue our efforts to increase detection of rail defects; improve or close crossings; and educate the public and law enforcement agencies about crossing safety through a combination of our own programs (including risk assessment strategies), industry programs and local community activities across our network.

· Network Operations – In 2016, we will continue to align resources with customer demand, continue to improve network performance, and maintain our surge capability.

· Fuel Prices – With the dramatic drop in fuel prices during 2015,  fuel priceprojections continue to be uncertain in the current environment. We again could see volatile fuel prices during the year, as they are sensitive to global and U.S. domestic demand, refining capacity, geopolitical events, weather conditions and other factors.  As prices fluctuate, there will be a timing impact on earnings, as our fuel surcharge programs trail fluctuations in fuel price by approximately two months.

Continuing lower fuel prices could have a positive impact on the economy by increasing consumer discretionary spending that potentially could increase demand for various consumer products that we transport. Alternatively, lower fuel prices will likely have a negative impact on other commodities such as coal, frac sand and crude oil shipments.

· Capital Plan – In 2016, we expect our capital plan to be approximately $3.75 billion, including expenditures for PTC, 230 locomotives and 450 freight cars. The capital plan may be revised if business conditions warrant or if new laws or regulations affect our ability to generate sufficient returns on these investments. (See further discussion in this Item 7 under Liquidity and Capital Resources – Capital Plan.)

· Financial Expectations – Economic conditions in many of our market sectors continue to drive uncertainty with respect to our volume levels.  We expect volumes to be down slightly in 2016 compared to 2015, but will depend on the overall economy and market conditions.  The strong U.S. dollar and historic low commodity prices could also drive continued volatility.  One of the biggest uncertainties is the outlook for energy markets, which will bring both challenges and opportunities.  In the current environment, we expect continued margin improvement driven by continued pricing opportunities, ongoing productivity initiatives, and the ability to leverage our resources andstrengthen our franchise. Over the longer term, we expect the overall U.S. economy to continue to improve at a modest pace, with some markets outperforming others.

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RESULTS OF OPERATIONS

Operating Revenues

							% Change		% Change
Millions	2015		2014		2013		2015 v 2014		2014 v 2013
Freight revenues	$	20,397	$	22,560	$	20,684	(10)	%	9	%
Other revenues		1,416		1,428		1,279	(1)	%	12	%
Total	$	21,813	$	23,988	$	21,963	(9)	%	9	%

We generate freight revenues by transporting freight or other materials from our six commodity groups. Freight revenues vary with volume (carloads) and average revenue per car (ARC). Changes in price, traffic mix and fuel surcharges drive ARC. We provide some of our customers with contractual incentives for meeting or exceeding specified cumulative volumes or shipping to and from specific locations, which we record as reductions to freight revenues based on the actual or projected future shipments. We recognize freight revenues as shipments move from origin to destination. We allocate freight revenues between reporting periods based on the relative transit time in each reporting period and recognize expenses as we incur them.

Other revenues include revenues earned by our subsidiaries, revenues from commuter rail operations that we manage, accessorial revenues, which we earn when customers retain equipment owned or controlled by us or when we perform additional services such as switching or storage, and miscellaneous contract revenue. We recognize other revenues as we perform services or meet contractual obligations.

Freight revenues from five of our six commodity groups decreased in 2015 compared to 2014 due to a 6% decline in carloadings and lower fuel surcharge revenue, partially offset by core pricing gains.  Volume declines in coal, international intermodal, frac sand, metals, crude oil, and grain shipments more than offset volume growth in domestic intermodal, finished vehicles, automotive parts, industrial chemicals and plastics shipments.

Freight revenues from all six commodity groups increased during 2014 compared to 2013 driven by 7% volume growth and core pricing gains of 2.5%.  Volume growth from grain, frac sand, rock, and intermodal (domestic and international) shipments offset declines in crude oil.

Our fuel surcharge programs generated freight revenues of $1.3 billion, $2.8 billion, and $2.6 billion in 2015, 2014, and 2013, respectively. Fuel surcharge revenue in 2015 decreased $1.5billion as a result of a 38% decrease in fuel price and a 6% reduction in carloadings.  Fuel surcharge revenue in 2014 increased 6% based on our 7% carloadings increase. 

In 2015, other revenue decreased from 2014 due to lower revenues at our subsidiaries, primarily those that broker intermodal and automotive services, partially offset by higher accessorial revenue driven by increased revenue for container usage and demurrage fees.

In 2014, other revenue increased from 2013 due to higher revenues at our subsidiaries, primarily those that broker intermodal and automotive services, accessorial revenue driven by increased volume and per diem revenue for container usage (previously included in automotive freight revenue).

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The following tables summarize the year-over-year changes in freight revenues, revenue carloads, and ARC by commodity type:

Freight Revenues							% Change		% Change
Millions	2015		2014		2013		2015 v 2014		2014 v 2013
Agricultural Products	$	3,581	$	3,777	$	3,276	(5)	%	15	%
Automotive		2,154		2,103		2,077	2		1
Chemicals		3,543		3,664		3,501	(3)		5
Coal		3,237		4,127		3,978	(22)		4
Industrial Products		3,808		4,400		3,822	(13)		15
Intermodal		4,074		4,489		4,030	(9)		11
Total	$	20,397	$	22,560	$	20,684	(10)	%	9	%

Revenue Carloads							% Change		% Change
Thousands	2015		2014		2013		2015 v 2014		2014 v 2013
Agricultural Products		941		973		874	(3)	%	11	%
Automotive		863		809		781	7		4
Chemicals		1,098		1,116		1,103	(2)		1
Coal		1,459		1,768		1,703	(17)		4
Industrial Products		1,213		1,368		1,236	(11)		11
Intermodal [a]		3,488		3,591		3,325	(3)		8
Total		9,062		9,625		9,022	(6)	%	7	%

							% Change		% Change
Average Revenue per Car	2015		2014		2013		2015 v 2014		2014 v 2013
Agricultural Products	$	3,805	$	3,881	$	3,746	(2)	%	4	%
Automotive		2,498		2,602		2,659	(4)		(2)
Chemicals		3,227		3,282		3,176	(2)		3
Coal		2,218		2,334		2,336	(5)		-
Industrial Products		3,139		3,217		3,093	(2)		4
Intermodal [a]		1,168		1,250		1,212	(7)		3
Average	$	2,251	$	2,344	$	2,293	(4)	%	2	%

[a] Each intermodal container or trailer equals one carload.

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Agricultural Products – Lower fuel surcharge revenue and volume declines, partially offset by core pricing gains, decreased freight revenue from agricultural shipments in 2015 compared to 2014. Grain shipments decreased 11% in 2015 compared to 2014. The strength of the U.S. dollar, lower grain commodity prices, and higher worldwide inventories contributed to the reduction in overall demand. Higher volume and pricing gains drove the increase in freight revenue from agricultural shipments in 2014 versus 2013. Grain shipments increased 27%, reflecting the strong overall harvest in 2013 and 2014. The 2012

2015 Agricultural Products Carloads

drought also negatively impacted the first three quarters of 2013, which created favorable comparisons for the first three quarters of 2014.  Lower export wheat shipments due to a larger world crop partially offset gains in grain.

Automotive –  Freight revenue from automotive shipments increased compared to 2014 driven by volume growth and core pricing gains, which were partially offset by lower fuel surcharge revenue.  Higher automotive production and recordsales levels drove the volume growth. Freight revenue from automotive shipments increased in 2014 compared to 2013. Growth in automotive parts and finished vehicle shipments and core price improvements drove the higher revenue. The increase in automotive parts volume was driven by continued strength in production and market penetration.  Finished vehicles shipments increased the last three

2015 Automotive Carloads

quarters of 2014 with improved sales and production, which offset declines in the first quarter due to winter weather. Shifts in business mix and a change in how we are compensated for container usage, which is now included as a per diem charge in other revenue, negatively impacted ARC compared to 2013.

Chemicals  – Freight revenue from chemical shipments declined in 2015 versus 2014 due to lower fuel surcharge revenue and volume declines, which more than offset core price improvements.  Crude oil shipments declined as a result of the drop in crude oil prices and production declines from various shale formations, which impacted the regional pricing differences for crude oil.  Lower fertilizer shipments also decreased freight revenue in 2015.  Strength in export plastics markets and industrial chemical shipments helped offset the decline in crude oil and fertilizer shipments.  Core price improvements, higher volumes and

2015 Chemicals Carloads

ARC driven by positive business mix increased freight revenue from chemicals in 2014 compared to 2013.  Shipments of industrial chemicals grew as a result of continued strong demand in the drilling market.  Fertilizer shipments increased due to strong exports of potash.  Reduced shipments of crude oil from the Bakken and Permian shale formations to the Gulf area partially offset these gains as market factors, primarily regional pricing differences for various types of crude oil, displaced some of the former Gulf Coast shipments to the East and West Coasts.

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Coal – Lower volume and fuel surcharge revenue, partially offset by core pricing gains, drove the decline in freight revenue from coal shipments in 2015 compared to 2014.  Shipments out of the Southern Powder River Basin (SPRB) declined 17% in 2015 as a result of depressed coal markets due to low natural gas prices and high inventory levels.  Shipments out of the SPRB also were negatively impacted as heavy rains in June flooded coal mines and washed out tracks in some areas, impacting both second and third quarter shipments.  Shipments out of Colorado and Utah declined 33% in 2015 primarily due to lower domestic demand for Colorado and Utah

2015 Coal Carloads

coal.  This lower demand was a result of several utilities switching to other fuel sources due to lower natural gas prices.  In addition, coal exports declined due to a soft global market.

Freight revenue from coal shipments increased in 2014 compared to 2013, driven by higher volumes. Shifts in business mix negatively impacted ARC compared to 2013.  SPRB shipments increased 3% from 2013. Strong demand continued throughout the year due to inventory replenishment but network performance and contract losses limited year-over-year volume growth.  Shipments from Colorado and Utah mines increased 6% compared to 2013, driven by higher natural gas prices for most of the year and strong exports through the West Coast.  However, in the fourth quarter volumes from Colorado and Utah mines declined as exports to the Gulf Coast decreased.

Industrial Products  – Freight revenue from industrial products shipments decreased in 2015 compared to 2014 due to volume declines, lower fuel surcharge revenue, and lower ARC due to the mix of traffic, partially offset by core price improvements. Declines in shale drilling activity due to lower oil prices decreased non-metallic mineral shipments (primarily frac sand carloadings).  Steel shipments also declined as a result of reductions in shale drilling activity, low commodity prices, and increased imports associated with the strength of the U.S. dollar.  Low commodity prices for lumber and the strong U.S. dollar resulted in inventory reductions that reduced lumber shipments.

2015 Industrial Products Carloads

Volume growth, core pricing gains and positive business mix in 2014 increased freight revenue for industrial products shipments versus 2013. Shipments of non-metallic minerals (primarily frac sand, up 31%)  grew as a result of drilling activity for energy products, as well as evolving drilling practices, which can increase the amount of frac sand used at certain wells.  Additionally, rock and lumber shipments increased from 2013, driven by new housing and commercial construction.

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Intermodal – Lower fuel surcharge revenue and volume declines, partially offset by core pricing gains, resulted in a decline in freight revenue from intermodal shipments in 2015 compared to 2014.  International shipments declined 8% resulting from the supply chain disruptions stemming from the West Coast port work disruptions and historically high retail inventories. Domestic volume increased 3% driven by continued conversions from trucks and new premium services, more than offsetting the impact of high retail inventory levels and modest retail sales activity. Freight revenue from intermodal shipments increased in 2014 compared to 2013 driven by

2015 Intermodal Carloads

volume growth, core pricing improvements and positive business mix.  Domestic traffic increased 11% due to continued conversions from truck transportation to rail and new premium services.  International traffic grew 5% versus 2013, driven primarily by new business and improving economic conditions.  International gains in the last three quarters of the year offset the declines in the first quarter due to severe weather that negatively impacted consumer demand.

Mexico Business – Each of our commodity groups includes revenue from shipments to and from Mexico.Freight revenue from Mexico business decreased 4% to $2.2 billion in 2015 compared to 2014 primarily due to lower fuel surcharge revenue. Volume levels were flat compared to 2014 as lower shipments of Intermodal, Agricultural, and Industrial Products were offset by growth in Automotive, Coal, and Chemical shipments.

Revenue from Mexico business increased 8% to $2.3 billion in 2014 versus 2013.  Volume levels increased 8% from 2013, as increases in Agricultural Products, Chemicals, Intermodal, Automotive and Industrial Products offset lower export Coal shipments.

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Operating Expenses

							% Change		% Change
Millions	2015		2014		2013		2015 v 2014		2014 v 2013
Compensation and benefits	$	5,161	$	5,076	$	4,807	2	%	6	%
Purchased services and materials		2,421		2,558		2,315	(5)		10
Fuel		2,013		3,539		3,534	(43)		-
Depreciation		2,012		1,904		1,777	6		7
Equipment and other rents		1,230		1,234		1,235	-		-
Other		924		924		849	-		9
Total	$	13,761	$	15,235	$	14,517	(10)	%	5	%

Operating expenses decreased nearly $1.5billion compared to 2014 driven by significantly lower fuel prices and volume-related cost savings.  Productivity gains in the second half of the year also drove expenses lower.  These decreases were partially offset by wage inflation,higher depreciation, and property taxes.  In addition, we incurred approximately $35 million of weather-related costs in 2014. Operating expenses increased $718 million in 2014 versus 2013. Volume-related expenses, incremental costs associated with operating a slower network, depreciation, wage and benefit inflation, and locomotive and freight car

2015 Operating Expenses

materials contributed to the higher costs.  Lower fuel price partially offset these increases.  In addition, there were approximately $35 million of weather-related costs in the first quarter of 2014.

Compensation and Benefits – Compensation and benefits include wages, payroll taxes, health and welfare costs, pension costs, other postretirement benefits, and incentive costs. In 2015, lower volume-related costs and second half productivity gains were more than offset by general wage inflation and increased hiring and training expenses related to a larger workforce in the first half of the year. 

Volume-related expenses, including training, and a slower network increased our train and engine work force, which, along with general wage and benefit inflation, resulted in increased wages in 2014 compared to 2013.  Weather-related costs in the first quarter of 2014 also increased costs.

Purchased Services and Materials – Expense for purchased services and materials includes the costs of services purchased from outside contractors and other service providers (including equipment maintenance and contract expenses incurred by our subsidiaries for external transportation services); materials used to maintain the Railroad’s lines, structures, and equipment; costs of operating facilities jointly used by UPRR and other railroads; transportation and lodging for train crew employees; trucking and contracting costs for intermodal containers; leased automobile maintenance expenses; and tools and supplies. Purchased services and materials decreased $137 million compared to 2014 primarily due to lower volume-related costs, including a decrease in external transportation expenses incurred by our logistics subsidiaries.  Expenses also decreased due to lower locomotive and freight car repair costs.

Expenses for purchased services in 2014 increased 8% compared to 2013 primarily due to volume-related expenses incurred by our logistics subsidiaries for external transportation and increased crew transportation and lodging due to volumes and a slower network.  In addition, higher consulting fees and higher contract expenses (including equipment maintenance) increased costs compared to 2013.  Locomotive and freight car material expenses increased in 2014 compared to 2013 due to additional volumes, including the impact of activating stored equipment to address operational issues caused by demand and a slower network.

Fuel – Fuel includes locomotive fuel and gasoline for highway and non-highway vehicles and heavy equipment. Locomotive diesel fuel prices, which averaged $1.84 per gallon (including taxes and transportation costs) in 2015, compared to $2.97 per gallon in 2014, decreased expenses $1.2 billion. In

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addition, fuel costs were lower as gross-ton miles decreased 9%. The fuel consumption rate (c-rate), computed as gallons of fuel consumed divided by gross ton-miles in thousands, increased 1% compared to 2014. Decreases in heavier, more fuel-efficient shipments, decreased gross-ton milesand increased the c-rate.

Volume growth of 7%, as measured by gross ton-miles, drove the increase in fuel expense in 2014 compared to 2013. This was essentially offset by lower locomotive diesel fuel prices, which averaged $2.97 per gallon (including taxes and transportation costs) in 2014, compared to $3.15 in 2013, along with a slight improvement in c-rate, computed as gallons of fuel consumed divided by gross ton-miles.

Depreciation –  The majority of depreciation relates to road property, including rail, ties, ballast, and other track material.  A higher depreciable asset base, reflecting higher capital spending in recent years, increased depreciation expense in 2015 compared to 2014. This increase was partially offset by our recent depreciation studies that resulted in lower depreciation rates for some asset classes.

Depreciation was up 7% in 2014 compared to 2013.  A higher depreciable asset base, reflecting higher ongoing capital spending drove the increase.

Equipment and Other Rents – Equipment and other rents expense primarily includes rental expense that the Railroad pays for freight cars owned by other railroads or private companies; freight car, intermodal, and locomotive leases; and office and other rent expenses. Equipment and other rents expense decreased $4 million compared to 2014 primarily from a decrease in manifest and intermodal shipments, partially offset by growth in finished vehicle shipments.

Higher intermodal volumes and longer cycle times increased short-term freight car rental expense in 2014 compared to 2013. Lower equipment leases essentially offset the higher freight car rental expense, as we exercised purchase options on some of our leased equipment.

Other – Other expenses include state and local taxes, freight, equipment and property damage, utilities, insurance, personal injury, environmental, employee travel, telephone and cellular, computer software, bad debt, and other general expenses.  Other expenses were flat in 2015 compared to 2014 as higher property taxes were offset by lower costs in other areas.

Higher property taxes, personal injury expense and utilities costs partially offset by lower environmental expense and costs associated with damaged freight resulted in an increase in other costs in 2014 compared to 2013.

Non-Operating Items

							% Change		% Change
Millions	2015		2014		2013		2015 v 2014		2014 v 2013
Other income	$	226	$	151	$	128	50	%	18	%
Interest expense		(622)		(561)		(526)	11		7
Income taxes		(2,884)		(3,163)		(2,660)	(9)	%	19	%

Other Income – Other income increased in 2015 compared to 2014 primarily due to a $113 million gain from a real estate sale in the second quarter of 2015, partially offset by a gain from the sale of a permanent easement in 2014. 

Other income increased in 2014 versus 2013 due to higher gains from real estate sales and a sale of a permanent easement.  These gains were partially offset by higher environmental costs on non-operating property in 2014 and lower lease income due to the $17 million settlement of a land lease contract in 2013.

Interest Expense – Interest expense increased in 2015 compared to 2014 due to an increased weighted-average debt level of $13.0 billion in 2015 from $10.7 billion in 2014, partially offset by the impact of a lower effective interest rate of 4.8% in 2015 compared to 5.3% in 2014.

Interest expense increased in 2014 versus 2013 due to an increased weighted-average debt level of $10.7 billion in 2014 from $9.6 billion in 2013, which more than offset the impact of the lower effective interest rate of 5.3% in 2014 versus 5.7% in 2013.

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Income Taxes – Lower pre-tax income decreased income taxes in 2015 compared to 2014. Our effective tax rate for 2015 was 37.7% compared to 37.9% in 2014.

Higher pre-tax income increased income taxes in 2014 compared to 2013. Our effective tax rate for 2014 was 37.9% compared to 37.7% in 2013.

OTHER OPERATING/PERFORMANCE AND FINANCIAL STATISTICS

We report a number of key performance measures weekly to the Association of American Railroads.  We provide this data on our website at www.up.com/investor/aar-stb_reports/index.htm.

Operating/Performance Statistics

Railroad performance measures are included in the table below:

				% Change		% Change
	2015	2014	2013	2015 v 2014		2014 v 2013
Average train speed (miles per hour)	25.4	24.0	26.0	6	%	(8)	%
Average terminal dwell time (hours)	29.3	30.3	27.1	(3)	%	12	%
Gross ton-miles (billions)	927.7	1,014.9	949.1	(9)	%	7	%
Revenue ton-miles (billions)	485.0	549.6	514.3	(12)	%	7	%
Operating ratio	63.1	63.5	66.1	(0.4)	pts	(2.6)	pts
Employees (average)	47,457	47,201	46,445	1	%	2	%

Average Train Speed –  Average train speed is calculated by dividing train miles by hours operated on our main lines between terminals.  Average train speed, as reported to the Association of American Railroads, improved 6% in 2015 compared to 2014.  Velocity gains resulted from lower volumes, improved network fluidity and a strong resource position. More favorable weather conditions in the first quarter of 2015 also contributed to the improvement in our average train speed.

Average train speed decreased 8% in 2014 versus 2013.  The decline was as result of a 7% volume increase, a major infrastructure project in Fort Worth, Texas and inclement weather, including flooding in the Midwest in the second quarter and severe weather conditions in the first quarter that impacted all major U.S. and Canadian railroads.

Average Terminal Dwell Time – Average terminal dwell time is the average time that a rail car spends at our terminals. Lower average terminal dwell time improves asset utilization and service. Average terminal dwell time improved 3% in 2015 compared to 2014, reflecting the impact of lower volume and improved network operations.

Average terminal dwell time increased 12% in 2014 compared to 2013, caused by higher volumes and inclement weather.

Gross and Revenue Ton-Miles – Gross ton-miles are calculated by multiplying the weight of loaded and empty freight cars by the number of miles hauled. Revenue ton-miles are calculated by multiplying the weight of freight by the number of tariff miles.  Gross ton-miles and revenue ton-miles decreased 9% and 12%, respectively in 2015 compared to 2014, resulting from a 6% decrease in carloads. Changes in commodity mix drove the variances in year-over-year declines between gross ton-miles, revenue ton-miles and carloads.

Gross ton-miles, revenue ton-miles and carloadings all increased 7% in 2014 compared to 2013.

Operating Ratio – Operating ratio is our operating expenses reflected as a percentage of operating revenue.  Our operating ratio improved 0.4 points to a new record low of 63.1% in 2015 compared to 2014.  Core pricing gains, the impact of lower fuel prices, resource realignments, network efficienciesand productivity gains more thanoffset the impact of lower volume and inflation.

Our operating ratio improved 2.6 points to 63.5% in 2014 versus 2013.  Core pricing, business demand and productivity more than offset the incremental operating costs associated with volume, a slower network, weather and inflation.

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Employees – Employee levels increased 1% in 2015 compared to 2014, driven by more employees in training and an increase in capital project work. More employees were in training as a result of the number of transportation employees hired during the last half of 2014 and early 2015 to handle expected volume increases, and who continued receiving training in 2015, most of which occurred in the first nine months of the year.

Employee levels increased 2% in 2014 versus 2013.  A decrease in our capital workforce due to improved productivity and project mix partially offset the larger train and engine workforce required for higher volume levels and a slower network.  We successfully managed the growth of our full-time equivalent train and engine force levels at a rate less than our volume growth in 2014.

Return on Average Common Shareholders’ Equity

Millions, Except Percentages	2015		2014		2013
Net income	$	4,772	$	5,180	$	4,388
Average equity	$	20,946	$	21,207	$	20,551
Return on average common shareholders' equity		22.8%		24.4%		21.4%

Return on Invested Capital as Adjusted (ROIC)

Millions, Except Percentages	2015		2014		2013
Net income	$	4,772	$	5,180	$	4,388
Interest expense		622		561		526
Interest on present value of operating leases		135		158		175
Taxes on interest		(285)		(273)		(264)
Net operating profit after taxes as adjusted (a)	$	5,244	$	5,626	$	4,825
Average equity	$	20,946	$	21,207	$	20,551
Average debt*		12,807		10,469		9,237
Average present value of operating leases		2,814		2,980		3,077
Average invested capital as adjusted (b)	$	36,567	$	34,656	$	32,865
Return on invested capital as adjusted (a/b)		14.3%		16.2%		14.7%

*Adjusted for the retrospective adoption of Accounting Standard Update 2015-03 related to the presentation of deferred debt   issuance costs.

ROIC is considered a non-GAAP financial measure by SEC Regulation G and Item 10 of SEC Regulation S-K, and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the efficiency and effectiveness of our long-term capital investments.  In addition, we currently use ROIC as a performance criteria in determining certain elements of equity compensation for our executives. ROIC should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The most comparable GAAP measure is Return on Average Common Shareholders’ Equity. The tables above provide reconciliations from return on average common shareholders’ equity to ROIC. Our 2015 ROIC decreased 1.9 points compared to 2014, primarily as a result of lower earnings and a higher invested capital base.

Debt to Capital

Millions, Except Percentages	2015		2014
Debt* (a)	$	14,201	$	11,413
Equity		20,702		21,189
Capital (b)	$	34,903	$	32,602
Debt to capital (a/b)		40.7%		35.0%

*Adjusted for the retrospective adoption of Accounting Standard Update 2015-03 related to the presentation of deferred debt   issuance costs.

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Adjusted Debt to Capital

Millions, Except Percentages	2015		2014
Debt	$	14,201	$	11,413
Net present value of operating leases		2,726		2,902
Unfunded pension and OPEB, after tax		463		523
Adjusted debt* (a)	$	17,390	$	14,838
Equity		20,702		21,189
Adjusted capital (b)	$	38,092	$	36,027
Adjusted debt to capital (a/b)		45.7%		41.2%

*Adjusted for the retrospective adoption of Accounting Standard Update 2015-03 related to the presentation of deferred debt   issuance costs.

Adjusted debt to capital is a non-GAAP financial measure under SEC Regulation G and Item 10 of SEC Regulation S-K, and may not be defined and calculated by other companies in the same manner. We believe this measure is important to management and investors in evaluating the total amount of leverage in our capital structure, including off-balance sheet lease obligations, which we generally incur in connection with financing the acquisition of locomotives and freight cars and certain facilities.  Operating leases were discounted using 4.8% and 5.3% at December 31, 2015 and 2014, respectively. The discount rate reflects our effective interest rate. We monitor the ratio of adjusted debt to capital as we manage our capital structure to balance cost-effective and efficient access to the capital markets with our overall cost of capital. Adjusted debt to capital should be considered in addition to, rather than as a substitute for, debt to capital. The tables above provide reconciliations from debt to capital to adjusted debt to capital. Our December 31, 2015 debt to capital ratios increased as a result of a $2.8 billion increase in debt from December 31, 2014.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2015, our principal sources of liquidity included cash, cash equivalents, our receivables securitization facility, and our revolving credit facility, as well as the availability of commercial paper and other sources of financing through the capital markets. We had $1.7 billion of committed credit available under our credit facility, with no borrowings outstanding as of December 31, 2015. We did not make any borrowings under this facility during 2015. The value of the outstanding undivided interest held by investors under the $650 million capacity receivables securitization facility was $400 million as of December 31, 2015, and is included in our Consolidated Statements of Financial Position as debt due after one year.  Our access to this receivables securitization facility may be reduced or restricted if our bond ratings fall to certain levels below investment grade. If our bond rating were to deteriorate, it could have an adverse impact on our liquidity. Access to commercial paper as well as other capital market financings is dependent on market conditions. Deterioration of our operating results or financial condition due to internal or external factors could negatively impact our ability to access capital markets as a source of liquidity. Access to liquidity through the capital markets is also dependent on our financial stability. We expect that we will continue to have access to liquidity through any or all of the following sources or activities: (i) increasing the size or utilization of our receivables securitization, (ii) issuing commercial paper, (iii) entering into bank loans, outside of our revolving credit facility, or (iv) issuing bonds or other debt securities to public or private investors based on our assessment of the current condition of the credit markets. The Company’s $1.7 billion revolving credit facility is intended to support the issuance of commercial paper by UPC and also serves as an emergency source of liquidity. The Company currently does not intend to make any borrowings under this facility.

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At December 31, 2015 and 2014, we had a modest working capital surplus. This reflects a strong cash position that provides enhanced liquidity in an uncertain economic environment. In addition, we believe we have adequate access to capital markets to meet any foreseeable cash requirements, and we have sufficient financial capacity to satisfy our current liabilities.

Cash Flows
Millions	2015		2014		2013
Cash provided by operating activities	$	7,344	$	7,385	$	6,823
Cash used in investing activities		(4,476)		(4,249)		(3,405)
Cash used in financing activities		(3,063)		(2,982)		(3,049)
Net change in cash and cash equivalents	$	(195)	$	154	$	369

Operating Activities

Cash provided by operating activities decreased in 2015 compared to 2014 due to lower net income and changes in working capital, partially offset by the timing of tax payments.

Federal tax law provided for 100% bonus depreciation for qualified investments made during 2011 and 50% bonus depreciation for qualified investments made during 2012-2013. As a result, the Company deferred a substantial portion of its 2011-2013 income tax expense, contributing to the positive operating cash flow in those years. Congress extended 50% bonus depreciation for 2014, but this extension occurred in December, and the related benefit was realized in 2015, rather than 2014.  Similarly, in December of 2015, Congress extended bonus depreciation through 2019, which delayed the benefit of 2015 bonus depreciation into 2016.  Bonus depreciation will be at a rate of 50% for 2015, 2016 and 2017, 40% for 2018 and 30% for 2019.

Higher net income in 2014 increased cash provided by operating activities compared to 2013, despite higher income tax payments. 2014 income tax payments were higher than 2013 primarily due to higher income, but also because we paid taxes previously deferred by bonus depreciation.

Investing Activities

Higher capital investments in locomotives and freight cars, including $327 million in early lease buyouts,which we exercised due to favorable economic terms and market conditions,drove the increase in cash used in investing activities in 2015 compared to 2014.

Higher capital investments, including the early buyout of the long-term operating lease of our headquarters building for approximately $261 million, drove the increase in cash used in investing activities in 2014 compared to 2013. Significant investments also were made for new locomotives, freight cars and containers, and capacity and commercial facility projects. Capital investments in 2014 also included $99 million for the early buyout of locomotives and freight cars under long-term operating leases, which we exercised due to favorable economic terms and market conditions.

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The following tables detail cash capital investments and track statistics for the years ended December 31, 2015, 2014, and 2013:

Millions	2015		2014		2013
Rail and other track material	$	734	$	749	$	743
Ties		455		415		438
Ballast		233		204		226
Other [a]		438		378		326
Total road infrastructure replacements		1,860		1,746		1,733
Line expansion and other capacity projects		457		515		455
Commercial facilities		227		217		146
Total capacity and commercial facilities		684		732		601
Locomotives and freight cars [b]		1,436		1,067		580
Positive train control		381		384		419
Technology and other [c]		289		417		163
Total cash capital investments	$	4,650	$	4,346	$	3,496

[a] Other includes bridges and tunnels, signals, other road assets, and road work equipment.

[b] Locomotives and freight cars include early lease buyouts of $327 million in 2015, $75 million in 2014, and $16 million in 2013.

[c] Technology and other includes the $261 million early buyout of our headquarters building operating lease in 2014.

	2015		2014		2013
Track miles of rail replaced		767		912		834
Track miles of rail capacity expansion		103		119		97
New ties installed (thousands)		4,178		4,076		3,870
Miles of track surfaced		10,076		10,791		11,017

Capital Plan – In 2016, we expect our capital plan to be approximately $3.75 billion, which may be revised if business conditions or the regulatory environment affect our ability to generate sufficient returns on these investments.  While asset replacements will fluctuate as part of our renewal strategy, we expect to use 55% to 60% of our capital investments to renew and improve existing capital assets.  We will continue to invest in our network and terminals where appropriate, balancing terminal capacity with mainline capacity.  Significant investments in technology improvements are planned, including approximately $375 million for PTC.  We will also continue commercial investments in rail facilities and equipment, including 230 locomotives and 450 freight cars.

We expect to fund our 2016 cash capital plan by using some or all of the following: cash generated from operations, proceeds from the sale or lease of various operating and non-operating properties, proceeds from the issuance of long-term debt, and cash on hand. Our annual capital plan is a critical component of our long-term strategic plan. We expect our plan will enhance the long-term value of the Company for our shareholders by providing sufficient resources to (i) replace and improve our existing track infrastructure to provide safe and fluid operations, (ii) increase network efficiency by adding or improving facilities and track, and (iii) make investments that meet customer demand and take advantage of opportunities for long-term growth.

Financing Activities

Cash used in financing activities increased in 2015 compared to 2014. An increase of $712 million in dividends paid and $240 million for the repurchase of shares under our common stock repurchase program more than offset an increase of $740 million in debt issued and a decrease of $154 million in debt repaid. The higher dividend payments primarily were a result of adjusting the dividend payable dates to align with the timing of the quarterly dividend declaration and payment within the same quarter. Aligning the quarterly dividend declaration and payment resulted in two payments in the first quarter of 2015: the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, as well as the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015. The second quarter 2015 dividend of $479 million was paid on June 30, 2015, the third quarter 2015 dividend of $476 million was paid on September 30, 2015, and the fourth quarter 2015 dividend of $467 million was paid on December 31, 2015. Higher dividends per share also contributed to the increase in dividends paid.

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Cash used in financing activities remained flat in 2014 versus 2013. Increases for the repurchase of shares under our common stock repurchase program and higher dividend payments in 2014 of $1.6 billion compared to $1.3 billion in 2013 were offset by higher debt issuances in 2014.

Credit Facilities – At December 31, 2015, we had $1.7 billion of credit available under our revolving credit facility (the facility), which is designated for general corporate purposes and supports the issuance of commercial paper. We did not draw on the facility during 2015. Commitment fees and interest rates payable under the facility are similar to fees and rates available to comparably rated, investment-grade borrowers. The facility allows for borrowings at floating rates based on London Interbank Offered Rates, plus a spread, depending upon credit ratings for our senior unsecured debt. The facility matures in May 2019 under a five-year term and requires UPC to maintain a debt-to-net-worth coverage ratio. At December 31, 2015, and December 31, 2014 (and at all times during the periods presented), we were in compliance with this covenant.

The definition of debt used for purposes of calculating the debt-to-net-worth coverage ratio includes, among other things, certain credit arrangements, capital leases, guarantees and unfunded and vested pension benefits under Title IV of ERISA. At December 31, 2015, the debt-to-net-worth coverage ratio allowed us to carry up to $41.4 billion of debt (as defined in the facility), and we had $14.3 billion of debt (as defined in the facility) outstanding at that date. Under our current capital plans, we expect to continue to satisfy the debt-to-net-worth coverage ratio; however, many factors beyond our reasonable control could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post collateral. The facility also includes a $125 million cross-default provision and a change-of-control provision.

During 2015, we did not issue or repay any commercial paper, and at December 31, 2015, and 2014, we had no commercial paper outstanding. Our revolving credit facility supports our outstanding commercial paper balances, and, unless we change the terms of our commercial paper program, our aggregate issuance of commercial paper will not exceed the amount of borrowings available under the facility.

(See further discussion in this Item 7 under Receivables Securitization Facility for information regarding the Company’s receivables securitization facility.)

Ratio of Earnings to Fixed Charges

For each of the years ended December 31, 2015, 2014, and 2013, our ratio of earnings to fixed charges was 11.6, 13.5, and 11.8, respectively. The ratio of earnings to fixed charges was computed on a consolidated basis. Earnings represent income from continuing operations, less equity earnings net of distributions, plus fixed charges and income taxes. Fixed charges represent interest charges, amortization of debt discount, and the estimated amount representing the interest portion of rental charges.  (See Exhibit 12 to this report for the calculation of the ratio of earnings to fixed charges.)

Common Shareholders’ Equity

Dividend Restrictions – Our revolving credit facility includes a debt-to-net worth covenant (discussed in the Credit Facilities section above) that, under certain circumstances, restricts the payment of cash dividends to our shareholders. The amount of retained earnings available for dividends was $13.6 billion and $15.4 billion at December 31, 2015, and 2014, respectively.

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Share Repurchase Program

Effective January 1, 2014, our Board of Directors authorized the repurchase of up to 120 million shares of our common stock by December 31, 2017, replacing our previous repurchase program. As of December 31, 2015, we repurchased a total of $16.0 billion of our common stock since the commencement of our repurchase programs in 2007.  The table below represents shares repurchased under this repurchase program.

	Number of Shares Purchased		Average Price Paid
	2015	2014		2015		2014
First quarter	6,881,455	7,640,000	$	117.28	$	89.43
Second quarter	7,975,100	8,320,000		104.62		96.84
Third quarter	13,800,700	8,347,000		89.65		102.54
Fourth quarter	6,646,899	7,736,400		88.19		113.77
Total	35,304,154	32,043,400	$	98.14	$	100.65
Remaining number of shares that may be repurchased under current authority				52,652,446

Management's assessments of market conditions and other pertinent facts guide the timing and volume of all repurchases.  We expect to fund any share repurchases under this program through cash generated from operations, the sale or lease of various operating and non-operating properties, debt issuances, and cash on hand.  Repurchased shares are recorded in treasury stock at cost, which includes any applicable commissions and fees.

From January 1, 2016, through February 4, 2016, we repurchased 3.7 million shares at an aggregate cost of approximately $268 million.

Shelf Registration Statement and Significant New Borrowings – We filed a new shelf registration statement with the SEC that became effective on February 9, 2015. The Board of Directors authorized the issuance of up to $4.0 billion of debt securities, replacing the $4.0 billion authorized under our shelf registration filed in February 2013, which was fully utilized after our January 2015 debt offering noted below. Under our current shelf registration, we may issue, from time to time, any combination of debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one or more offerings.  We have no immediate plans to issue equity securities; however, we will continue to explore opportunities to replace existing debt or access capital through issuances of debt securities under our shelf registration, and, therefore, we may issue additional debt securities at any time.

During 2015, we issued the following unsecured, fixed-rate debt securities under our shelf registrations:

Date	Description of Securities
January 29, 2015	$250 million of 1.80% Notes due February 1, 2020
	$450 million of 3.375% Notes due February 1, 2035
	$450 million of 3.875% Notes due February 1, 2055
June 19, 2015	$400 million of 2.250% Notes due June 19, 2020
	$300 million of 3.250% Notes due August 15, 2025
October 29, 2015	$200 million of reopened 3.250% Notes due August 15, 2025
	$500 million of 4.050% Notes due November 15, 2045
	$400 million of 4.375% Notes due November 15, 2065

We used the net proceeds from the offerings for general corporate purposes, including the repurchase of common stock pursuant to our share repurchase program. These debt securities include change-of-control provisions. At December 31, 2015, we had remaining authority to issue up to $2.2 billion of debt securities under our current shelf registration.

Equipment Trust – On May 12, 2015, UPRR consummated a pass-through (P/T) financing, whereby a P/T trust was created, which issued $399 million of P/T trust certificates with a stated interest rate of 2.695%. The P/T trust certificates will mature on May 12, 2027. The proceeds from the issuance of the P/T trust certificates were used to purchase equipment trust certificates to be issued by UPRR to finance the acquisition of 182 locomotives. The equipment trust certificates are secured by a lien on the

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locomotives. The $399 million is classified as debt due after one year in our Consolidated Statements of Financial Position.

Debt Exchange – On August 21, 2013, we exchanged $1,170 million of various outstanding notes and debentures due between 2016 and 2040 (the Existing Notes) for $439 million of 3.646% notes (the New 2024 Notes) due February 15, 2024 and $700 million of 4.821% notes (the New 2044 Notes) due February 1, 2044, plus cash consideration of approximately $280 million in addition to $8 million for accrued and unpaid interest on the Existing Notes.  In accordance with ASC 470-50-40, Debt-Modifications and Extinguishments-Derecognition, this transaction was accounted for as a debt exchange, as the exchanged debt instruments are not considered to be substantially different.  The cash consideration was recorded as an adjustment to the carrying value of debt, and the balance of the unamortized discount and issue costs from the Existing Notes is being amortized as an adjustment of interest expense over the terms of the New 2024 Notes and the New 2044 Notes.  No gain or loss was recognized as a result of the exchange.  Costs related to the debt exchange that were payable to parties other than the debt holders totaled approximately $9 million and were included in interest expense during the year ended December 31, 2013.

The following table lists the outstanding notes and debentures that were exchanged:

	Principal amount
Millions	exchanged
The 2024 Offers
7.000% Debentures due 2016	$	8
5.650% Notes due 2017		38
5.750% Notes due 2017		70
5.700% Notes due 2018		103
7.875% Notes due 2019		20
6.125% Notes due 2020		238
The 2044 Offers
7.125% Debentures due 2028		73
6.625% Debentures due 2029		177
6.250% Debentures due 2034		19
6.150% Debentures due 2037		138
5.780% Notes due 2040		286
Total	$	1,170

Receivables Securitization Facility – The Railroad maintains a $650 million, 3-year receivables securitization facility maturing in July 2017 under which it sells most of its eligible third-party receivables to Union Pacific Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in accounts receivable to investors. The investors have no recourse to the Railroad’s other assets except for customary warranty and indemnity claims. Creditors of the Railroad do not have recourse to the assets of UPRI.

The amount outstanding under the facility was $400 million at both December 31, 2015, and December 31, 2014, respectively. The facility was supported by $0.9 billion and $1.2 billion of accounts receivable as collateral at December 31, 2015, and December 31, 2014, respectively, which, as a retained interest, is included in accounts receivable, net in our Consolidated Statements of Financial Position.

The outstanding amount the Railroad is allowed to maintain under the facility, with a maximum of $650 million, may fluctuate based on the availability of eligible receivables and is directly affected by business volumes and credit risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the facility would not materially change.

The costs of the receivables securitization facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unused commitment availability.  The costs of the receivables securitization facility are included in interest expense and were $5 million, $4 million, and $5 million for 2015, 2014, and 2013, respectively.

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Contractual Obligations and Commercial Commitments

As described in the notes to the Consolidated Financial Statements and as referenced in the tables below, we have contractual obligations and commercial commitments that may affect our financial condition. Based on our assessment of the underlying provisions and circumstances of our contractual obligations and commercial commitments, including material sources of off-balance sheet and structured finance arrangements, other than the risks that we and other similarly situated companies face with respect to the condition of the capital markets (as described in Item 1A of Part II of this report),  there is no known trend, demand, commitment, event, or uncertainty that is reasonably likely to occur that would have a material adverse effect on our consolidated results of operations, financial condition, or liquidity. In addition, our commercial obligations, financings, and commitments are customary transactions that are similar to those of other comparable corporations, particularly within the transportation industry.

The following tables identify material obligations and commitments as of December 31, 2015:

			Payments Due by December 31,
Contractual Obligations													After
Millions	Total		2016		2017		2018		2019		2020		2020		Other
Debt [a]	$	22,885	$	1,006	$	1,434	$	938	$	981	$	1,339	$	17,187	$	-
Operating leases [b]		3,430		491		446		371		339		282		1,501		-
Capital lease obligations [c]		1,587		217		220		198		184		193		575		-
Purchase obligations [d]		3,983		2,309		673		306		255		211		197		32
Other post retirement benefits [e]		453		45		45		46		46		46		225		-
Income tax contingencies [f]		94		-		-		-		-		-		-		94
Total contractual obligations	$	32,432	$	4,068	$	2,818	$	1,859	$	1,805	$	2,071	$	19,685	$	126

[a] Excludes capital lease obligations of $1,268 million, as well as unamortized discount and deferred issuance costs of $(674) million. Includes an interest component of $9,278 million.

[b] Includes leases for locomotives, freight cars, other equipment, and real estate.

[c] Represents total obligations, including interest component of $319 million.

[d] Purchase obligations include locomotive maintenance contracts; purchase commitments for fuel purchases, locomotives, ties, ballast, and rail; and agreements to purchase other goods and services.  For amounts where we cannot reasonably estimate the year of settlement, they are reflected in the Other column.

[e] Includes estimated other post retirement, medical, and life insurance payments, payments made under the unfunded pension plan for the next ten years.

[f] Future cash flows for income tax contingencies reflect the recorded liabilities and assets for unrecognized tax benefits, including interest and penalties, as of December 31, 2015.  For amounts where the year of settlement is uncertain, they are reflected in the Other column.

			Amount of Commitment Expiration per Period
Other Commercial Commitments														After
Millions	Total		2016		2017		2018		2019		2020		2020
Credit facilities [a]	$	1,700	$	-	$	-	$	-	$	1,700	$	-	$	-
Receivables securitization facility [b]		650		-		650		-		-		-		-
Guarantees [c]		53		9		10		11		8		5		10
Standby letters of credit [d]		35		33		2		-		-		-		-
Total commercial commitments	$	2,438	$	42	$	662	$	11	$	1,708	$	5	$	10

[a] None of the credit facility was used as of December 31, 2015.

[b] $400 million of the receivables securitization facility was utilized as of December 31, 2015, which is accounted for as debt. The full program matures in July 2017.

[c] Includes guaranteed obligations related to our affiliated operations.

[d] None of the letters of credit were drawn upon as of December 31, 2015.

Off-Balance Sheet Arrangements

Guarantees – At December 31, 2015, and 2014, we were contingently liable for $53 million and $82 million in guarantees. We have recorded liabilities of $0 and $0.3 million for the fair value of these obligations as of December 31, 2015, and 2014, respectively. We entered into these contingent guarantees in the normal course of business, and they include guaranteed obligations related to our affiliated operations. The final guarantee expires in 2022. We are not aware of any existing event of

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default that would require us to satisfy these guarantees. We do not expect that these guarantees will have a material adverse effect on our consolidated financial condition, results of operations, or liquidity.

OTHER MATTERS

Labor Agreements – Approximately 85% of our 47,457 full-time-equivalent employees are represented by 14 major rail unions. On January 1, 2015, current labor agreements became subject to modification and we began the current round of negotiations with the unions. Existing agreements remain in effect until new agreements are reached or the Railway Labor Act’s procedures (which include mediation, cooling-off periods, and the possibility of Presidential Emergency Boards and Congressional intervention) are exhausted.  Contract negotiations historically continue for an extended period of time and we rarely experience work stoppages while negotiations are pending.

Inflation – Long periods of inflation significantly increase asset replacement costs for capital-intensive companies. As a result, assuming that we replace all operating assets at current price levels, depreciation charges (on an inflation-adjusted basis) would be substantially greater than historically reported amounts.

Derivative Financial Instruments – We may use derivative financial instruments in limited instances to assist in managing our overall exposure to fluctuations in interest rates and fuel prices. We are not a party to leveraged derivatives and, by policy, do not use derivative financial instruments for speculative purposes. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. We formally document the nature and relationships between the hedging instruments and hedged items at inception, as well as our risk-management objectives, strategies for undertaking the various hedge transactions, and method of assessing hedge effectiveness. Changes in the fair market value of derivative financial instruments that do not qualify for hedge accounting are charged to earnings. We may use swaps, collars, futures, and/or forward contracts to mitigate the risk of adverse movements in interest rates and fuel prices; however, the use of these derivative financial instruments may limit future benefits from favorable price movements.

Market and Credit Risk – We address market risk related to derivative financial instruments by selecting instruments with value fluctuations that highly correlate with the underlying hedged item. We manage credit risk related to derivative financial instruments, which is minimal, by requiring high credit standards for counterparties and periodic settlements. At December 31, 2015 and 2014, we were not required to provide collateral, nor had we received collateral, relating to our hedging activities.

Determination of Fair Value – We determine the fair values of our derivative financial instrument positions based upon current fair values as quoted by recognized dealers or the present value of expected future cash flows.

Sensitivity Analyses – The sensitivity analyses that follow illustrate the economic effect that hypothetical changes in interest rates could have on our results of operations and financial condition. These hypothetical changes do not consider other factors that could impact actual results.

At December 31, 2015, we had variable-rate debt representing approximately 4.2% of our total debt. If variable interest rates average one percentage point higher in 2016 than our December 31, 2015 variable rate, which was approximately 1.1%, our interest expense would increase by approximately $6 million. This amount was determined by considering the impact of the hypothetical interest rate on the balances of our variable-rate debt at December 31, 2015.

Market risk for fixed-rate debt is estimated as the potential increase in fair value resulting from a hypothetical one percentage point decrease in interest rates as of December 31, 2015, and amounts to an increase of approximately $1.6 billion to the fair value of our debt at December 31, 2015. We estimated the fair values of our fixed-rate debt by considering the impact of the hypothetical interest rates on quoted market prices and current borrowing rates.

Interest Rate Fair Value Hedges – We manage our overall exposure to fluctuations in interest rates by adjusting the proportion of fixed and floating rate debt instruments within our debt portfolio over a given period. We generally manage the mix of fixed and floating rate debt through the issuance of targeted amounts of each as debt matures or as we require incremental borrowings. We employ derivatives, primarily swaps, as one of the tools to obtain the targeted mix. In addition, we also obtain flexibility in

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managing interest costs and the interest rate mix within our debt portfolio by evaluating the issuance of and managing outstanding callable fixed-rate debt securities.

Swaps allow us to convert debt from fixed rates to variable rates and thereby hedge the risk of changes in the debt’s fair value attributable to the changes in interest rates. We account for swaps as fair value hedges using the short-cut method as allowed by the Derivatives and Hedging Topic of the Financial Accounting Standards Board (FASB) ASC 815; therefore, we do not record any ineffectiveness within our Consolidated Financial Statements. As of December 31, 2015 and 2014, we had no interest rate fair value hedges outstanding.

Interest Rate Cash Flow Hedges – We report changes in the fair value of cash flow hedges in accumulated other comprehensive loss until the hedged item affects earnings. As of December 31, 2015, and 2014, we had no interest rate cash flow hedges outstanding.

Accounting Pronouncements – In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers (Topic 606).  ASU 2014-09 supersedes the revenue recognition guidance in Topic 605, Revenue Recognition.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services.  This standard is effective for annual reporting periods beginning after December 15, 2017, and can be adopted either retrospectively or as a cumulative effect adjustment as of the date of adoption.  ASU 2014-09 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs in the financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. Amortization of debt issuance costs will be reported as interest expense. This standard is effective for annual reporting periods beginning after December 15, 2015. We elected to early adopt ASU 2015-03 on December 31, 2015. As a result, the Company reclassified debt issuance costs from other assets to a direct deduction from debt due after one year on the Consolidated Statements of Financial Position. ASU 2015-03 did not have a material impact on our consolidated financial position, and had no impact on our results of operations or cash flows.  All prior period financial information presented herein has been adjusted to reflect the retrospective application of this ASU.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17), Balance Sheet Classification of Deferred Taxes (Subtopic 740-10). ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the requirement for companies to present deferred tax liabilities and assets as current and non-current on the Consolidated Statements of Financial Position.  Instead, companies will be required to classify all deferred tax assets and liabilities as non-current.  This guidance is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted.  We elected to early adopt ASU 2015-17 on December 31, 2015.  ASU 2015-17 did not have a material impact on our consolidated financial position, and had no impact on our results of operations or cash flows.  All prior period financial information presented herein has been adjusted to reflect the retrospective application of this ASU.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (ASU 2016-01), Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). ASU 2016-01 provides guidance for the recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. ASU 2016-01 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

Asserted and Unasserted Claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. We cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations, financial condition, or liquidity. To the extent possible, we have recorded a liability where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated. We do not expect that any known lawsuits, claims, environmental costs, commitments, contingent liabilities, or guarantees will have a material adverse effect on our consolidated results of operations, financial condition, or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters.

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Indemnities – Our maximum potential exposure under indemnification arrangements, including certain tax indemnifications, can range from a specified dollar amount to an unlimited amount, depending on the nature of the transactions and the agreements. Due to uncertainty as to whether claims will be made or how they will be resolved, we cannot reasonably determine the probability of an adverse claim or reasonably estimate any adverse liability or the total maximum exposure under these indemnification arrangements. We do not have any reason to believe that we will be required to make any material payments under these indemnity provisions.

Climate Change – Although climate change could have an adverse impact on our operations and financial performance in the future (see Risk Factors under Item 1A of this report), we are currently unable to predict the manner or severity of such impact. However, we continue to take steps and explore opportunities to reduce the impact of our operations on the environment, including investments in new technologies, using training programs to reduce fuel consumption, and changing our operations to increase fuel efficiency.

CRITICAL ACCOUNTING POLICIES

Our Consolidated Financial Statements have been prepared in accordance with GAAP. The preparation of these financial statements requires estimation and judgment that affect the reported amounts of revenues, expenses, assets, and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The following critical accounting policies are a subset of our significant accounting policies described in Note 2 to the Financial Statements and Supplementary Data, Item 8. These critical accounting policies affect significant areas of our financial statements and involve judgment and estimates. If these estimates differ significantly from actual results, the impact on our Consolidated Financial Statements may be material.

Personal Injury – The cost of personal injuries to employees and others related to our activities is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability, including unasserted claims. The Federal Employers’ Liability Act (FELA) governs compensation for work-related accidents. Under FELA, damages are assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work.

Our personal injury liability is not discounted to present value due to the uncertainty surrounding the timing of future payments. Approximately 94% of the recorded liability is related to asserted claims and approximately 6% is related to unasserted claims at December 31, 2015. Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle these claims may range from approximately $318 million to $345 million. We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other.  Estimates can vary over time due to evolving trends in litigation.

Our personal injury liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	335	$	294	$	334
Current year accruals		89		96		87
Changes in estimates for prior years		(3)		9		(38)
Payments		(103)		(64)		(89)
Ending balance at December 31	$	318	$	335	$	294
Current portion, ending balance at December 31	$	63	$	111	$	82

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Our personal injury claims activity was as follows:

	2015	2014	2013
Open claims, beginning balance	2,618	2,605	2,792
New claims	2,573	2,773	2,705
Settled or dismissed claims	(2,787)	(2,760)	(2,892)
Open claims, ending balance at December 31	2,404	2,618	2,605

In conjunction with the liability update performed in 2015, we also reassessed our estimated insurance recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2015, and 2014.

Asbestos – We are a defendant in a number of lawsuits in which current and former employees and other parties allege exposure to asbestos. We assess our potential liability using a statistical analysis of resolution costs for asbestos-related claims.  This liability is updated annually and excludes future defense and processing costs. The liability for resolving both asserted and unasserted claims was based on the following assumptions:

· The ratio of future claims by alleged disease would be consistent with historical averages adjusted for inflation.

· The number of claims filed against us will decline each year.

· The average settlement values for asserted and unasserted claims will be equivalent to historical averages.

· The percentage of claims dismissed in the future will be equivalent to historical averages.

Our liability for asbestos-related claims is not discounted to present value due to the uncertainty surrounding the timing of future payments. Approximately 22% of the recorded liability related to asserted claims and approximately 78% related to unasserted claims at December 31, 2015.  Because of the uncertainty surrounding the ultimate outcome of asbestos-related claims, it is reasonably possible that future costs to settle these claims may range from approximately $120 million to $129 million.  We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other.

Our asbestos-related liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	126	$	131	$	139
Accruals/(Credits)		-		1		2
Payments		(6)		(6)		(10)
Ending balance at December 31	$	120	$	126	$	131
Current portion, ending balance at December 31	$	6	$	8	$	9

Our asbestos-related claims activity was as follows:

	2015	2014	2013
Open claims, beginning balance	1,065	1,140	1,258
New claims	193	183	192
Settled or dismissed claims	(169)	(258)	(310)
Open claims, ending balance at December 31	1,089	1,065	1,140

In conjunction with the liability update performed in 2015, we also reassessed our estimated insurance recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2015, and 2014.  The amounts recorded for asbestos-related liabilities and related insurance recoveries were based on currently known facts. However, future events, such as the number of new claims filed each year, average settlement costs, and insurance coverage issues, could cause the actual costs and insurance recoveries to be higher or lower than the projected amounts. Estimates also may vary in the future if strategies, activities, and outcomes of asbestos litigation materially change; federal and state laws

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governing asbestos litigation increase or decrease the probability or amount of compensation of claimants; and there are material changes with respect to payments made to claimants by other defendants.

Environmental Costs – We are subject to federal, state, and local environmental laws and regulations. We have identified 290 sites at which we are or may be liable for remediation costs associated with alleged contamination or for violations of environmental requirements. This includes 31 sites that are the subject of actions taken by the U.S. government, 19 of which are currently on the Superfund National Priorities List. Certain federal legislation imposes joint and several liability for the remediation of identified sites; consequently, our ultimate environmental liability may include costs relating to activities of other parties, in addition to costs relating to our own activities at each site.

When we identify an environmental issue with respect to property owned, leased, or otherwise used in our business, we perform, with assistance of our consultants, environmental assessments on the property. We expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be reasonably estimated. Our environmental liability is not discounted to present value due to the uncertainty surrounding the timing of future payments.

Our environmental liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	182	$	171	$	170
Accruals		61		56		58
Payments		(53)		(45)		(57)
Ending balance at December 31	$	190	$	182	$	171
Current portion, ending balance at December 31	$	52	$	60	$	53

Our environmental site activity was as follows:

	2015	2014	2013
Open sites, beginning balance	270	268	284
New sites	66	55	41
Closed sites	(46)	(53)	(57)
Open sites, ending balance at December 31	290	270	268

The environmental liability includes future costs for remediation and restoration of sites, as well as ongoing monitoring costs, but excludes any anticipated recoveries from third parties. Cost estimates are based on information available for each site, financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharing arrangements with other potentially responsible parties, the degree of contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the speculative nature of remediation costs. Estimates of liability may vary over time due to changes in federal, state, and local laws governing environmental remediation. Current obligations are not expected to have a material adverse effect on our consolidated results of operations, financial condition, or liquidity.

Property and Depreciation – Our railroad operations are highly capital intensive, and our large base of homogeneous, network-type assets turns over on a continuous basis.  Each year we develop a capital program for the replacement of assets and for the acquisition or construction of assets that enable us to enhance our operations or provide new service offerings to customers.  Assets purchased or constructed throughout the year are capitalized if they meet applicable minimum units of property criteria.  Properties and equipment are carried at cost and are depreciated on a straight-line basis over their estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those subject to abandonment, yard and switching tracks, and electronic yards) for which lives are measured in millions of gross tons per mile of track.  We use the group method of depreciation in which all items with similar characteristics, use, and expected lives are grouped together in asset classes, and are depreciated using composite depreciation rates.  The group method of depreciation treats each asset class as a pool of resources, not as singular items.  We currently have more than 60 depreciable

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asset classes, and we may increase or decrease the number of asset classes due to changes in technology, asset strategies, or other factors.

We determine the estimated service lives of depreciable railroad property by means of depreciation studies.  We perform depreciation studies at least every three years for equipment and every six years for track assets (i.e., rail and other track material, ties, and ballast) and other road property.  Our depreciation studies take into account the following factors:

· Statistical analysis of historical patterns of use and retirements of each of our asset classes;

· Evaluation of any expected changes in current operations and the outlook for continued use of the assets;

· Evaluation of technological advances and changes to maintenance practices; and

· Expected salvage to be received upon retirement.

For rail in high-density traffic corridors, we measure estimated service lives in millions of gross tons per mile of track.  It has been our experience that the lives of rail in high-density traffic corridors are closely correlated to usage (i.e., the amount of weight carried over the rail).  The service lives also vary based on rail weight, rail condition (e.g., new or secondhand), and rail type (e.g., straight or curve).  Our depreciation studies for rail in high-density traffic corridors consider each of these factors in determining the estimated service lives.  For rail in high-density traffic corridors, we calculate depreciation rates annually by dividing the number of gross ton-miles carried over the rail (i.e., the weight of loaded and empty freight cars, locomotives and maintenance of way equipment transported over the rail) by the estimated service lives of the rail measured in millions of gross tons per mile.  Rail in high-density traffic corridors accounts for approximately 70 percent of the historical cost of rail and other track material.  Based on the number of gross ton-miles carried over our rail in high density traffic corridors during 2015, the estimated service lives of the majority of this rail ranged from approximately 19 years to approximately 39 years.  For all other depreciable assets, we compute depreciation based on the estimated service lives of our assets as determined from the analysis of our depreciation studies.  Changes in the estimated service lives of our assets and their related depreciation rates are implemented prospectively.

Estimated service lives of depreciable railroad property may vary over time due to changes in physical use, technology, asset strategies, and other factors that will have an impact on the retirement profiles of our assets.  We are not aware of any specific factors that are reasonably likely to significantly change the estimated service lives of our assets.  Actual use and retirement of our assets may vary from our current estimates, which would impact the amount of depreciation expense recognized in future periods.

Changes in estimated useful lives of our assets due to the results of our depreciation studies could significantly impact future periods’ depreciation expense and have a material impact on our Consolidated Financial Statements.  If the estimated useful lives of all depreciable assets were increased by one year, annual depreciation expense would decrease by approximately $66 million.  If the estimated useful lives of all depreciable assets were decreased by one year, annual depreciation expense would increase by approximately $70 million.  Our recent depreciation studies have resulted in lower depreciation rates for some asset classes. These lower rates will partially offset the impact of a projected higher depreciable asset base, resulting in an increase in total depreciation expense by approximately 1% to 2% in 2016 versus 2015.

Under group depreciation, the historical cost (net of salvage) of depreciable property that is retired or replaced in the ordinary course of business is charged to accumulated depreciation and no gain or loss is recognized.  The historical cost of certain track assets is estimated using (i) inflation indices published by the Bureau of Labor Statistics and (ii) the estimated useful lives of the assets as determined by our depreciation studies.  The indices were selected because they closely correlate with the major costs of the properties comprising the applicable track asset classes.  Because of the number of estimates inherent in the depreciation and retirement processes and because it is impossible to precisely estimate each of these variables until a group of property is completely retired, we continually monitor the estimated service lives of our assets and the accumulated depreciation associated with each asset class to ensure our depreciation rates are appropriate.  In addition, we determine if the recorded amount of accumulated depreciation is deficient (or in excess) of the amount indicated by our depreciation studies.  Any deficiency (or excess) is amortized as a component of depreciation expense over the remaining service lives of the applicable classes of assets.

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For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized if the retirement meets each of the following three conditions: (i) it is unusual, (ii) it is material in amount, and (iii) it varies significantly from the retirement profile identified through our depreciation studies.  During the last three fiscal years, no gains or losses were recognized due to the retirement of depreciable railroad properties.  A gain or loss is recognized in other income when we sell land or dispose of assets that are not part of our railroad operations.

Income Taxes – We account for income taxes by recording taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on current tax law; the effects of future tax legislation are not anticipated.  Future tax legislation, such as a change in the corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity.  For example, a 1% increase in future income tax rates would increase our deferred tax liability by approximately $390 million.

When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based on management’s judgments using available evidence for purposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset. In 2015 and 2014, there were no valuation allowances.

We recognize tax benefits that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

Pension and Other Postretirement Benefits – We use an actuarial analysis to measure the liabilities and expenses associated with providing pension and medical and life insurance benefits (OPEB) to eligible employees. In order to use actuarial methods to value the liabilities and expenses, we must make several assumptions. The critical assumptions used to measure pension obligations and expenses are the discount rate and expected rate of return on pension assets. For OPEB, the critical assumptions are the discount rate and health care cost trend rate.

We evaluate our critical assumptions at least annually, and selected assumptions are based on the following factors:

· Discount rate is based on a Mercer yield curve of high quality corporate bonds (rated AA by a recognized rating agency) for which the timing and amount of cash flows matches our plans’ expected benefit payments.

· Expected return on plan assets is based on our asset allocation mix and our historical return, taking into consideration current and expected market conditions.

· Health care cost trend rate is based on our historical rates of inflation and expected market conditions.

The following tables present the key assumptions used to measure net periodic pension and OPEB cost/(benefit) for 2015 and the estimated impact on 2015 net periodic pension and OPEB cost/(benefit) relative to a change in those assumptions:

Assumptions	Pension	OPEB
Discount rate	3.94%	3.74%
Expected return on plan assets	7.50%	N/A
Compensation increase	4.00%	N/A
Health care cost trend rate:
Pre-65 current	N/A	6.34%
Pre-65 level in 2028	N/A	4.50%

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Sensitivities	Increase in Expense
Millions	Pension		OPEB
0.25% decrease in discount rate	$	14	$	1
0.25% increase in compensation scale	$	9		N/A
0.25% decrease in expected return on plan assets	$	8		N/A
1% increase in health care cost trend rate		N/A	$	3

The following table presents the net periodic pension and OPEB cost for the years ended December 31:

	Est.
Millions	2016		2015		2014		2013
Net periodic pension cost	$	42	$	120	$	69	$	110
Net periodic OPEB cost		13		19		15		14

In 2016, we will measure the service cost and interest cost components of our net periodic benefit cost by using individual spot rates matched with separate cash flows for each future year instead of a single weighted-average discount rate approach. Our net periodic pension cost is expected to decrease to approximately $42 million in 2016 from $120 million in 2015.  Our net periodic OPEB expense is expected to decrease to approximately $13 million in 2016 from $19 million in 2015. 

CAUTIONARY INFORMATION

Certain statements in this report, and statements in other reports or information filed or to be filed with the SEC (as well as information included in oral statements or other written statements made or to be made by us), are, or will be, forward-looking statements as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements and information include, without limitation, (A) statements in the Chairman’s letter preceding Part I; statements regarding planned capital expenditures under the caption “2016 Capital Plan” in Item 2 of Part I; statements regarding dividends in Item 5 of Part II; and statements and information set forth under the captions “2016 Outlook”; “Liquidity and Capital Resources”; and “Pension and Other Postretirement Benefits” in this Item 7 of Part II, and (B) any other statements or information in this report (including information incorporated herein by reference) regarding: expectations as to financial performance, revenue growth and cost savings;  the time by which goals, targets, or objectives will be achieved;  projections, predictions, expectations, estimates, or forecasts as to our business, financial and operational results, future economic performance, and general economic conditions;  expectations as to operational or service performance or improvements;  expectations as to the effectiveness of steps taken or to be taken to improve operations and/or service, including capital expenditures for infrastructure improvements and equipment acquisitions, any strategic business acquisitions, and modifications to our transportation plans;  expectations as to existing or proposed new products and services; expectations as to the impact of any new regulatory activities or legislation on our operations or financial results;  estimates of costs relating to environmental remediation and restoration; estimates and expectations regarding tax matters; expectations that claims, litigation, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not have a material adverse effect on our consolidated results of operations, financial condition, or liquidity and any other similar expressions concerning matters that are not historical facts.  Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects” and similar words, phrases or expressions.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times that, or by which, such performance or results will be achieved. Forward-looking statements and information are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements and information.  Forward-looking statements and information reflect the good faith consideration by management of currently available information, and may be based on underlying assumptions believed to be reasonable under the circumstances. However, such information and assumptions (and, therefore, such forward-looking statements and information) are or may be subject to variables or unknown or unforeseeable events or circumstances over which management has little or no influence or control.  The Risk Factors in Item 1A of this report could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in any forward-looking statements or information. To the extent circumstances require or we deem it otherwise necessary, we will update or

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amend these risk factors in a Form 10-Q, Form 8-K or subsequent Form 10-K.  All forward-looking statements are qualified by, and should be read in conjunction with, these Risk Factors.

Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Information concerning market risk sensitive instruments is set forth under Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Matters, Item 7.

****************************************

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm	51
Consolidated Statements of Income
For the Years Ended December 31, 2015, 2014, and 2013	52
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2015, 2014, and 2013	52
Consolidated Statements of Financial Position
At December 31, 2015 and 2014	53
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2015, 2014, and 2013	54
Consolidated Statements of Changes in Common Shareholders’ Equity
For the Years Ended December 31, 2015, 2014, and 2013	55
Notes to the Consolidated Financial Statements	56

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Union Pacific Corporation

Omaha, Nebraska

We have audited the accompanying consolidated statements of financial position of Union Pacific Corporation and Subsidiary Companies (the "Corporation") as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, changes in common shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the financial statement schedule listed in the Table of Contents at Part IV, Item 15. These financial statements and financial statement schedule are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Union Pacific Corporation and Subsidiary Companies as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Corporation's internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 5, 2016 expressed  an unqualified opinion on the Corporation's internal control over financial reporting.

Omaha, Nebraska

February 5, 2016

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CONSOLIDATED STATEMENTS OF INCOME

Union Pacific Corporation and Subsidiary Companies

Millions, Except Per Share Amounts, for the Years Ended December 31,	2015		2014		2013
Operating revenues:
Freight revenues	$	20,397	$	22,560	$	20,684
Other revenues		1,416		1,428		1,279
Total operating revenues		21,813		23,988		21,963
Operating expenses:
Compensation and benefits		5,161		5,076		4,807
Purchased services and materials		2,421		2,558		2,315
Fuel		2,013		3,539		3,534
Depreciation		2,012		1,904		1,777
Equipment and other rents		1,230		1,234		1,235
Other		924		924		849
Total operating expenses		13,761		15,235		14,517
Operating income		8,052		8,753		7,446
Other income (Note 7)		226		151		128
Interest expense		(622)		(561)		(526)
Income before income taxes		7,656		8,343		7,048
Income taxes (Note 8)		(2,884)		(3,163)		(2,660)
Net income	$	4,772	$	5,180	$	4,388
Share and Per Share (Note 9):
Earnings per share - basic	$	5.51	$	5.77	$	4.74
Earnings per share - diluted	$	5.49	$	5.75	$	4.71
Weighted average number of shares - basic		866.2		897.1		926.5
Weighted average number of shares - diluted		869.4		901.1		931.5
Dividends declared per share	$	2.20	$	1.91	$	1.48

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Union Pacific Corporation and Subsidiary Companies

Millions, for the Years Ended December 31,	2015		2014		2013
Net income	$	4,772	$	5,180	$	4,388
Other comprehensive income/(loss):
Defined benefit plans		58		(448)		436
Foreign currency translation		(43)		(12)		(1)
Derivatives		-		-		1
Total other comprehensive income/(loss) [a]		15		(460)		436
Comprehensive income	$	4,787	$	4,720	$	4,824

[a] Net of deferred taxes of ($8) million, $291 million, and ($264) million during 2015, 2014, and 2013, respectively.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Union Pacific Corporation and Subsidiary Companies

Millions, Except Share and Per Share Amounts as of December 31,	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	1,391	$	1,586
Accounts receivable, net (Note 11)		1,356		1,611
Materials and supplies		736		712
Other current assets		647		492
Total current assets		4,130		4,401
Investments		1,410		1,390
Net properties (Note 12)		48,866		46,272
Other assets		194		309
Total assets	$	54,600	$	52,372
Liabilities and Common Shareholders' Equity
Current liabilities:
Accounts payable and other current liabilities (Note 13)	$	2,612	$	3,303
Debt due within one year (Note 15)		594		461
Total current liabilities		3,206		3,764
Debt due after one year (Note 15)		13,607		10,952
Deferred income taxes (Note 8)		15,241		14,403
Other long-term liabilities		1,844		2,064
Commitments and contingencies (Notes 17 and 18)
Total liabilities		33,898		31,183
Common shareholders' equity:
Common shares, $2.50 par value, 1,400,000,000 authorized;
1,110,426,354 and 1,110,100,423 issued; 849,211,436 and 883,366,476
outstanding, respectively		2,776		2,775
Paid-in-surplus		4,417		4,321
Retained earnings		30,233		27,367
Treasury stock		(15,529)		(12,064)
Accumulated other comprehensive loss (Note 10)		(1,195)		(1,210)
Total common shareholders' equity		20,702		21,189
Total liabilities and common shareholders' equity	$	54,600	$	52,372

The accompanying notes are an integral part of these Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Union Pacific Corporation and Subsidiary Companies

Millions, for the Years Ended December 31,	2015		2014		2013
Operating Activities
Net income	$	4,772	$	5,180	$	4,388
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		2,012		1,904		1,777
Deferred and other income taxes		765		895		723
Net gain on non-operating asset dispositions		(144)		(69)		(32)
Other operating activities, net		116		(216)		(194)
Changes in current assets and liabilities:
Accounts receivable, net		255		(197)		(83)
Materials and supplies		(24)		(59)		7
Other current assets		(47)		(35)		1
Accounts payable and other current liabilities		(276)		295		40
Income and other taxes		(85)		(313)		196
Cash provided by operating activities		7,344		7,385		6,823
Investing Activities
Capital investments		(4,650)		(4,346)		(3,496)
Proceeds from asset sales		251		138		98
Other investing activities, net		(77)		(41)		(7)
Cash used in investing activities		(4,476)		(4,249)		(3,405)
Financing Activities
Common share repurchases (Note 19)		(3,465)		(3,225)		(2,218)
Debt issued		3,328		2,588		1,443
Dividends paid		(2,344)		(1,632)		(1,333)
Debt repaid		(556)		(710)		(640)
Debt exchange		-		-		(289)
Other financing activities, net		(26)		(3)		(12)
Cash used in financing activities		(3,063)		(2,982)		(3,049)
Net change in cash and cash equivalents		(195)		154		369
Cash and cash equivalents at beginning of year		1,586		1,432		1,063
Cash and cash equivalents at end of year	$	1,391	$	1,586	$	1,432
Supplemental Cash Flow Information
Non-cash investing and financing activities:
Capital investments accrued but not yet paid	$	100	$	174	$	133
Capital lease financings		13		-		39
Cash dividends declared but not yet paid (Note 13)		-		438		356
Cash paid during the year for:
Income taxes, net of refunds	$	(2,156)	$	(2,492)	$	(1,656)
Interest, net of amounts capitalized		(592)		(554)		(528)

The accompanying notes are an integral part of these Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN COMMON SHAREHOLDERS' EQUITY

Union Pacific Corporation and Subsidiary Companies

Millions	Common Shares	Treasury Shares	Common Shares		Paid-in- Surplus		Retained Earnings		Treasury Stock		AOCI [a]		Total
Balance at January 1, 2013	1,109.3	(170.3)		$   2,773		$   4,113		$   20,884		$    (6,707)		$  (1,186)		$   19,877
Net income				-		-		4,388		-		-		4,388
Other comp. income				-		-		-		-		436		436
Conversion, stock option    exercises, forfeitures, and other	0.4	1.6		1		97		-		15		-		113
Share repurchases (Note 19)	-	(29.0)		-		-		-		(2,218)		-		(2,218)
Cash dividends declared    ($1.48 per share)	-	-		-		-		(1,371)		-		-		(1,371)
Balance at December 31, 2013	1,109.7	(197.7)		$   2,774		$   4,210		$   23,901		$    (8,910)		$     (750)		$   21,225
Net income				-		-		5,180		-		-		5,180
Other comp. loss				-		-		-		-		(460)		(460)
Conversion, stock option    exercises, forfeitures, and other	0.4	3.0		1		111		-		71		-		183
Share repurchases (Note 19)	-	(32.0)		-		-		-		(3,225)		-		(3,225)
Cash dividends declared    ($1.91 per share)	-	-		-		-		(1,714)		-		-		(1,714)
Balance at December 31, 2014	1,110.1	(226.7)		$   2,775		$   4,321		$   27,367		$  (12,064)		$  (1,210)		$   21,189
Net income				-		-		4,772		-		-		4,772
Other comp. income				-		-		-		-		15		15
Conversion, stock option    exercises, forfeitures, and other	0.3	0.8		1		96		-		-		-		97
Share repurchases (Note 19)	-	(35.3)		-		-		-		(3,465)		-		(3,465)
Cash dividends declared    ($2.20 per share)	-	-		-		-		(1,906)		-		-		(1,906)
Balance at December 31, 2015	1,110.4	(261.2)		$   2,776		$   4,417		$   30,233		$  (15,529)		$  (1,195)		$   20,702

[a] AOCI = Accumulated Other Comprehensive Income/(Loss) (Note 10)

The accompanying notes are an integral part of these Consolidated Financial Statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Union Pacific Corporation and Subsidiary Companies

For purposes of this report, unless the context otherwise requires, all references herein to the “Corporation”, “Company”, “UPC”, “we”, “us”, and “our” mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which will be separately referred to herein as “UPRR” or the “Railroad”.

1. Nature of Operations

Operations and Segmentation – We are a Class I railroad operating in the U.S. Our network includes 32,084 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors to key Mexican gateways. We own 26,064 miles and operate on the remainder pursuant to trackage rights or leases. We serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers for the handling of freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. Export and import traffic is moved through Gulf Coast and Pacific Coast ports and across the Mexican and Canadian borders.

The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze revenue by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network. The following table provides freight revenue by commodity group:

Millions	2015		2014		2013
Agricultural Products	$	3,581	$	3,777	$	3,276
Automotive		2,154		2,103		2,077
Chemicals		3,543		3,664		3,501
Coal		3,237		4,127		3,978
Industrial Products		3,808		4,400		3,822
Intermodal		4,074		4,489		4,030
Total freight revenues	$	20,397	$	22,560	$	20,684
Other revenues		1,416		1,428		1,279
Total operating revenues	$	21,813	$	23,988	$	21,963

Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of origination or destination for some products transported by us are outside the U.S. Each of our commodity groups includes revenue from shipments to and from Mexico. Included in the above table are freight revenues from our Mexico business which amounted to $2.2 billion in 2015, $2.3 billion in 2014, and $2.1 billion in 2013.

Basis of Presentation – The Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the U.S. (GAAP) as codified in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Certain prior period amounts in the statement of cash flows and income tax footnote have been aggregated or disaggregated further to conform to the current period financial presentation.

2. Significant Accounting Policies

Principles of Consolidation – The Consolidated Financial Statements include the accounts of Union Pacific Corporation and all of its subsidiaries. Investments in affiliated companies (20% to 50% owned) are accounted for using the equity method of accounting. All intercompany transactions are eliminated. We currently have no less than majority-owned investments that require consolidation under variable interest entity requirements.

Cash and Cash Equivalents – Cash equivalents consist of investments with original maturities of three months or less.

Accounts Receivable – Accounts receivable includes receivables reduced by an allowance for doubtful accounts. The allowance is based upon historical losses, credit worthiness of customers, and current

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economic conditions.  Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements of Financial Position.

Investments – Investments represent our investments in affiliated companies (20% to 50% owned) that are accounted for under the equity method of accounting and investments in companies (less than 20% owned) accounted for under the cost method of accounting.

Materials and Supplies – Materials and supplies are carried at the lower of average cost or market.

Property and Depreciation – Properties and equipment are carried at cost and are depreciated on a straight-line basis over their estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those subject to abandonment, yard and switching tracks, and electronic yards), for which lives are measured in millions of gross tons per mile of track.  We use the group method of depreciation in which all items with similar characteristics, use, and expected lives are grouped together in asset classes, and are depreciated using composite depreciation rates.  The group method of depreciation treats each asset class as a pool of resources, not as singular items.  We determine the estimated service lives of depreciable railroad assets by means of depreciation studies.  Under the group method of depreciation, no gain or loss is recognized when depreciable property is retired or replaced in the ordinary course of business.

Impairment of Long-lived Assets – We review long-lived assets, including identifiable intangibles, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the long-lived assets, the carrying value is reduced to the estimated fair value as measured by the discounted cash flows.

Revenue Recognition – We recognize freight revenues as freight moves from origin to destination. The allocation of revenue between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Other revenues, which include revenues earned by our subsidiaries, revenues from our commuter rail operations, and accessorial revenue, are recognized as service is performed or contractual obligations are met. Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a reduction to operating revenues based on actual or projected future customer shipments.

Translation of Foreign Currency – Our portion of the assets and liabilities related to foreign investments are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average rates of exchange prevailing during the year. Unrealized gains or losses are reflected within common shareholders’ equity as accumulated other comprehensive income or loss.

Fair Value Measurements – We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels include:

Level 1:  Quoted market prices in active markets for identical assets or liabilities.

Level 2:  Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:  Unobservable inputs that are not corroborated by market data.

We have applied fair value measurements to our pension plan assets and short- and long-term debt.

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.

We measure and recognize compensation expense for all stock-based awards made to employees and directors, including stock options. Compensation expense is based on the calculated fair value of the awards as measured at the grant date and is expensed ratably over the service period of the awards (generally the vesting period). The fair value of retention awards is the closing stock price on the date of grant, while the fair value of stock options is determined by using the Black-Scholes option pricing model.

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Earnings Per Share – Basic earnings per share are calculated on the weighted-average number of common shares outstanding during each period. Diluted earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive.

Income Taxes – We account for income taxes by recording taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on current tax law; the effects of future tax legislation are not anticipated.  Future tax legislation, such as a change in the corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity.

When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based on management’s judgments using available evidence for purposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset.

We recognize tax benefits that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

Pension and Postretirement Benefits – We incur certain employment-related expenses associated with pensions and postretirement health benefits. In order to measure the expense associated with these benefits, we must make various assumptions including discount rates used to value certain liabilities, expected return on plan assets used to fund these expenses, compensation increases, employee turnover rates, anticipated mortality rates, and expected future health care costs. The assumptions used by us are based on our historical experience as well as current facts and circumstances. We use an actuarial analysis to measure the expense and liability associated with these benefits.

Personal Injury – The cost of injuries to employees and others on our property is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability. Our personal injury liability is not discounted to present value. Legal fees and incidental costs are expensed as incurred.

Asbestos – We estimate a liability for asserted and unasserted asbestos-related claims based on an assessment of the number and value of those claims. We use a statistical analysis to assist us in properly measuring our potential liability. Our liability for asbestos-related claims is not discounted to present value due to the uncertainty surrounding the timing of future payments. Legal fees and incidental costs are expensed as incurred.

Environmental – When environmental issues have been identified with respect to property currently or formerly owned, leased, or otherwise used in the conduct of our business, we perform, with the assistance of our consultants, environmental assessments on such property. We expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be reasonably estimated. We do not discount our environmental liabilities when the timing of the anticipated cash payments is not fixed or readily determinable. Legal fees and incidental costs are expensed as incurred.

Use of Estimates – The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported assets and liabilities,and the disclosure of certain contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual future results may differ from such estimates.

3. Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers (Topic 606).  ASU 2014-09 supersedes the revenue recognition guidance in Topic 605, Revenue Recognition.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the

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consideration to which the entity expects to be entitled in the exchange for those goods or services.  This standard is effective for annual reporting periods beginning after December 15, 2017, and can be adopted either retrospectively or as a cumulative effect adjustment as of the date of adoption.  ASU 2014-09 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs in the financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. Amortization of debt issuance costs will be reported as interest expense. This standard is effective for annual reporting periods beginning after December 15, 2015. We elected to early adopt ASU 2015-03 on December 31, 2015. As a result, the Company reclassified debt issuance costs from other assets to debt on the Consolidated Statements of Financial Position. ASU 2015-03 did not have a material impact on our consolidated financial position, and had no impact on our results of operations or cash flows.  All prior period financial information presented herein has been adjusted to reflect the retrospective application of this ASU.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17), Balance Sheet Classification of Deferred Taxes (Subtopic 740-10). ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the requirement for companies to present deferred tax liabilities and assets as current and non-current on the Consolidated Statements of Financial Position.  Instead, companies will be required to classify all deferred tax assets and liabilities as non-current.  This guidance is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted.  We elected to early adopt ASU 2015-17 on December 31, 2015.  ASU 2015-17 did not have a material impact on our consolidated financial position,and had no impact on our results of operations or cash flows.  All prior period financial information presented herein has been adjusted to reflect the retrospective application of this ASU.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (ASU 2016-01), Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). ASU 2016-01 provides guidance for the recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. ASU 2016-01 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

4. Stock Split

On June 6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. The stock split entitled all shareholders of record at the close of business on May 27, 2014, to receive one additional share of our common stock, par value $2.50 per share, for each share of common stock held on that date. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

5. 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 2,200,000 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 4,000 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 20,000 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, 2015, 36,000 restricted shares and 45,400 options were outstanding under the Directors Plan.

The Union Pacific Corporation 2004 Stock Incentive Plan (2004 Plan) was approved by shareholders in April 2004. The 2004 Plan reserved 84,000,000 shares of our common stock for issuance, plus any

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shares subject to awards made under previous plans 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, 2015, 3,652,954 options and 2,092,721 retention shares and stock units were outstanding under the 2004 Plan.  We no longer grant any stock options or other stock or unit awards under this plan.

The Union Pacific Corporation 2013 Stock Incentive Plan (2013 Plan) was approved by shareholders in May 2013. The 2013 Plan reserved 78,000,000 shares of our common stock for issuance, plus any shares subject to awards made under previous plans as of February 28, 2013, that are subsequently cancelled, expired, forfeited or otherwise not issued under previous plans.  Under the 2013 Plan, non-qualified options, incentive stock options, 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 2013 Plan. As of December 31, 2015, 1,873,014 options and 2,061,737 retention shares and stock units were outstanding under the 2013 Plan.

Pursuant to the above plans 76,548,520;77,786,772; and 79,574,896 shares of our common stock were authorized and available for grant at December 31, 2015, 2014, and 2013, 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	2015		2014		2013
Stock-based compensation, before tax:
Stock options	$	17	$	21	$	19
Retention awards		81		91		79
Total stock-based compensation, before tax	$	98	$	112	$	98
Excess tax benefits from equity compensation plans	$	62	$	118	$	76

Stock Options – We estimate the fair value of our stock option awards using the Black-Scholes option pricing model. The table below shows the annual weighted-average assumptions used for valuation purposes:

Weighted-Average Assumptions	2015		2014		2013
Risk-free interest rate		1.3%		1.6%		0.8%
Dividend yield		1.8%		2.1%		2.1%
Expected life (years)		5.1		5.2		5.0
Volatility		23.4%		30.0%		36.2%
Weighted-average grant-date fair value of options granted	$	22.30	$	20.18	$	17.49

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the expected dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected exercise behavior; and expected volatility is based on the historical volatility of our stock price over the expected life of the option.

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A summary of stock option activity during 2015 is presented below:

	Options (thous.)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value (millions)
Outstanding at January 1, 2015	5,387	$	53.56	5.8	yrs.	$	353
Granted	934		122.85	N/A			N/A
Exercised	(716)		40.10	N/A			N/A
Forfeited or expired	(34)		89.24	N/A			N/A
Outstanding at December 31, 2015	5,571	$	66.69	5.4	yrs.	$	114
Vested or expected to vest      at December 31, 2015	5,532	$	66.32	5.4	yrs.	$	114
Options exercisable at December 31, 2015	3,672	$	49.00	4.1	yrs.	$	110

Stock options are granted at the closing price on the date of grant, have ten-year contractual terms, and vest no later than three years from the date of grant. None of the stock options outstanding at December 31, 2015, are subject to performance or market-based vesting conditions.

At December 31, 2015, there was $18 million of unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.0 year. Additional information regarding stock option exercises appears in the table below:

Millions	2015		2014		2013
Intrinsic value of stock options exercised	$	50	$	194	$	112
Cash received from option exercises		27		54		51
Treasury shares repurchased for employee payroll taxes		(12)		(24)		(21)
Tax benefit realized from option exercises		19		74		43
Aggregate grant-date fair value of stock options vested		19		17		16

Retention Awards – The fair value of retention awards is based on the closing price of the stock on the grant date. Dividends and dividend equivalents are paid to participants during the vesting periods.

Changes in our retention awards during 2015 were as follows:

	Shares (thous.)	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2015	3,403	$	64.39
Granted	521		122.79
Vested	(934)		47.66
Forfeited	(90)		72.87
Nonvested at December 31, 2015	2,900	$	80.01

Retention awards are granted at no cost to the employee or non-employee director and vest over periods lasting up to four years. At December 31, 2015, there was $88 million of total unrecognized compensation expense related to nonvested retention awards, which is expected to be recognized over a weighted-average period of 1.5 years.

Performance Retention Awards – In February 2015, our Board of Directors approved performance stock unit grants. Other than different performance targets, the basic terms of these performance stock units are identical to those granted in February 2013 and February 2014, including using annual return on invested capital (ROIC) as the performance measure.   We define ROIC as net operating profit adjusted for interest expense (including interest on the present value of operating leases) and taxes on interest divided by average invested capital adjusted for the present value of operating leases.

Stock units awarded to selected employees under these grants are subject to continued employment for 37 months and the attainment of certain levels of ROIC.We expense the fair value of the units that are

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probable of being earned based on our forecasted ROIC over the 3-year performance period. We measure the fair value of these performance stock units based upon the closing price of the underlying common stock as of the date of grant, reduced by the present value of estimated future dividends. Dividend equivalents are paid to participants only after the units are earned.

The assumptions used to calculate the present value of estimated future dividends related to the February 2015 grant were as follows:

	2015
Dividend per share per quarter	$	0.55
Risk-free interest rate at date of grant		0.8%

Changes in our performance retention awards during 2015 were as follows:

	Shares (thous.)	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2015	1,583	$	65.33
Granted	339		117.42
Vested	(580)		54.38
Forfeited	(87)		86.66
Nonvested at December 31, 2015	1,255	$	82.98

At December 31, 2015, there was $19 million of total unrecognized compensation expense related to nonvested performance retention awards, which is expected to be recognized over a weighted-average period of 0.7 years. This expense is subject to achievement of the ROIC levels established for the performance stock unit grants.

6. Retirement Plans

Pension and Other Postretirement Benefits

Pension Plans – We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements.

Other Postretirement Benefits (OPEB) – We provide medical and life insurance benefits for eligible retirees. These benefits are funded as medical claims and life insurance premiums are paid.

Funded Status

We are required by GAAP to separately recognize the overfunded or underfunded status of our pension and OPEB plans as an asset or liability. The funded status represents the difference between the projected benefit obligation (PBO) and the fair value of the plan assets. Our non-qualified (supplemental) pension plan is unfunded by design. The PBO of the pension plans is the present value of benefits earned to date by plan participants, including the effect of assumed future compensation increases. The PBO of the OPEB plan is equal to the accumulated benefit obligation, as the present value of the OPEB liabilities is not affected by compensation increases. Plan assets are measured at fair value. We use a December 31 measurement date for plan assets and obligations for all our retirement plans.

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Changes in our PBO and plan assets were as follows for the years ended December 31:

Funded Status	Pension				OPEB
Millions	2015		2014		2015		2014
Projected Benefit Obligation
Projected benefit obligation at beginning of year	$	4,142	$	3,372	$	354	$	330
Service cost		106		70		3		2
Interest cost		163		158		13		14
Actuarial loss/(gain)		(267)		735		(18)		33
Gross benefits paid		(186)		(193)		(23)		(25)
Projected benefit obligation at end of year	$	3,958	$	4,142	$	329	$	354
Plan Assets
Fair value of plan assets at beginning of year	$	3,654	$	3,429	$	-	$	-
Actual return on plan assets		(43)		185		-		-
Voluntary funded pension plan contributions		100		200		-		-
Non-qualified plan benefit contributions		19		33		23		25
Gross benefits paid		(186)		(193)		(23)		(25)
Fair value of plan assets at end of year	$	3,544	$	3,654	$	-	$	-
Funded status at end of year	$	(414)	$	(488)	$	(329)	$	(354)

Amounts recognized in the statement of financial position as of December 31, 2015 and 2014 consist of:

	Pension				OPEB
Millions	2015		2014		2015		2014
Noncurrent assets	$	1	$	1	$	-	$	-
Current liabilities		(22)		(19)		(23)		(23)
Noncurrent liabilities		(393)		(470)		(306)		(331)
Net amounts recognized at end of year	$	(414)	$	(488)	$	(329)	$	(354)

Pre-tax amounts recognized in accumulated other comprehensive income/(loss) as of December 31, 2015 and 2014 consist of:

	2015						2014
Millions	Pension		OPEB		Total		Pension		OPEB		Total
Prior service (cost)/credit	$	-	$	7	$	7	$	-	$	17	$	17
Net actuarial loss		(1,652)		(117)		(1,769)		(1,727)		(148)		(1,875)
Total	$	(1,652)	$	(110)	$	(1,762)	$	(1,727)	$	(131)	$	(1,858)

Pre-tax changes recognized in other comprehensive income/(loss) during 2015, 2014 and 2013 were as follows:

	Pension						OPEB
Millions	2015		2014		2013		2015		2014		2013
Net actuarial (loss)/gain	$	(31)	$	(780)	$	561	$	18	$	(33)	$	34
Amortization of:
Prior service cost/(credit)		-		-		-		(10)		(11)		(16)
Actuarial loss		106		71		106		13		10		15
Total	$	75	$	(709)	$	667	$	21	$	(34)	$	33

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Amounts included in accumulated other comprehensive income/(loss) expected to be amortized into net periodic cost during 2016:

Millions	Pension		OPEB		Total
Prior service credit	$	-	$	9	$	9
Net actuarial loss		(80)		(10)		(90)
Total	$	(80)	$	(1)	$	(81)

Underfunded Accumulated Benefit Obligation – The accumulated benefit obligation (ABO) is the present value of benefits earned to date, assuming no future compensation growth. The underfunded accumulated benefit obligation represents the difference between the ABO and the fair value of plan assets. At December 31, 2015 and 2014, the non-qualified (supplemental) plan ABO was $388 million and $379 million, respectively. The following table discloses only the PBO, ABO, and fair value of plan assets for pension plans where the accumulated benefit obligation is in excess of the fair value of the plan assets as of December 31:

Underfunded Accumulated Benefit Obligation
Millions	2015		2014
Projected benefit obligation	$	398	$	388
Accumulated benefit obligation	$	388	$	379
Fair value of plan assets		-		-
Underfunded accumulated benefit obligation	$	(388)	$	(379)

The ABO for all defined benefit pension plans was $3.7 billion and $3.9 billion at December 31, 2015 and 2014, respectively.

Assumptions – The weighted-average actuarial assumptions used to determine benefit obligations at December 31:

	Pension		OPEB
Percentages	2015	2014	2015	2014
Discount rate	4.37%	3.94%	4.16%	3.74%
Compensation increase	4.10%	4.00%	N/A	N/A
Health care cost trend rate (employees under 65)	N/A	N/A	6.52%	6.34%
Ultimate health care cost trend rate	N/A	N/A	4.50%	4.50%
Year ultimate trend rate reached	N/A	N/A	2038	2028

Expense

Both pension and OPEB expense are determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a five-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately, but are deferred in accumulated other comprehensive income and, if necessary, amortized as pension or OPEB expense.

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The components of our net periodic pension and OPEB cost/(benefit) were as follows for the years ended December 31:

	Pension						OPEB
Millions	2015		2014		2013		2015		2014		2013
Net Periodic Benefit Cost:
Service cost	$	106	$	70	$	72	$	3	$	2	$	3
Interest cost		163		158		134		13		14		12
Expected return on plan assets		(255)		(230)		(202)		-		-		-
Amortization of:
Prior service cost/(credit)		-		-		-		(10)		(11)		(16)
Actuarial loss		106		71		106		13		10		15
Net periodic benefit cost/(benefit)	$	120	$	69	$	110	$	19	$	15	$	14

Assumptions – The weighted-average actuarial assumptions used to determine expense were as follows:

	Pension			OPEB
Percentages	2015	2014	2013	2015	2014	2013
Discount rate	3.94%	4.72%	3.78%	3.74%	4.47%	3.48%
Expected return on plan assets	7.50%	7.50%	7.50%	N/A	N/A	N/A
Compensation increase	4.00%	4.00%	3.43%	N/A	N/A	N/A
Health care cost trend rate (employees under 65)	N/A	N/A	N/A	6.34%	6.49%	6.64%
Ultimate health care cost trend rate	N/A	N/A	N/A	4.50%	4.50%	4.50%
Year ultimate trend reached	N/A	N/A	N/A	2028	2028	2028

The discount rate was based on a yield curve of high quality corporate bonds with cash flows matching our plans’ expected benefit payments.  The expected return on plan assets is based on our asset allocation mix and our historical return, taking into account current and expected market conditions. The actual return on pension plan assets, net of fees, was approximately (1)% in 2015, 6% in 2014, and 17% in 2013.

Assumed health care cost trend rates have an effect on the expense and liabilities reported for health care plans. The assumed health care cost trend rate is based on historical rates and expected market conditions. The 2016 assumed health care cost trend rate for employees under 65 is 6.34%.  It is assumed the rate will decrease gradually to an ultimate rate of 4.5% in 2028 and will remain at that level.  A one-percentage point change in the assumed health care cost trend rates would have the following effects on OPEB:

Millions	One % pt. Increase		One % pt. Decrease
Effect on total service and interest cost components	$	1	$	(1)
Effect on accumulated benefit obligation		17		(14)

Cash Contributions

The following table details our cash contributions for the qualified pension plans and the benefit payments for the non-qualified (supplemental) pension and OPEB plans:

	Pension
Millions	Qualified		Non-qualified		OPEB
2014	$	200	$	33	$	25
2015		100		19		23

Our policy with respect to funding the qualified plans is to fund at least the minimum required by law and not more than the maximum amount deductible for tax purposes. All contributions made to the qualified pension plans in 2015 were voluntary and were made with cash generated from operations.

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The non-qualified pension and OPEB plans are not funded and are not subject to any minimum regulatory funding requirements. Benefit payments for each year represent supplemental pension payments and claims paid for medical and life insurance. We anticipate our 2016 supplemental pension and OPEB payments will be made from cash generated from operations.

Benefit Payments

The following table details expected benefit payments for the years 2016 through 2025:

Millions	Pension		OPEB
2016	$	191	$	23
2017		194		23
2018		198		23
2019		202		23
2020		205		22
Years 2021 - 2025		1,077		102

Asset Allocation Strategy

Our pension plan asset allocation at December 31, 2015 and 2014, and target allocation for 2016, are as follows:

		Percentage of Plan Assets
	Target	December 31,
	Allocation 2016	2015	2014
Equity securities	60% to 70%	67%	68%
Debt securities	20% to 30%	23	23
Real estate	2% to 8%	6	4
Commodities	4% to 6%	4	5
Total		100%	100%

The investment strategy for pension plan assets is to maintain a broadly diversified portfolio designed to achieve our target average long-term rate of return of 7.5%. While we believe we can achieve a long-term average rate of return of 7.5%, we cannot be certain that the portfolio will perform to our expectations. Assets are strategically allocated among equity, debt, and other investments in order to achieve a diversification level that reduces fluctuations in investment returns. Asset allocation target ranges for equity, debt, and other portfolios are evaluated at least every three years with the assistance of an independent consulting firm. Actual asset allocations are monitored monthly, and rebalancing actions are executed at least quarterly, if needed.

The pension plan investments are held in a Master Trust. The majority of pension plan assets are invested in equity securities because equity portfolios have historically provided higher returns than debt and other asset classes over extended time horizons and are expected to do so in the future. Correspondingly, equity investments also entail greater risks than other investments.  Equity risks are balanced by investing a significant portion of the plans’ assets in high quality debt securities. The average credit rating of the debt portfolio exceeded A as of December 31, 2015 and A+ as of December 31, 2014. The debt portfolio is also broadly diversified and invested primarily in U.S. Treasury, mortgage, and corporate securities. The weighted-average maturity of the debt portfolio was 12 years at both December 31, 2015 and 2014.

The investment of pension plan assets in securities issued by UPC is explicitly prohibited by the plan for both the equity and debt portfolios, other than through index fund holdings.

Fair Value Measurements

The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

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Temporary Cash Investments – These investments consist of U.S. dollars and foreign currencies held in master trust accounts at The Northern Trust Company (the Trustee).  Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as Level 1 investments.

Registered Investment Companies – Registered Investment Companies are real estate investments and bond investments registered with the Securities and Exchange Commission.  The real estate investments are traded actively on public exchanges. The share prices for these investments are published at the close of each business day.  The Plan’s holdings of real estate investments are classified as Level 1 investments.  The bond investments are not traded publicly, but the underlying assets held in these funds are traded on active markets and the prices for these assets are readily observable.  The Plan’s holdings in bond investments are classified as Level 2 investments.

Federal Government Securities – Federal Government Securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or by government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.  Federal Government Securities are classified as Level 2 investments.

Bonds and Debentures – Bonds and debentures consist of fixed income securities issued by U.S. and non-U.S. corporations as well as state and local governments.  These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.  Corporate, state, and municipal bonds and debentures are classified as Level 2 investments.

Corporate Stock – This investment category consists of common and preferred stock issued by U.S. and non-U.S. corporations.  Most common shares are traded actively on exchanges and price quotes for these shares are readily available. Common stock is classified as a Level 1 investment.  Preferred shares included in this category are valued using a bid evaluation process with bid data provided by independent pricing sources.  Preferred stock is classified as a Level 2 investment.

Venture Capital and Buyout Partnerships – This investment category is comprised of interests in limited partnerships that invest primarily in privately-held companies.  Due to the private nature of the partnership investments, pricing inputs are not readily observable.  Asset valuations are developed by the general partners that manage the partnerships.  These valuations are based on the application of public market multiples to private company cash flows, market transactions that provide valuation information for comparable companies, and other methods.  The fair value recorded by the Plan is calculated using each partnership’s net asset value (NAV), which is derived from the valuation method described here. The Plan’s holdings of limited partnership interests are classified as Level 3 investments.

Real Estate Partnerships – Most of the Plan’s real estate investments are partnership interests.  The Real Estate Partnership category also includes real estate investments held in similar structures such as private real estate investment trusts and limited liability companies. Valuations for the holdings in this category are not based on readily observable inputs and are primarily derived from property appraisals. The fair value recorded by the Plan is calculated using the NAV for each investment, which is derived from the valuation methods described here. The Plan’s interests in private real estate partnerships, investment trusts, and limited liability companies are classified as Level 3 investments.

Collective Trust and Other Funds – Collective trust funds are comprised of shares or units in commingled funds that are not publicly traded.  The underlying assets in these funds (U.S. stock funds, non-U.S. stock funds, commodity funds, and short term investment funds) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. The Plan’s holdings of common trust funds are classified as Level 2 investments.

This category also includes investments in limited liability companies that invest in publicly-traded securities. The limited liability company investments are funds that invest in both long and short positions in convertible securities, stocks, commodities, and fixed income securities.  The underlying securities held by the funds are traded actively on public exchanges and price quotes for these investments are readily available.  Interests in the limited liability companies are classified as Level 2 investments.

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As of December 31, 2015, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Inputs		Inputs		Inputs
Millions	(Level 1)		(Level 2)		(Level 3)		Total
Plan assets:
Temporary cash investments	$	13	$	-	$	-	$	13
Registered investment companies		179		270		-		449
Federal government securities		-		125		-		125
Bonds & debentures		-		383		-		383
Corporate stock		1,034		7		-		1,041
Venture capital and buyout partnerships		-		-		256		256
Real estate partnerships		-		-		199		199
Collective trust and other funds		-		1,075		-		1,075
Total plan assets at fair value	$	1,226	$	1,860	$	455		3,541
Other assets [a]								3
Total plan assets							$	3,544

[a] Other assets include accrued receivables and pending broker settlements.

As of December 31, 2014, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Inputs		Inputs		Inputs
Millions	(Level 1)		(Level 2)		(Level 3)		Total
Plan assets:
Temporary cash investments	$	22	$	-	$	-	$	22
Registered investment companies		12		282		-		294
Federal government securities		-		163		-		163
Bonds & debentures		-		381		-		381
Corporate stock		1,076		15		-		1,091
Venture capital and buyout partnerships		-		-		234		234
Real estate partnerships		-		-		139		139
Collective trust and other funds		-		1,340		-		1,340
Total plan assets at fair value	$	1,110	$	2,181	$	373		3,664
Other assets [a]								(10)
Total plan assets							$	3,654

[a] Other assets include accrued receivables and pending broker settlements.

For the years ended December 31, 2015 and 2014, there were no significant transfers in or out of Levels 1, 2, or 3.

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The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3 investments) during 2015:

	Venture Capital
	and Buyout		Real Estate
Millions	Partnerships		Partnerships		Total
Beginning balance - January 1, 2015	$	234	$	139	$	373
Realized gain		18		5		23
Unrealized gain		13		8		21
Purchases		54		74		128
Sales		(63)		(27)		(90)
Ending balance - December 31, 2015	$	256	$	199	$	455

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3 investments) during 2014:

	Venture Capital
	and Buyout		Real Estate
Millions	Partnerships		Partnerships		Total
Beginning balance - January 1, 2014	$	213	$	139	$	352
Realized gain		17		8		25
Unrealized gain		5		6		11
Purchases		54		19		73
Sales		(55)		(33)		(88)
Ending balance - December 31, 2014	$	234	$	139	$	373

Other Retirement Programs

401(k)/Thrift Plan – We provide a defined contribution plan (401(k)/thrift plan) to eligible non-union and union employees for whom we make matching contributions. We match 50 cents for each dollar contributed by employees up to the first six percent of compensation contributed. Our plan contributions were $20 million in 2015, $19 million in 2014, and $18 million in 2013.

Railroad Retirement System – All Railroad employees are covered by the Railroad Retirement System (the System). Contributions made to the System are expensed as incurred and amounted to approximately $749 million in 2015, $711 million in 2014, and $670 million in 2013.

Collective Bargaining Agreements –  Under collective bargaining agreements, we participate in multi-employer benefit plans that provide certain postretirement health care and life insurance benefits for eligible union employees.  Premiums paid under these plans are expensed as incurred and amounted to $46 million in 2015, $52 million in 2014, and $57 million in 2013.

7. Other Income

Other income included the following for the years ended December 31:

Millions	2015		2014		2013
Net gain on non-operating asset dispositions [a]	$	144	$	69	$	32
Rental income [b]		96		96		106
Interest income		5		4		4
Non-operating environmental costs and other [c]		(19)		(18)		(14)
Total	$	226	$	151	$	128

[a] 2015 includes $113 million related to a real estate sale.

[b] 2013 includes $17 million related to a land lease contract settlement.

[c] 2014 includes $14 million related to the sale of a permanent easement.

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8. Income Taxes

Components of income tax expense were as follows for the years ended December 31:

Millions	2015		2014		2013
Current tax expense:
Federal	$	1,901	$	2,019	$	1,727
State		210		239		199
Foreign		8		10		11
Total current tax expense		2,119		2,268		1,937
Deferred and other tax expense:
Federal		644		753		605
State		121		142		118
Total deferred and other tax expense		765		895		723
Total income tax expense	$	2,884	$	3,163	$	2,660

For the years ended December 31, reconciliations between statutory and effective tax rates are as follows:

Tax Rate Percentages	2015		2014		2013
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State statutory rates, net of federal benefits	3.1		3.1		3.1
Tax credits	(0.5)		(0.4)		(0.2)
Deferred tax adjustments	-		-		(0.1)
Other	0.1		0.2		(0.1)
Effective tax rate	37.7	%	37.9	%	37.7	%

Deferred tax assets and liabilities are recorded for the expected future tax consequences of events that are reported in different periods for financial reporting and income tax purposes.  The majority of our deferred tax assets relate to deductions that already have been claimed for financial reporting purposes but not for tax purposes.  The majority of our deferred tax liabilities relate to differences between the tax bases and financial reporting amounts of our land and depreciable property, due to accelerated tax depreciation (including bonus depreciation), revaluation of assets in purchase accounting transactions, and differences in capitalization methods.

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Deferred income tax (liabilities)/assets were comprised of the following at December 31:

Millions	2015		2014
Deferred income tax liabilities:
Property	$	(16,079)	$	(15,173)
Other		(352)		(411)
Total deferred income tax liabilities		(16,431)		(15,584)
Deferred income tax assets:
Accrued wages		76		74
Accrued casualty costs		237		228
Stock compensation		72		69
Debt and leases		149		86
Retiree benefits		204		392
Credits		156		164
Other		296		168
Total deferred income tax assets [a]	$	1,190	$	1,181
Net deferred income tax liability	$	(15,241)	$	(14,403)

[a] Prior to the adoption of Accounting Standard Update (ASU) 2015-17, deferred tax assets were required to be presented as current and non-current on the Consolidated Statement of Financial Position.  In 2015, UP adopted ASU 2015-17 retrospectively.  Current deferred income tax assets at December 31, 2014 of $277 million were reclassified from current to non-current for 2015 presentation.

When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized based on management’s judgments using available evidence for purposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset. In 2015 and 2014, there were no valuation allowances.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

A reconciliation of changes in unrecognized tax benefits liabilities/(assets) from the beginning to the end of the reporting period is as follows:

Millions	2015		2014		2013
Unrecognized tax benefits at January 1	$	151	$	59	$	115
Increases for positions taken in current year		38		92		24
Increases for positions taken in prior years		13		22		15
Decreases for positions taken in prior years		(87)		(14)		(35)
Payments to and settlements with taxing authorities		(13)		(8)		(58)
Increases/(decreases) for interest and penalties		(5)		1		-
Lapse of statutes of limitations		(3)		(1)		(2)
Unrecognized tax benefits at December 31	$	94	$	151	$	59

We recognize interest and penalties as part of income tax expense. Total accrued liabilities for interest and penalties were $2 million and $6 million at December 31, 2015 and 2014, respectively. Total interest and penalties recognized as part of income tax expense (benefit) were $(3) million for 2015, $9 million for 2014, and $7 million for 2013.

Internal Revenue Service (IRS) examinations have been completed and settled for all years prior to 2011, and the statute of limitations bars any additional tax assessments. UPC is not currently under audit by the Internal Revenue Service.

In the third quarter of 2015, UPC and the IRS signed a closing agreement resolving all tax matters for tax

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years 2009-2010. The settlement had an immaterial effect on our income tax expense. In connection with the settlement, UPC paid $10 million in the fourth quarter of 2015.

In the fourth quarter of 2014, UPC and the IRS signed a closing agreement resolving all tax matters for tax years 2005-2008. The settlement had an immaterial effect on our income tax expense. In connection with the settlement, UPC paid $11 million in 2014.

Several state tax authorities are examining our state income tax returns for years 2006 through 2012.

We do not expect our unrecognized tax benefits to change significantly in the next 12 months. At December 31, 2015, we had a net unrecognized tax benefit liability of $94 million.

The portion of our unrecognized tax benefits that relates to permanent changes in tax and interest would reduce our effective tax rate, if recognized. The remaining unrecognized tax benefits relate to tax positions for which only the timing of the benefit is uncertain. Recognition of the tax benefits with uncertain timing would reduce our effective tax rate only through a reduction of accrued interest and penalties.  The unrecognized tax benefits that would reduce our effective tax rate are as follows:

Millions	2015		2014		2013
Unrecognized tax benefits that would reduce the effective tax rate	$	31	$	33	$	34
Unrecognized tax benefits that would not reduce the effective tax rate		63		118		25
Total unrecognized tax benefits	$	94	$	151	$	59

9. Earnings Per Share

The following table provides a reconciliation between basic and diluted earnings per share for the years ended December 31:

Millions, Except Per Share Amounts	2015		2014		2013
Net income	$	4,772	$	5,180	$	4,388
Weighted-average number of shares outstanding:
Basic		866.2		897.1		926.5
Dilutive effect of stock options		1.5		2.1		2.4
Dilutive effect of retention shares and units		1.7		1.9		2.6
Diluted		869.4		901.1		931.5
Earnings per share – basic	$	5.51	$	5.77	$	4.74
Earnings per share – diluted	$	5.49	$	5.75	$	4.71

Common stock options totaling 1.1 million, 0.4 million, and 0.5 million for 2015, 2014, and 2013, respectively, were excluded from the computation of diluted earnings per share because the exercise prices of these options exceeded the average market price of our common stock for the respective periods, and the effect of their inclusion would be anti-dilutive.

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10. Accumulated Other Comprehensive Income/(Loss)

Reclassifications out of accumulated other comprehensive income/(loss) were as follows (net of tax):

Millions	Defined benefit plans		Foreign currency translation		Total
Balance at January 1, 2015	$	(1,161)	$	(49)	$	(1,210)
Other comprehensive income/(loss) before reclassifications		(4)		(43)		(47)
Amounts reclassified from accumulated other comprehensive income/(loss) [a]		62		-		62
Net year-to-date other comprehensive income/(loss), net of taxes of $(8) million		58		(43)		15
Balance at December 31, 2015	$	(1,103)	$	(92)	$	(1,195)
Balance at January 1, 2014	$	(713)	$	(37)	$	(750)
Other comprehensive income/(loss) before reclassifications		10		(12)		(2)
Amounts reclassified from accumulated other comprehensive income/(loss) [a]		(458)		-		(458)
Net year-to-date other comprehensive income/(loss), net of taxes of $291 million		(448)		(12)		(460)
Balance at December 31, 2014	$	(1,161)	$	(49)	$	(1,210)

[a] The accumulated other comprehensive income/(loss) reclassification components are 1) prior service cost/(benefit) and 2) net actuarial loss which are both included in the computation of net periodic pension cost.  See Note 6 Retirement Plans for additional details.

11. Accounts Receivable

Accounts receivable includes freight and other receivables reduced by an allowance for doubtful accounts. The allowance is based upon historical losses, credit worthiness of customers, and current economic conditions. At both December 31, 2015, and 2014, our accounts receivable were reduced by $5 million.  Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements of Financial Position.  At December 31, 2015, and 2014, receivables classified as other assets were reduced by allowances of $11 million and $16 million, respectively.

Receivables Securitization Facility – The Railroad maintains a $650 million, 3-year receivables securitization facility maturing in July 2017 under which it sells most of its eligible third-party receivables to Union Pacific Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in accounts receivable to investors. The investors have no recourse to the Railroad’s other assets except for customary warranty and indemnity claims. Creditors of the Railroad do not have recourse to the assets of UPRI.

The amount outstanding under the facility was $400 million at both December 31, 2015, and December 31, 2014. The facility was supported by $0.9 billion and $1.2 billion of accounts receivable as collateral at December 31, 2015, and December 31, 2014, respectively, which, as a retained interest, is included in accounts receivable, net in our Consolidated Statements of Financial Position.

The outstanding amount the Railroad is allowed to maintain under the facility, with a maximum of $650 million, may fluctuate based on the availability of eligible receivables and is directly affected by business volumes and credit risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the facility would not materially change.

The costs of the receivables securitization facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unused commitment availability.  The costs of the

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receivables securitization facility are included in interest expense and were $5 million, $4 million and $5 million for 2015, 2014, and 2013, respectively.

12. Properties

The following tables list the major categories of property and equipment, as well as the weighted-average estimated useful life for each category (in years):

Millions, Except Estimated Useful Life			Accumulated		Net Book		Estimated
As of December 31, 2015	Cost		Depreciation		Value		Useful Life
Land	$	5,195	$	N/A	$	5,195	N/A
Road:
Rail and other track material		15,236		5,495		9,741	37
Ties		9,439		2,595		6,844	33
Ballast		5,024		1,350		3,674	34
Other roadway [a]		17,374		3,021		14,353	47
Total road		47,073		12,461		34,612	N/A
Equipment:
Locomotives		9,027		3,726		5,301	19
Freight cars		2,203		962		1,241	24
Work equipment and other		897		191		706	19
Total equipment		12,127		4,879		7,248	N/A
Technology and other		919		358		561	11
Construction in progress		1,250		-		1,250	N/A
Total	$	66,564	$	17,698	$	48,866	N/A

Millions, Except Estimated Useful Life			Accumulated		Net Book		Estimated
As of December 31, 2014	Cost		Depreciation		Value		Useful Life
Land	$	5,194	$	N/A	$	5,194	N/A
Road:
Rail and other track material		14,588		5,241		9,347	33
Ties		9,102		2,450		6,652	33
Ballast		4,826		1,264		3,562	34
Other roadway [a]		16,476		2,852		13,624	47
Total road		44,992		11,807		33,185	N/A
Equipment:
Locomotives		8,276		3,694		4,582	20
Freight cars		2,116		968		1,148	25
Work equipment and other		684		153		531	18
Total equipment		11,076		4,815		6,261	N/A
Technology and other		872		320		552	10
Construction in progress		1,080		-		1,080	N/A
Total	$	63,214	$	16,942	$	46,272	N/A

[a] Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.

Property and Depreciation – Our railroad operations are highly capital intensive, and our large base of homogeneous, network-type assets turns over on a continuous basis.  Each year we develop a capital program for the replacement of assets and for the acquisition or construction of assets that enable us to enhance our operations or provide new service offerings to customers.  Assets purchased or constructed throughout the year are capitalized if they meet applicable minimum units of property criteria.  Properties and equipment are carried at cost and are depreciated on a straight-line basis over their estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those subject to abandonment, yard and switching tracks, and electronic yards) for which lives are measured in millions of gross tons per mile of track.  We use the group method of depreciation in

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which all items with similar characteristics, use, and expected lives are grouped together in asset classes, and are depreciated using composite depreciation rates.  The group method of depreciation treats each asset class as a pool of resources, not as singular items.  We currently have more than 60 depreciable asset classes, and we may increase or decrease the number of asset classes due to changes in technology, asset strategies, or other factors.

We determine the estimated service lives of depreciable railroad assets by means of depreciation studies.  We perform depreciation studies at least every three years for equipment and every six years for track assets (i.e., rail and other track material, ties, and ballast) and other road property.  Our depreciation studies take into account the following factors:

· Statistical analysis of historical patterns of use and retirements of each of our asset classes;

· Evaluation of any expected changes in current operations and the outlook for continued use of the assets;

· Evaluation of technological advances and changes to maintenance practices; and

· Expected salvage to be received upon retirement.

For rail in high-density traffic corridors, we measure estimated service lives in millions of gross tons per mile of track.  It has been our experience that the lives of rail in high-density traffic corridors are closely correlated to usage (i.e., the amount of weight carried over the rail).  The service lives also vary based on rail weight, rail condition (e.g., new or secondhand), and rail type (e.g., straight or curve).  Our depreciation studies for rail in high-density traffic corridors consider each of these factors in determining the estimated service lives.  For rail in high-density traffic corridors, we calculate depreciation rates annually by dividing the number of gross ton-miles carried over the rail (i.e., the weight of loaded and empty freight cars, locomotives and maintenance of way equipment transported over the rail) by the estimated service lives of the rail measured in millions of gross tons per mile.  For all other depreciable assets, we compute depreciation based on the estimated service lives of our assets as determined from the analysis of our depreciation studies.  Changes in the estimated service lives of our assets and their related depreciation rates are implemented prospectively.

Under group depreciation, the historical cost (net of salvage) of depreciable property that is retired or replaced in the ordinary course of business is charged to accumulated depreciation and no gain or loss is recognized.  The historical cost of certain track assets is estimated using (i) inflation indices published by the Bureau of Labor Statistics and (ii) the estimated useful lives of the assets as determined by our depreciation studies.  The indices were selected because they closely correlate with the major costs of the properties comprising the applicable track asset classes.  Because of the number of estimates inherent in the depreciation and retirement processes and because it is impossible to precisely estimate each of these variables until a group of property is completely retired, we continually monitor the estimated service lives of our assets and the accumulated depreciation associated with each asset class to ensure our depreciation rates are appropriate. In addition, we determine if the recorded amount of accumulated depreciation is deficient (or in excess) of the amount indicated by our depreciation studies. Any deficiency (or excess) is amortized as a component of depreciation expense over the remaining service lives of the applicable classes of assets.

For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized if the retirement meets each of the following three conditions: (i) is unusual, (ii) is material in amount, and (iii) varies significantly from the retirement profile identified through our depreciation studies.  A gain or loss is recognized in other income when we sell land or dispose of assets that are not part of our railroad operations.

When we purchase an asset, we capitalize all costs necessary to make the asset ready for its intended use.  However, many of our assets are self-constructed.  A large portion of our capital expenditures is for replacement of existing track assets and other road properties, which is typically performed by our employees, and for track line expansion and other capacity projects.  Costs that are directly attributable to capital projects (including overhead costs) are capitalized.  Direct costs that are capitalized as part of self-constructed assets include material, labor, and work equipment.  Indirect costs are capitalized if they clearly relate to the construction of the asset.

General and administrative expenditures are expensed as incurred. Normal repairs and maintenance are also expensed as incurred, while costs incurred that extend the useful life of an asset, improve the safety of our operations or improve operating efficiency are capitalized. These costs are allocated using

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appropriate statistical bases. Total expense for repairs and maintenance incurred was $2.5 billion for 2015, $2.4 billion for 2014, and $2.3 billion for 2013.

Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease.

13. Accounts Payable and Other Current Liabilities

	Dec. 31,		Dec. 31,
Millions	2015		2014
Accounts payable	$	743	$	877
Income and other taxes payable		434		412
Accrued wages and vacation		391		409
Interest payable		208		178
Accrued casualty costs		181		249
Equipment rents payable		105		100
Dividends payable [a]		-		438
Other		550		640
Total accounts payable and other current liabilities	$	2,612	$	3,303

[a]Beginning in 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter. The 2015 dividends paid amount includes the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015, the second quarter 2015 dividend of $479 million, which was paid on June 30, 2015, the third quarter 2015 dividend of $476 million, which was paid on September 30, 2015, as well as the fourth quarter 2015 dividend of $467 million, which was paid on December 30, 2015.

14. Financial Instruments

Strategy and Risk – We may use derivative financial instruments in limited instances for other than trading purposes to assist in managing our overall exposure to fluctuations in interest rates and fuel prices. We are not a party to leveraged derivatives and, by policy, do not use derivative financial instruments for speculative purposes. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. We formally document the nature and relationships between the hedging instruments and hedged items at inception, as well as our risk-management objectives, strategies for undertaking the various hedge transactions, and method of assessing hedge effectiveness. Changes in the fair market value of derivative financial instruments that do not qualify for hedge accounting are charged to earnings. We may use swaps, collars, futures, and/or forward contracts to mitigate the risk of adverse movements in interest rates and fuel prices; however, the use of these derivative financial instruments may limit future benefits from favorable interest rate and fuel price movements.

Market and Credit Risk – We address market risk related to derivative financial instruments by selecting instruments with value fluctuations that highly correlate with the underlying hedged item. We manage credit risk related to derivative financial instruments, which is minimal, by requiring high credit standards for counterparties and periodic settlements. At December 31, 2015, and 2014, we were not required to provide collateral, nor had we received collateral, relating to our hedging activities.

Interest Rate Fair Value Hedges – We manage our overall exposure to fluctuations in interest rates by adjusting the proportion of fixed and floating rate debt instruments within our debt portfolio over a given period. We generally manage the mix of fixed and floating rate debt through the issuance of targeted amounts of each as debt matures or as we require incremental borrowings. We employ derivatives, primarily swaps, as one of the tools to obtain the targeted mix. In addition, we also obtain flexibility in managing interest costs and the interest rate mix within our debt portfolio by evaluating the issuance of and managing outstanding callable fixed-rate debt securities.

Swaps allow us to convert debt from fixed rates to variable rates and thereby hedge the risk of changes in the debt’s fair value attributable to the changes in interest rates. We account for swaps as fair value hedges using the short-cut method; therefore, we do not record any ineffectiveness within our

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Consolidated Financial Statements. As of December 31, 2015, and 2014, we had no interest rate fair value hedges outstanding.

Interest Rate Cash Flow Hedges – We report changes in the fair value of cash flow hedges in accumulated other comprehensive loss until the hedged item affects earnings. As of December 31, 2015, and 2014, we had no interest rate cash flow hedges outstanding.

Earnings Impact – Our use of derivative financial instruments had no impact on pre-tax income for the years ended December 31, 2015, 2014, and 2013.

Fair Value of Financial Instruments – The fair value of our short- and long-term debt was estimated using a market value price model, which utilizes applicable U.S. Treasury rates along with current market quotes on comparable debt securities. All of the inputs used to determine the fair market value of the Corporation’s long-term debt are Level 2 inputs and obtained from an independent source. At December 31, 2015, the fair value of total debt was $15.2 billion, approximately $1.0 billion more than the carrying value.  At December 31, 2014, the fair value of total debt was $13.0 billion, approximately $1.5 billion more than the carrying value. The fair value of the Corporation’s debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules. At December 31, 2015, and 2014, approximately $155 million and $163 million, respectively, of debt securities contained call provisions that allow us to retire the debt instruments prior to final maturity, with the payment of fixed call premiums, or in certain cases, at par.  The fair value of our cash equivalents approximates their carrying value due to the short-term maturities of these instruments.

15. Debt

Total debt as of December 31, 2015, and 2014, is summarized below:

Millions	2015		2014
Notes and debentures, 1.8% to 7.9% due through 2065	$	11,964	$	9,266
Capitalized leases, 3.1% to 8.4% due through 2028		1,268		1,520
Equipment obligations, 2.8% to 6.7% due through 2031		963		597
Receivables Securitization (Note 11)		400		400
Term loans - floating rate, due in 2016		200		200
Mortgage bonds, 4.8% due through 2030		57		57
Medium-term notes, 9.3% to 10.0% due through 2020		23		23
Tax-exempt financings - floating rate, due in 2015		-		8
Unamortized discount and deferred issuance costs [a]		(674)		(658)
Total debt		14,201		11,413
Less: current portion		(594)		(461)
Total long-term debt	$	13,607	$	10,952

[a] Includes deferred debt issuance costs of $89 million and $67 million as of December 31, 2015, and 2014, respectively, as a result of the retrospective adoption of Accounting Standard Update (ASU) 2015-03 on December 31, 2015.  Prior to the ASU adoption, deferred debt issuance costs were presented in other assets.

Debt Maturities – The following table presents aggregate debt maturities as of December 31, 2015, excluding market value adjustments:

Millions
2016	$	594
2017		1,052
2018		566
2019		637
2020		1,034
Thereafter		10,318
Total debt	$	14,201

Equipment Encumbrances – Equipment with a carrying value of approximately $2.6 billion and $2.8 billion at December 31, 2015, and 2014, respectively, served as collateral for capital leases and other

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types of equipment obligations in accordance with the secured financing arrangements utilized to acquire such railroad equipment.

As a result of the merger of Missouri Pacific Railroad Company (MPRR) with and into UPRR on January 1, 1997, and pursuant to the underlying indentures for the MPRR mortgage bonds, UPRR must maintain the same value of assets after the merger in order to comply with the security requirements of the mortgage bonds. As of the merger date, the value of the MPRR assets that secured the mortgage bonds was approximately $6.0 billion. In accordance with the terms of the indentures, this collateral value must be maintained during the entire term of the mortgage bonds irrespective of the outstanding balance of such bonds.

Credit Facilities – At December 31, 2015, we had $1.7 billion of credit available under the facility, which is designated for general corporate purposes and supports the issuance of commercial paper. We did not draw on the facility during 2015. Commitment fees and interest rates payable under the facility are similar to fees and rates available to comparably rated, investment-grade borrowers. The facility allows for borrowings at floating rates based on London Interbank Offered Rates, plus a spread, depending upon credit ratings for our senior unsecured debt. The facility matures in May 2019 under a five-year term and requires UPC to maintain a debt-to-net-worth coverage ratio.

The definition of debt used for purposes of calculating the debt-to-net-worth coverage ratio includes, among other things, certain credit arrangements, capital leases, guarantees and unfunded and vested pension benefits under Title IV of ERISA. At December 31, 2015, the debt-to-net-worth coverage ratio allowed us to carry up to $41.4 billion of debt (as defined in the facility), and we had $14.3 billion of debt (as defined in the facility) outstanding at that date.  Under our current capital plans, we expect to continue to satisfy the debt-to-net-worth coverage ratio; however, many factors beyond our reasonable control could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post collateral. The facility also includes a $125 million cross-default provision and a change-of-control provision.

During 2015, we did not issue or repay any commercial paper, and at December 31, 2015, and 2014, we had no commercial paper outstanding. Our revolving credit facility supports our outstanding commercial paper balances, and, unless we change the terms of our commercial paper program, our aggregate issuance of commercial paper will not exceed the amount of borrowings available under the facility.

Dividend Restrictions – Our revolving credit facility includes a debt-to-net worth covenant (discussed in the Credit Facilities section above) that, under certain circumstances, restricts the payment of cash dividends to our shareholders. The amount of retained earnings available for dividends was $13.6 billion and $15.4 billion at December 31, 2015, and 2014, respectively.

Shelf Registration Statement and Significant New Borrowings – We filed a new shelf registration statement with the SEC that became effective on February 9, 2015. The Board of Directors authorized the issuance of up to $4.0 billion of debt securities, replacing the $4.0 billion authorized under our shelf registration filed in February 2013, which was fully utilized after our January 2015 debt offering noted below. Under our current shelf registration, we may issue, from time to time, any combination of debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one or more offerings.

During 2015, we issued the following unsecured, fixed-rate debt securities under our shelf registrations:

Date	Description of Securities
January 29, 2015	$250 million of 1.80% Notes due February 1, 2020
	$450 million of 3.375% Notes due February 1, 2035
	$450 million of 3.875% Notes due February 1, 2055
June 19, 2015	$400 million of 2.250% Notes due June 19, 2020
	$300 million of 3.250% Notes due August 15, 2025
October 29, 2015	$200 million of reopened 3.250% Notes due August 15, 2025
	$500 million of 4.050% Notes due November 15, 2045
	$400 million of 4.375% Notes due November 15, 2065

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We used the net proceeds from the offerings for general corporate purposes, including the repurchase of common stock pursuant to our share repurchase program. These debt securities include change-of-control provisions. At December 31, 2015, we had remaining authority to issue up to $2.2 billion of debt securities under our shelf registration.

Equipment Trust – On May 12, 2015, UPRR consummated a pass-through (P/T) financing, whereby a P/T trust was created, which issued $399 million of P/T trust certificates with a stated interest rate of 2.695%. The P/T trust certificates will mature on May 12, 2027. The proceeds from the issuance of the P/T trust certificates were used to purchase equipment trust certificates to be issued by UPRR to finance the acquisition of 182 locomotives. The equipment trust certificates are secured by a lien on the locomotives. The $399 million is classified as debt due after one year in our Consolidated Statements of Financial Position.

Debt Exchange – On August 21, 2013, we exchanged $1,170 million of various outstanding notes and debentures due between 2016 and 2040 (the Existing Notes) for $439 million of 3.646% notes (the New 2024 Notes) due February 15, 2024 and $700 million of 4.821% notes (the New 2044 Notes) due February 1, 2044, plus cash consideration of approximately $280 million in addition to $8 million for accrued and unpaid interest on the Existing Notes.  In accordance with ASC 470-50-40, Debt-Modifications and Extinguishments-Derecognition, this transaction was accounted for as a debt exchange, as the exchanged debt instruments are not considered to be substantially different.  The cash consideration was recorded as an adjustment to the carrying value of debt, and the balance of the unamortized discount and issue costs from the Existing Notes is being amortized as an adjustment of interest expense over the terms of the New 2024 Notes and the New 2044 Notes.  No gain or loss was recognized as a result of the exchange.  Costs related to the debt exchange that were payable to parties other than the debt holders totaled approximately $9 million and were included in interest expense during the year ended December 31, 2013.

The following table lists the outstanding notes and debentures that were exchanged:

	Principal amount
Millions	exchanged
The 2024 Offers
7.000% Debentures due 2016	$	8
5.650% Notes due 2017		38
5.750% Notes due 2017		70
5.700% Notes due 2018		103
7.875% Notes due 2019		20
6.125% Notes due 2020		238
The 2044 Offers
7.125% Debentures due 2028		73
6.625% Debentures due 2029		177
6.250% Debentures due 2034		19
6.150% Debentures due 2037		138
5.780% Notes due 2040		286
Total	$	1,170

Receivables Securitization Facility – As of both December 31, 2015 and 2014, we recorded $400 million of borrowings under our receivables securitization facility, as secured debt. (See further discussion of our receivables securitization facility in Note 11).

16. Variable Interest Entities

We have entered into various lease transactions in which the structure of the leases contain variable interest entities (VIEs). These VIEs were created solely for the purpose of doing lease transactions (principally involving railroad equipment and facilities) and have no other activities, assets or liabilities outside of the lease transactions.  Within these lease arrangements, we have the right to purchase some or all of the assets at fixed prices. Depending on market conditions, fixed-price purchase options available in the leases could potentially provide benefits to us; however, these benefits are not expected to be significant.

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We maintain and operate the assets based on contractual obligations within the lease arrangements, which set specific guidelines consistent within the railroad industry. As such, we have no control over activities that could materially impact the fair value of the leased assets. We do not hold the power to direct the activities of the VIEs and, therefore, do not control the ongoing activities that have a significant impact on the economic performance of the VIEs. Additionally, we do not have the obligation to absorb losses of the VIEs or the right to receive benefits of the VIEs that could potentially be significant to the VIEs.

We are not considered to be the primary beneficiary and do not consolidate these VIEs because our actions and decisions do not have the most significant effect on the VIE’s performance and our fixed-price purchase options are not considered to be potentially significant to the VIEs.  The future minimum lease payments associated with the VIE leases totaled $2.6 billion as of December 31, 2015.

17. Leases

We lease certain locomotives, freight cars, and other property. The Consolidated Statements of Financial Position as of December 31, 2015 and 2014 included $2,273 million, net of $1,189 million of accumulated depreciation, and $2,454 million, net of $1,210 million of accumulated depreciation, respectively, for properties held under capital leases. A charge to income resulting from the depreciation for assets held under capital leases is included within depreciation expense in our Consolidated Statements of Income. Future minimum lease payments for operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2015, were as follows:

Millions	Operating Leases		Capital Leases
2016	$	491	$	217
2017		446		220
2018		371		198
2019		339		184
2020		282		193
Later years		1,501		575
Total minimum lease payments	$	3,430	$	1,587
Amount representing interest		N/A		(319)
Present value of minimum lease payments		N/A	$	1,268

Approximately 95% of capital lease payments relate to locomotives. Rent expense for operating leases with terms exceeding one month was $590 million in 2015, $593 million in 2014, and $618 million in 2013. When cash rental payments are not made on a straight-line basis, we recognize variable rental expense on a straight-line basis over the lease term. Contingent rentals and sub-rentals are not significant.

18. Commitments and Contingencies

Asserted and Unasserted Claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. We cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations, financial condition, or liquidity. To the extent possible, we have recorded a liability where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated. We do not expect that any known lawsuits, claims, environmental costs, commitments, contingent liabilities, or guarantees will have a material adverse effect on our consolidated results of operations, financial condition, or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters.

Personal Injury – The cost of personal injuries to employees and others related to our activities is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability, including unasserted claims. The Federal Employers’ Liability Act (FELA) governs compensation for work-related accidents. Under FELA, damages are assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work.

Our personal injury liability is not discounted to present value due to the uncertainty surrounding the timing of future payments. Approximately 94% of the recorded liability is related to asserted claims and

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approximately 6% is related to unasserted claims at December 31, 2015. Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle these claims may range from approximately $318 million to $345 million. We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other.  Estimates can vary over time due to evolving trends in litigation.

Our personal injury liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	335	$	294	$	334
Current year accruals		89		96		87
Changes in estimates for prior years		(3)		9		(38)
Payments		(103)		(64)		(89)
Ending balance at December 31	$	318	$	335	$	294
Current portion, ending balance at December 31	$	63	$	111	$	82

In conjunction with the liability update performed in 2015, we also reassessed our estimated insurance recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2015, and 2014.

Asbestos – We are a defendant in a number of lawsuits in which current and former employees and other parties allege exposure to asbestos. We assess our potential liability using a statistical analysis of resolution costs for asbestos-related claims.  This liability is updated annually and excludes future defense and processing costs. The liability for resolving both asserted and unasserted claims was based on the following assumptions:

· The ratio of future claims by alleged disease would be consistent with historical averages adjusted for inflation.

· The number of claims filed against us will decline each year.

· The average settlement values for asserted and unasserted claims will be equivalent to historical averages.

· The percentage of claims dismissed in the future will be equivalent to historical averages.

Our liability for asbestos-related claims is not discounted to present value due to the uncertainty surrounding the timing of future payments. Approximately 22% of the recorded liability related to asserted claims and approximately 78% related to unasserted claims at December 31, 2015.  Because of the uncertainty surrounding the ultimate outcome of asbestos-related claims, it is reasonably possible that future costs to settle these claims may range from approximately $120 million to $129 million.  We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other.

Our asbestos-related liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	126	$	131	$	139
Accruals/(Credits)		-		1		2
Payments		(6)		(6)		(10)
Ending balance at December 31	$	120	$	126	$	131
Current portion, ending balance at December 31	$	6	$	8	$	9

In conjunction with the liability update performed in 2015, we also reassessed our estimated insurance recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2015, and 2014.  The amounts recorded for asbestos-related liabilities and related insurance recoveries were based on currently known facts. However, future events, such as the number of new claims filed each year, average settlement costs, and insurance coverage issues, could cause the actual costs and insurance recoveries to be higher or lower than the projected amounts. Estimates also may vary in the future if strategies, activities, and outcomes of asbestos litigation materially change; federal and state laws governing asbestos litigation increase or decrease the probability or amount of compensation of

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claimants; and there are material changes with respect to payments made to claimants by other defendants.

Environmental Costs – We are subject to federal, state, and local environmental laws and regulations. We have identified 290 sites at which we are or may be liable for remediation costs associated with alleged contamination or for violations of environmental requirements. This includes 31 sites that are the subject of actions taken by the U.S. government, 19 of which are currently on the Superfund National Priorities List. Certain federal legislation imposes joint and several liability for the remediation of identified sites; consequently, our ultimate environmental liability may include costs relating to activities of other parties, in addition to costs relating to our own activities at each site.

When we identify an environmental issue with respect to property owned, leased, or otherwise used in our business, we perform, with assistance of our consultants, environmental assessments on the property. We expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be reasonably estimated. Our environmental liability is not discounted to present value due to the uncertainty surrounding the timing of future payments.

Our environmental liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	182	$	171	$	170
Accruals		61		56		58
Payments		(53)		(45)		(57)
Ending balance at December 31	$	190	$	182	$	171
Current portion, ending balance at December 31	$	52	$	60	$	53

The environmental liability includes future costs for remediation and restoration of sites, as well as ongoing monitoring costs, but excludes any anticipated recoveries from third parties. Cost estimates are based on information available for each site, financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharing arrangements with other potentially responsible parties, the degree of contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the speculative nature of remediation costs. Estimates of liability may vary over time due to changes in federal, state, and local laws governing environmental remediation. Current obligations are not expected to have a material adverse effect on our consolidated results of operations, financial condition, or liquidity.

Insurance – The Company has a consolidated, wholly-owned captive insurance subsidiary (the captive), that provides insurance coverage for certain risks including FELA claims and property coverage which are subject to reinsurance.  The captive entered into annual reinsurance treaty agreements that insure workers compensation, general liability, auto liability and FELA risk. The captive cedes a portion of its FELA exposure through the treaty and assumes a proportionate share of the entire risk.  The captive receives direct premiums, which are netted against the Company’s premium costs in other expenses in the Consolidated Statements of Income. The treaty agreements provide for certain protections against the risk of treaty participants’ non-performance, and we do not believe our exposure to treaty participants’ non-performance is material at this time. In the event the Company leaves the reinsurance program, the Company is not relieved of its primary obligation to the policyholders for activity prior to the termination of the treaty agreements. We record both liabilities and reinsurance receivables using an actuarial analysis based on historical experience in our Consolidated Statements of Financial Position.

Guarantees – At December 31, 2015, and 2014, we were contingently liable for $53 million and $82 million in guarantees, respectively. We have recorded liabilities of $0 and $0.3 million for the fair value of these obligations as of December 31, 2015, and 2014, respectively. We entered into these contingent guarantees in the normal course of business, and they include guaranteed obligations related to our affiliated operations. The final guarantee expires in 2022. We are not aware of any existing event of default that would require us to satisfy these guarantees. We do not expect that these guarantees will have a material adverse effect on our consolidated financial condition, results of operations, or liquidity.

Indemnities – We are contingently obligated under a variety of indemnification arrangements, although in some cases the extent of our potential liability is limited, depending on the nature of the transactions and

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the agreements. Due to uncertainty as to whether claims will be made or how they will be resolved, we cannot reasonably determine the probability of an adverse claim or reasonably estimate any adverse liability or the total maximum exposure under these indemnification arrangements. We do not have any reason to believe that we will be required to make any material payments under these indemnity provisions.

Gain Contingency – UPRR and Santa Fe Pacific Pipelines (SFPP, a subsidiary of Kinder Morgan Energy Partners, L.P.) currently are engaged in a proceeding to resolve the fair market rent payable to UPRR commencing on January 1, 2004, for pipeline easements on UPRR rights-of-way (Union Pacific Railroad Company vs. Santa Fe Pacific Pipelines, Inc., SFPP, L.P., Kinder Morgan Operating L.P. “D” Kinder Morgan G.P., Inc., et al., Superior Court of the State of California for the County of Los Angeles, filed July 28, 2004). In February 2007, a trial began to resolve this issue, and in May 2012, the trial judge rendered an opinion establishing the fair market rent and entering judgment for back rent, including prejudgment interest. SFPP appealed the judgment. On November 5, 2014, the Second District Circuit Court of Appeal in California issued an opinion holding that UPRR was not entitled to collect rent from SFPP for easements on the portions of the property acquired solely through federal government land grants issued during the 1800s. The Appellate Court also reversed the award of prejudgment interest and remanded the case to the trial court. A favorable final judgment may materially affect UPRR's results of operations in the period of any monetary recoveries. Due to the uncertainty regarding the amount and timing of any recovery or any subsequent proceedings, we consider this a gain contingency and have not recognized any amounts in the Consolidated Financial Statements as of December 31, 2015.

19. Share Repurchase Program

Effective January 1, 2014, our Board of Directors authorized the repurchase of up to 120 million shares of our common stock by December 31, 2017, replacing our previous repurchase program. As of December 31, 2015, we repurchased a total of $16.0 billion of our common stock since the commencement of our repurchase programs in 2007.  The table below represents shares repurchased under this repurchase program.

	Number of Shares Purchased		Average Price Paid
	2015	2014		2015		2014
First quarter	6,881,455	7,640,000	$	117.28	$	89.43
Second quarter	7,975,100	8,320,000		104.62		96.84
Third quarter	13,800,700	8,347,000		89.65		102.54
Fourth quarter	6,646,899	7,736,400		88.19		113.77
Total	35,304,154	32,043,400	$	98.14	$	100.65
Remaining number of shares that may be repurchased under current authority				52,652,446

Management's assessments of market conditions and other pertinent factors guide the timing and volume of all repurchases. Repurchased shares are recorded in treasury stock at cost, which includes any applicable commissions and fees.

From January 1, 2016, through February 4, 2016, we repurchased 3.7 million shares at an aggregate cost of approximately $268 million.

20. Related Parties

UPRR and other North American railroad companies jointly own TTX Company (TTX).  UPRR has a 36.79% economic and voting interest in TTX while the other North American railroads own the remaining interest.  In accordance with ASC 323 Investments - Equity Method and Joint Venture, UPRR applies the equity method of accounting to our investment in TTX.

TTX is a railcar pooling company that owns railcars and intermodal wells to serve North America’s railroads.  TTX assists railroads in meeting the needs of their customers by providing railcars in an efficient, pooled environment.  All railroads have the ability to utilize TTX railcars through car hire by renting railcars at stated rates.

UPRR had $830 million and $795 million recognized as investments related to TTX in our consolidated statements of financial position as of December 31, 2015 and 2014, respectively.TTX car hire expenses

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of $376 million in 2015, $350 million in 2014, and $326 million in 2013 are included in equipment and other rents in our consolidated statements of income.  In addition, UPRR had accounts payable to TTX of $61 million and $53 million as of December 31, 2015 and 2014, respectively.

21. Selected Quarterly Data (Unaudited)

Millions, Except Per Share Amounts
2015	Mar. 31		Jun. 30		Sep. 30		Dec. 31
Operating revenues	$	5,614	$	5,429	$	5,562	$	5,208
Operating income		1,977		1,949		2,208		1,918
Net income		1,151		1,204		1,300		1,117
Net income per share:
Basic		1.31		1.38		1.51		1.31
Diluted		1.30		1.38		1.50		1.31

Millions, Except Per Share Amounts
2014	Mar. 31		Jun. 30		Sep. 30		Dec. 31
Operating revenues	$	5,638	$	6,015	$	6,182	$	6,153
Operating income		1,854		2,196		2,330		2,373
Net income		1,088		1,291		1,370		1,431
Net income per share:
Basic		1.20		1.43		1.53		1.62
Diluted		1.19		1.43		1.53		1.61

Per share net income for the four quarters combined may not equal the per share net income for the year due to rounding.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this report, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer (CEO) and Executive Vice President – Finance and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based upon that evaluation, the CEO and the CFO concluded that, as of the end of the period covered by this report, the Corporation’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Additionally, the CEO and CFO determined that there were no changes to the Corporation’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Union Pacific Corporation and Subsidiary Companies (the Corporation) is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). The Corporation’s internal control system was designed to provide reasonable assurance to the Corporation’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Corporation’s management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2015. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on our assessment, management believes that, as of December 31, 2015, the Corporation’s internal control over financial reporting is effective based on those criteria.

The Corporation’s independent registered public accounting firm has issued an attestation report on the effectiveness of the Corporation’s internal control over financial reporting. This report appears on the next page.

February 4, 2016

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Union Pacific Corporation

Omaha, Nebraska

We have audited the internal control over financial reporting of Union Pacific Corporation and Subsidiary Companies (the Corporation) as of December 31, 2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2015 of the Corporation and our report dated February 5, 2016 expressed  an unqualified opinion on those financial statements and financial statement schedule.

Omaha, Nebraska

February 5, 2016

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Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

(a) Directors of Registrant.

Information as to the names, ages, positions and offices with UPC, terms of office, periods of service, business experience during the past five years and certain other directorships held by each director or person nominated to become a director of UPC is set forth in the Election of Directors segment of the Proxy Statement and is incorporated herein by reference.

Information concerning our Audit Committee and the independence of its members, along with information about the audit committee financial expert(s) serving on the Audit Committee, is set forth in the Audit Committee segment of the Proxy Statement and is incorporated herein by reference.

(b) Executive Officers of Registrant.

Information concerning the executive officers of UPC and its subsidiaries is presented in Part I of this report under Executive Officers of the Registrant and Principal Executive Officers of Subsidiaries.

(c) Section 16(a) Compliance.

Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth in the Section 16(a) Beneficial Ownership Reporting Compliance segment of the Proxy Statement and is incorporated herein by reference.

(d) Code of Ethics for Chief Executive Officer and Senior Financial Officers of Registrant.

The Board of Directors of UPC has adopted the UPC Code of Ethics for the Chief Executive Officer and Senior Financial Officers (the Code). A copy of the Code may be found on the Internet at our website www.up.com/investor/governance. We intend to disclose any amendments to the Code or any waiver from a provision of the Code on our website.

Item 11. Executive Compensation

Information concerning compensation received by our directors and our named executive officers is presented in the Compensation Discussion and Analysis, Summary Compensation Table, Grants of Plan-Based Awards in Fiscal Year 2015, Outstanding Equity Awards at 2015 Fiscal Year-End, Option Exercises and Stock Vested in Fiscal Year 2015, Pension Benefits at 2015 Fiscal Year-End, Nonqualified Deferred Compensation at 2015 Fiscal Year-End, Potential Payments Upon Termination or Change in Control and Director Compensation in Fiscal Year 2015 segments of the Proxy Statement and is incorporated herein by reference. Additional information regarding compensation of directors, including Board committee members, is set forth in the By-Laws of UPC and the Stock Unit Grant and Deferred Compensation Plan for the Board of Directors, both of which are included as exhibits to this report. Information regarding the Compensation and Benefits Committee is set forth in the Compensation Committee Interlocks and Insider Participation and Compensation Committee Report segments of the Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information as to the number of shares of our equity securities beneficially owned by each of our directors and nominees for director, our named executive officers, our directors and executive officers as a group, and certain beneficial owners is set forth in the Security Ownership of Certain Beneficial Owners and Management segment of the Proxy Statement and is incorporated herein by reference.

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The following table summarizes the equity compensation plans under which UPC common stock may be issued as of December 31, 2015:

	(a)		(b)			(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved    by security holders	7,720,201	[1]	$	66.67	[2]	76,548,520
Total	7,720,201		$	66.67		76,548,520

[1] Includes 2,148,833 retention units that do not have an exercise price. Does not include 2,048,765 retention shares that have been issued and are outstanding.

[2] Does not include the retention units or retention shares described above in footnote 1.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information on related transactions is set forth in the Certain Relationships and Related Transactions and Compensation Committee Interlocks and Insider Participation segments of the Proxy Statement and is incorporated herein by reference. We do not have any relationship with any outside third party that would enable such a party to negotiate terms of a material transaction that may not be available to, or available from, other parties on an arm’s-length basis.

Information regarding the independence of our directors is set forth in the Director Independence segment of the Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information concerning the fees billed by our independent registered public accounting firm and the nature of services comprising the fees for each of the two most recent fiscal years in each of the following categories: (i) audit fees, (ii) audit-related fees, (iii) tax fees, and (iv) all other fees, is set forth in the Independent Registered Public Accounting Firm’s Fees and Services segment of the Proxy Statement and is incorporated herein by reference.

Information concerning our Audit Committee’s policies and procedures pertaining to pre-approval of audit and non-audit services rendered by our independent registered public accounting firm is set forth in the Audit Committee segment of the Proxy Statement and is incorporated herein by reference.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)    Financial Statements, Financial Statement Schedules, and Exhibits:

(1)    Financial Statements

The financial statements filed as part of this filing are listed on the index to the Financial Statements and Supplementary Data, Item 8, on page 50.

(2)    Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts

Schedules not listed above have been omitted because they are not applicable or not required or the information required to be set forth therein is included in the Financial Statements and Supplementary Data, Item 8, or notes thereto.

(3)    Exhibits

Exhibits are listed in the exhibit index beginning on page 93. The exhibits include management contracts, compensatory plans and arrangements required to be filed as exhibits to the Form 10-K by Item 601 (10) (iii) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 5th day of February, 2016.

UNION PACIFIC CORPORATION
By	/s/ Lance M. Fritz
	Lance M. Fritz,
	Chairman, President and
	Chief Executive Officer
	Union Pacific Corporation

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below, on this 5th day of February, 2016, by the following persons on behalf of the registrant and in the capacities indicated.

PRINCIPAL EXECUTIVE OFFICER
AND DIRECTOR:
	By	/s/ Lance M. Fritz
		Lance M. Fritz,
		Chairman, President and
		Chief Executive Officer
		Union Pacific Corporation

PRINCIPAL FINANCIAL OFFICER:
	By	/s/ Robert M. Knight, Jr.
		Robert M. Knight, Jr.,
		Executive Vice President - Finance
		and Chief Financial Officer

PRINCIPAL ACCOUNTING OFFICER:
	By	/s/ Todd M. Rynaski
		Todd M. Rynaski,
		Vice President and Controller

DIRECTORS:

Andrew H. Card, Jr.*	Michael R. McCarthy*
Erroll B. Davis, Jr.*	Michael W. McConnell*
David B. Dillon*	Thomas F. McLarty III*
Judith Richards Hope*	Steven R. Rogel*
Charles C. Krulak*	Jose H. Villarreal*

* By	James J. Theisen, Jr.
	James J. Theisen, Jr., Attorney-in-fact

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SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

Union Pacific Corporation and Subsidiary Companies

Millions, for the Years Ended December 31,	2015		2014		2013
Allowance for doubtful accounts:
Balance, beginning of period	$	21	$	23	$	37
Charges/(reduction) to expense		1		5		(4)
Net recoveries/(write-offs)		(6)		(7)		(10)
Balance, end of period	$	16	$	21	$	23
Allowance for doubtful accounts are presented in the Consolidated Statements of Financial Position as follows:
Current	$	5	$	5	$	1
Long-term		11		16		22
Balance, end of period	$	16	$	21	$	23
Accrued casualty costs:
Balance, beginning of period	$	757	$	702	$	734
Charges to expense		227		256		188
Cash payments and other reductions		(248)		(201)		(220)
Balance, end of period	$	736	$	757	$	702
Accrued casualty costs are presented in the Consolidated Statements of Financial Position as follows:
Current	$	181	$	249	$	207
Long-term		555		508		495
Balance, end of period	$	736	$	757	$	702

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UNION PACIFIC CORPORATION

Exhibit Index

Exhibit No.	Description
Filed with this Statement
10(a)	Form of Performance Stock Unit Agreement dated February 4, 2016.
10(b)	Form of Stock Unit Agreement for Executives dated February 4, 2016.
10(c)	Form of Non-Qualified Stock Option Agreement for Executives dated February 4, 2016.
12	Ratio of Earnings to Fixed Charges.
21	List of the Corporation’s significant subsidiaries and their respective states of incorporation.
23	Independent Registered Public Accounting Firm’s Consent.
24	Powers of attorney executed by the directors of UPC.
31(a)	Certifications Pursuant to Rule 13a-14(a), of the Exchange Act, as Adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Lance M. Fritz.
31(b)	Certifications Pursuant to Rule 13a-14(a), of the Exchange Act, as Adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Robert M. Knight, Jr.
32	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Lance M. Fritz and Robert M. Knight, Jr.
101	eXtensible Business Reporting Language (XBRL) documents submitted electronically: 101.INS (XBRL Instance Document), 101.SCH (XBRL Taxonomy Extension Schema Document), 101.CAL (XBRL Calculation Linkbase Document), 101.LAB (XBRL Taxonomy Label Linkbase Document), 101.DEF (XBRL Taxonomy Definition Linkbase Document) and 101.PRE (XBRL Taxonomy Presentation Linkbase Document). The following financial and related information from Union Pacific Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015  (filed with the SEC on February 5, 2016), is formatted in XBRL and submitted electronically herewith:  (i) Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013, (ii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014, and 2013, (iii) Consolidated Statements of Financial Position at December 31, 2015 and December 31, 2014, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013, (v) Consolidated Statements of Changes in Common Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013, and (vi) the Notes to the Consolidated Financial Statements.
Incorporated by Reference
3(a)	Restated Articles of Incorporation of UPC, as amended and restated through June 27, 2011, and as further amended May 15, 2014, are incorporated herein by reference to Exhibit 3(a) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
3(b)	By-Laws of UPC, as amended, effective November 19, 2015, are incorporated herein by reference to Exhibit 3.2 to the Corporation’s Current Report on Form 8-K dated November 19, 2015.

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4(a)	Indenture, dated as of December 20, 1996, between UPC and Wells Fargo Bank, National Association, as successor to Citibank, N.A., as Trustee, is incorporated herein by reference to Exhibit 4.1 to UPC’s Registration Statement on Form S-3 (No. 333-18345).
4(b)	Indenture, dated as of April 1, 1999, between UPC and The Bank of New York, as successor to JP Morgan Chase Bank, formerly The Chase Manhattan Bank, as Trustee, is incorporated herein by reference to Exhibit 4.2 to UPC’s Registration Statement on Form S-3 (No. 333-75989).
4(c)	Form of 2.250% Note due 2020 is incorporated by reference to Exhibit 4.1 to the Corporation’s Current Report on Form 8-K dated June 19, 2015.
4(d)	Form of 3.250% Note due 2025 is incorporated by reference to Exhibit 4.2 to the Corporation’s Current Report on Form 8-K dated June  19, 2015.
4(e)	Form of 3.250% Note due 2025 is incorporated herein by reference to Exhibit 4.1 to the Corporation’s Current Report on Form 8-K dated October 29, 2015.
4(f)	Form of 4.050% Note due 2045 is incorporated herein by reference to Exhibit 4.2 to the Corporation’s Current Report on Form 8-K dated October 29, 2015.
4(g)	Form of 4.375% Note due 2065 is incorporated herein by reference to Exhibit 4.3 to the Corporation’s Current Report on Form 8-K dated October 29, 2015. Certain instruments evidencing long-term indebtedness of UPC are not filed as exhibits because the total amount of securities authorized under any single such instrument does not exceed 10% of the Corporation’s total consolidated assets. UPC agrees to furnish the Commission with a copy of any such instrument upon request by the Commission.
10(d)	Supplemental Thrift Plan (409A Non-Grandfathered Component) of Union Pacific Corporation, as amended March 1, 2013, is incorporated herein by reference to Exhibit 10(c) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
10(e)	Supplemental Thrift Plan (409A Grandfathered Component) of Union Pacific Corporation, as amended March 1, 2013, is incorporated herein by reference to Exhibit 10(d) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
10(f)	Supplemental Pension Plan for Officers and Managers (409A Non-Grandfathered Component) of Union Pacific Corporation and Affiliates, as amended February 1, 2013, and March 1, 2013, is incorporated herein by reference to Exhibit 10(e) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
10(g)	Supplemental Pension Plan for Officers and Managers (409A Grandfathered Component) of Union Pacific Corporation and Affiliates, as amended February 1, 2013, and March 1, 2013 is incorporated herein by reference to Exhibit 10(f) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
10(h)	Union Pacific Corporation Key Employee Continuity Plan, as amended February 5, 2015, is incorporated herein by reference to Exhibit 10(d) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
10(i)	Union Pacific Corporation Executive Incentive Plan, effective May 5, 2005, amended and restated effective January 1, 2009, is incorporated herein by reference to Exhibit 10(g) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.

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10(j)	Deferred Compensation Plan (409A Grandfathered Component) of Union Pacific Corporation, as amended March 1, 2013, is incorporated herein by reference to Exhibit 10(b) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
10(k)	Deferred Compensation Plan (409A Non-Grandfathered Component) of Union Pacific Corporation, as amended December 17, 2013, is incorporated herein by reference to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
10(l)	1992 Restricted Stock Plan for Non-Employee Directors of Union Pacific Corporation, as amended as of January 28, 1993, is incorporated herein by reference to Exhibit 10(a) to the Corporation’s Current Report on Form 8-K dated March 16, 1993.
10(m)	Union Pacific Corporation 2000 Directors Plan, effective as of April 21, 2000, as amended November 16, 2006, January 30, 2007 and January 1, 2009 is incorporated herein by reference to Exhibit 10(j) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
10(n)	Union Pacific Corporation Stock Unit Grant and Deferred Compensation Plan for the Board of Directors (409A Non-Grandfathered Component), effective as of January 1, 2009 is incorporated herein by reference to Exhibit 10(k) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
10(o)	Union Pacific Corporation Stock Unit Grant and Deferred Compensation Plan for the Board of Directors (409A Grandfathered Component), as amended and restated in its entirety, effective as of January 1, 2009 is incorporated herein by reference to Exhibit 10(l) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
10(p)	Union Pacific Corporation 2013 Stock Incentive Plan, effective May 16, 2013, is incorporated herein by reference to Exhibit 4.3 to the Corporation’s Form S-8 dated May 17, 2013.
10(q)	UPC 2004 Stock Incentive Plan amended March 1, 2013, is incorporated herein by reference to Exhibit 10(g) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
10(r)	Amended and Restated Registration Rights Agreement, dated as of July 12, 1996, among UPC, UP Holding Company, Inc., Union Pacific Merger Co. and Southern Pacific Rail Corporation (SP) is incorporated herein by reference to Annex J to the Joint Proxy Statement/Prospectus included in Post-Effective Amendment No. 2 to UPC’s Registration Statement on Form S-4 (No. 33-64707).
10(s)	Agreement, dated September 25, 1995, among UPC, UPRR, Missouri Pacific Railroad Company (MPRR), SP, Southern Pacific Transportation Company (SPT), The Denver & Rio Grande Western Railroad Company (D&RGW), St. Louis Southwestern Railway Company (SLSRC) and SPCSL Corp. (SPCSL), on the one hand, and Burlington Northern Railroad Company (BN) and The Atchison, Topeka and Santa Fe Railway Company (Santa Fe), on the other hand, is incorporated by reference to Exhibit 10.11 to UPC’s Registration Statement on Form S-4 (No. 33 64707).
10(t)	Supplemental Agreement, dated November 18, 1995, between UPC, UPRR, MPRR, SP, SPT, D&RGW, SLSRC and SPCSL, on the one hand, and BN and Santa Fe, on the other hand, is incorporated herein by reference to Exhibit 10.12 to UPC’s Registration Statement on Form S-4 (No. 33 64707).

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10(u)	The Pension Plan for Non-Employee Directors of UPC, as amended January 25, 1996, is incorporated herein by reference to Exhibit 10(w) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1995.
10(v)	Charitable Contribution Plan for Non-Employee Directors of Union Pacific Corporation is incorporated herein by reference to Exhibit 10(z) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 1995.
10(w)	Form of Non-Qualified Stock Option Agreement for Executives is incorporated herein by reference to Exhibit 10(c) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.
10(x)	Form of Stock Unit Agreement for Executives is incorporated herein by reference to Exhibit 10(b) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.
10(y)	Form of Non-Qualified Stock Option Agreement for Executives is incorporated herein by reference to Exhibit 10(c) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
10(z)	Form of Stock Unit Agreement for Executives is incorporated herein by reference to Exhibit 10(b) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
10(aa)	Form of 2013 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.
10(bb)	Form of 2014 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.
10(cc)	Form of 2015 Long Term Plan Stock Unit Agreement is incorporated herein by reference to Exhibit 10(a) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014.
10(dd)	Form of Non-Qualified Stock Option Agreement for Directors is incorporated herein by reference to Exhibit 10(d) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.
10(ee)	Executive Incentive Plan (2005) – Deferred Compensation Program, dated December 21, 2005 is incorporated herein by reference to Exhibit 10(g) to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2005.
99	Form of U.S. $1,700,000,000 5-Year Revolving Credit Agreement dated as of May 21, 2014, is incorporated herein by reference to Exhibit 99(a) to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30,2014.

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EX-10.(A)

Exhibit 10(a)

UNION PACIFIC CORPORATION

GRANT NOTICE FOR 2013 STOCK INCENTIVE PLAN

PERFORMANCE STOCK UNITS

FOR GOOD AND VALUABLE CONSIDERATION, Union Pacific Corporation (the “Company”), hereby grants to Participant named below the number of Stock Units specified below (the “Award”), upon the terms and subject to the conditions set forth in this Grant Notice, the Union Pacific Corporation 2013 Stock Incentive Plan (the “Plan”), the Standard Terms and Conditions (the “Standard Terms and Conditions”) adopted under such Plan and described in this Grant Notice, and the Union Pacific Corporation Long Term Plan (the “Long Term Plan”) approved and adopted by the Compensation and Benefits Committee of the Company’s Board of Directors (the “Committee”), each as amended from time to time.  Each Stock Unit subject to this Award represents the right to receive one share of the Company’s common stock, par value $2.50 (the “Common Stock”), subject to the conditions set forth in this Grant Notice, the Plan, the Standard Terms and Conditions, and the Long Term Plan.  This Award is granted pursuant to the Plan and the Long Term Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions.

Name of Participant:	FIRST_NAME  LAST_NAME ID: EMPLOYEE_ID
Grant Date:	2/4/2016
Grant Number:	OPTION_NUMBER
Maximum Number of  Stock Units subject to the Award: The Stock Unit Target Award (amount of stock units granted at Target is half the amount shown).  The amount of stock units shown is the “maximum” number of shares that the Participant is eligible to receive in accordance with the program design shown in the Long Term Plan Summary.  The actual number of shares paid, if any, depends on the achievement level of the applicable performance criteria.	X,XXX
Restriction Period:	3 years
Restriction Period Commencement Date:	2/4/2016
Restriction Period Termination Date:	2/4/2019

By electronically accepting this Award, Participant acknowledges that he or she has received and read, and agrees that this Award shall be subject to, the terms of this Grant Notice, the Plan, the Standard Terms and Conditions, and the Long Term Plan (including, but not limited to, the Committee’s discretionary authority under the Long Term Plan to determine the number of Stock Units payable with respect to the Award).  The Participant also hereby consents to the delivery of information (including,

without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Stock Units via Company website or other electronic delivery.

THE PARTICIPANT WILL BE DEEMED TO HAVE ACCEPTED THE AWARD AND THE STANDARD TERMS AND CONDITIONS IF THE PARTICIPANT DOES NOT OBJECT IN WRITING WITHIN NINETY (90) DAYS FOLLOWING DELIVERY OF THIS GRANT NOTICE AND THE STANDARD TERMS AND CONDITIONS.

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UNION PACIFIC CORPORATION

STANDARD TERMS AND CONDITIONS FOR

PERFORMANCE STOCK UNITS

These Standard Terms and Conditions apply to the Award of performance stock units granted pursuant to the Union Pacific Corporation 2013 Stock Incentive Plan (the “Plan”), which are evidenced by a Grant Notice that specifically refers to these Standard Terms and Conditions.  In addition to these Standard Terms and Conditions, the performance stock units shall be subject to the terms of the Plan and the Long Term Plan, which are incorporated into these Standard Terms and Conditions by reference.  Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

PERFORMANCE STOCK UNITS

1. TERMS OF PERFORMANCE STOCK UNITS

Union Pacific Corporation, a Utah corporation (the “Company”), has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) an award of a number of performance stock units (the “Award” or the “Stock Units”) specified in the Grant Notice.  Each Stock Unit represents the right to receive (i) one share of the Company’s common stock, $2.50 par value per share (the “Common Stock”) and (ii) a payment in cash equal to the amount of dividends that would have been payable on one share of Common Stock (“Dividend Equivalent Payments”), provided the applicable Performance Criteria described below have been satisfied.  The Award is subject to the terms and conditions set forth in the Grant Notice, these Standard Terms and Conditions, the Plan and the Long Term Plan, each as amended from time to time.  For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

2. VESTING OF PERFORMANCE STOCK UNITS

The Award shall not be vested as of the Grant Date set forth in the Grant Notice and shall be forfeitable until the end of the Restriction Period, unless otherwise provided under these Standard Terms and Conditions.  After the end of the Restriction Period, subject to termination or acceleration as provided in these Standard Terms and Conditions, the Plan and the Long Term Plan, and to the extent the Performance Criteria described below have been satisfied, the Award shall become vested as of the Restriction Period Termination Date set forth in the Grant Notice with respect to that number of Stock Units determined by the Committee to be paid pursuant to the Award.  Unless the Committee shall determine otherwise, a period in which the Participant is on a leave of absence during the Restriction Period in accordance with a leave of absence policy adopted by the Company shall count toward satisfaction of the Restriction Period.

3. PERFORMANCE CRITERIA

The Performance Criteria are annual Return on Invested Capital ("ROIC") and relative Operating Income Growth (“OIG”).  However, such Performance Criteria is of no force and effect unless and until the Company has operating income (“Operating Income”) in one or more of fiscal years 2016, 2017 or 2018.  The definition and calculation of annual ROIC, relative OIG and Operating Income shall be determined in accordance with the Long Term Plan.

The Participant may earn Stock Units during the Restriction Period based on the Company’s satisfaction of the Performance Criteria in accordance with the ROIC targets and payout schedule and relative OIG modifier approved by the Committee, subject to Section 6(ii) hereof and the Committee’s discretion under the Long Term Plan to determine the number of Stock Units payable with respect to the Award.  For the fiscal year ending December 31, 2016, the Participant may earn up to one-third of the Stock Unit Target Award as shown on the Grant Notice based on the first fiscal year (2016) of ROIC performance achieved.  For the fiscal year ending December 31, 2017, the Participant may earn up to a total of two-thirds of the Stock Unit Target Award as

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shown on the Grant Notice (less any Stock Units earned in the first fiscal year) based on the average of the first two fiscal years (2016 and 2017) of ROIC performance achieved.  For the fiscal year ending December 31, 2018, the Participant may earn up to two times the Stock Unit Target Award as shown on the Grant Notice (less any Stock Units earned in the first two fiscal years) based on the average of all three fiscal years (2016, 2017, and 2018) of ROIC performance achieved and the relative OIG modifier (which is based on the Company’s OIG performance over the three fiscal year period as compared to the OIG performance over that period of the constituent companies of the S&P 500 Industrials Index as set forth in the Long Term Plan).

4. DIVIDEND EQUIVALENT RIGHTS

For all dividend record dates occurring while the Participant is employed and between the date that Stock Units are earned and the earlier of the date the Stock Units are forfeited or the date that shares are delivered to the Participant, the Participant shall be entitled to receive Dividend Equivalent Payments for those Stock Units which have been earned in accordance with Section 3 hereof.  For this purpose, Stock Units are earned in accordance with Section 3 hereof for a fiscal year on the date on which the Committee certifies in writing the Performance Criteria achieved for such fiscal year, provided the Company has Operating Income in that fiscal year, or for fiscal years 2017 and 2018, the previous fiscal year.  Notwithstanding the foregoing:

(i) If the Participant earns Stock Units in accordance with Section 3 hereof that are payable to the Participant as specified in Section 6(ii) hereof, unless otherwise determined by the Committee, the Participant, the Participant’s estate or beneficiary, as applicable, shall further receive Dividend Equivalent Payments with respect to such Stock Units for all dividend record dates occurring after the Participant is Separated from Service or determined to be disabled under the provisions of an applicable long-term disability plan of the Company, through the date the shares are delivered as provided in and subject to the adjustment described in Section 6(ii) hereof; and

(ii) Unless otherwise determined by the Committee, if the Participant remains continuously employed with the Company, but is on a leave of absence during the Restriction Period in accordance with an applicable leave of absence policy adopted by the Company, for all dividend record dates occurring while the Participant is on such leave of absence and between the date that Stock Units are earned and the earlier of the date the Stock Units are forfeited or the date that shares are delivered to the Participant, the Participant shall be entitled to receive Dividend Equivalent Payments for those Stock Units which have been earned in accordance with Section 3 hereof.

Any such Dividend Equivalent Payments shall be made on the payment date established by the Board of Directors for the underlying dividend payments (such date to be on or after the date the corresponding Stock Units are earned); provided, however, that (i) if the Participant has elected to defer receipt of such Stock Units in accordance with the terms of the Deferred Compensation Plan of Union Pacific Corporation (the “Deferred Compensation Plan”), Dividend Equivalent Payments with respect to such earned and deferred Stock Units which relate to dividends paid on and after the date of the deferral of such Stock Units (i.e., the date that the Stock Units would have been payable to the Participant under the Plan had such Stock Units not been deferred under the Company’s Deferred Compensation Plan) shall be reinvested as part of the Award Account under the Company’s Deferred Compensation Plan, and shall be deferred for payment at the same time as the Award Account is paid under the terms of the Company’s Deferred Compensation Plan and (ii) if such Dividend Equivalent Payments relate to Stock Units for which payment is delayed as described in Section 6(i) hereof, on the date such Stock Units are paid. 

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5. RESTRICTIONS

Unless provided otherwise by the Committee, the following restrictions apply to the Stock Units:

(i)The Participant shall be entitled to delivery of the shares of Common Stock as specified in Section 6 hereof;

(ii) None of the Stock Units may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of;

(iii)The Participant’s right to receive Dividend Equivalent Payments shall terminate without further obligation on the part of the Company at the earlier of the Participant’s Separation from Service with the Company, except as provided in Section 4(ii) and Section 6(ii) hereof, or the Participant’s receipt of Common Stock under Section 6 hereof;

(iv)All of the Stock Units shall be forfeited and all of the Participant’s rights to such Stock Units and the right to receive Common Stock shall terminate without further obligation on the part of the Company in the event of the Participant’s Separation from Service with the Company without having a right to delivery of shares of Common Stock under Section 6 hereof; and

(v)Any Stock Units not earned as of the Restriction Period Termination Date shall be forfeited and all of the Participant’s rights to such Stock Units shall terminate without further obligation on the part of the Company.

6. ACCELERATION/LAPSE OF RESTRICTION PERIOD

Unless provided otherwise by the Committee, the Stock Units shall be treated as follows:

(i)Following the end of the Restriction Period and provided the Participant has remained continuously employed by the Company through the Restriction Period Termination Date and absent any Change of Control before the Restriction Period Termination Date in which the acquiring or surviving company in the transaction does not assume or continue the outstanding Stock Units, shares of Common Stock equal to the number of Stock Units which are earned (as determined by the Committee) based on the achievement of the applicable Performance Criteria shall be delivered to the Participant (through the Participant’s account at the Company's third party stock plan administrator, if applicable) free of all restrictions, provided the Company has Operating Income in one or more of the fiscal years 2016, 2017 or 2018.  The payment of the Stock Units under this Section 6(i) shall be made to the Participant within thirty (30) days of the Restriction Period Termination Date.  Notwithstanding the foregoing, (A) the Company shall not be obligated to deliver any shares of Common Stock during any period when the Company determines that the delivery of shares hereunder would violate any federal, state or other applicable laws and/or may issue shares subject to any restrictive legend that, as determined by the Company’s counsel, is necessary to comply with securities or other regulatory requirements and (B) the date on which shares are delivered to the Participant (and any Dividend Equivalent Payment thereon) may include a delay to provide the Company such time as it determines appropriate to calculate and address tax withholding and/or other administrative matters; provided, however, that delivery of shares of Common Stock underlying the Stock Units (and any Dividend Equivalent Payments on such Stock Units or, if such Dividend Equivalent Payments are invested in additional Stock Units at the Company’s discretion, the shares of Common Stock underlying such additional Stock Units) shall in no event be later than the last day of the calendar year that includes the Restriction Period Termination Date.

(ii)If the Participant: (A) has a Separation from Service with the Company due to (1) death or (2) retiring after having attained age 62 with 10 years of service under the provisions of the Company’s pension plan (“Retirement”) (including a Separation from Service described in Section 6(iv) hereof on or after the date the Participant satisfies the age and service criteria for

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Retirement); or (B) is determined to be disabled under the provisions of an applicable long-term disability plan of the Company (“Disability”) (each a “Lapse Event”), prior to the Restriction Period Termination Date and prior to a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue the outstanding Stock Units, the Participant, the Participant’s estate or the Participant’s beneficiary, as applicable (each a “Payee”), shall be entitled to receive shares of Common Stock equal to the number of Stock Units which are earned (as determined by the Committee) based on the average of all three fiscal years (2016, 2017 and 2018) of the applicable ROIC performance achieved (and, with respect to fiscal year 2018, the relative OIG modifier) prorated based on the number of fiscal years in the Restriction Period during which the Participant remained continuously employed by the Company until September 30th of that year (e.g., if the Participant’s Lapse Event occurs on or after September 30, 2016, then the Payee would be entitled to receive payment for 33 1/3% of the earned Stock Units; if the Participant’s Lapse Event occurs on or after September 30, 2017, then the Payee would be entitled to receive payment for 66 2/3% of the earned Stock Units; and if the Participant’s Lapse Event occurs on or after September 30, 2018, then the Payee would be entitled to receive payment for  100% of the earned Stock Units), provided that the Company has Operating Income in one or more of the fiscal years 2016, 2017 or 2018.  The Payee shall be entitled to receive Dividend Equivalent Payments respecting all Stock Units earned in accordance with Section 3 hereof through the end of the fiscal year ending before the Participant’s Lapse Event for all dividend record dates occurring after the Participant’s Lapse Event (or, if later, the date the Stock Units for a fiscal year are earned) and thereafter during the Restriction Period until the Payee receives Common Stock under this Section 6(ii), notwithstanding the Participant’s Lapse Event.  The Committee shall adjust the total amount of such Dividend Equivalent Payments made to the Payee and/or the total number of shares of Common Stock paid to the Payee following the end of the Restriction Period so that the total amount of such Dividend Equivalent Payments made to the Payee does not exceed the amount that would have been made based on the number of Stock Units which are earned as set forth in this Section 6(ii).  The payment of the Stock Units earned under this Section 6(ii) shall be made within thirty (30) days of the Restriction Period Termination Date, but in no event later than the last day of the calendar year that includes the Restriction Period Termination Date.  A Participant who has a Lapse Event and subsequently returns to employment with the Company before the end of the Restriction Period shall not be eligible to earn additional Stock Units beyond those described in this Section 6(ii).

(iii)Upon the occurrence of a Change in Control, prior to the termination of the Participant’s employment for any reason, in which the acquiring or surviving company in the transaction does not assume or continue the outstanding Stock Units and such Change in Control occurs prior to the Restriction Period Termination Date, shares of Common Stock equal to the number of Stock Units which are earned (as determined by the Committee) based on achievement of the applicable Performance Criteria through the end of each fiscal year ending prior to the occurrence of such Change in Control and through the end of the most recent fiscal quarter ending prior to the date of the Change in Control shall be delivered to the Participant (through the Participant’s account at the Company’s third party administrator, if applicable) free of all restrictions, provided the Company has Operating Income in one or more of the calendar years 2016, 2017 or 2018 and further provided that any such calendar year precedes the calendar year in which the Change in Control occurs. No additional Stock Units granted as part of the Award may be earned following the Change in Control. Shares of Common Stock to which the Participant is entitled pursuant to this Section 6(iii) shall be delivered as soon as practicable following the date on which the Change in Control occurs, but in no event later than two and one-half (2½) months following the end of the calendar year that includes the date on which the Change in Control occurs.

(iv)If the Participant incurs a Separation from Service because such Participant’s employment is involuntarily terminated by the Company (other than a termination as a result of the Participant’s Disability, cause or gross misconduct as determined by the Committee), within twenty-four (24) months following a Change in Control in which the acquiring or surviving company in the transaction assumes or continues the outstanding Stock Unitsand such Separation from Service occurs prior to the Restriction Period Termination Date and prior to the

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Participant having satisfied the age and service criteria for Retirement prior to such Separation from Service, shares of Common Stock equal to the number of Stock Units which are earned (as determined by the Committee) based on achievement of the applicable Performance Criteria through the end of each fiscal year ending prior to the occurrence of such Change in Control and through the end of the most recent fiscal quarter ending prior to the date of the Change in Control shall be delivered to the Participant (through the Participant’s account at the Company’s third party administrator, if applicable) free of all restrictions, provided the Company has Operating Income in one or more of the calendar years 2016, 2017 or 2018 and further provided that any such calendar year precedes the calendar year in which the Change in Control occurs.  The payment of the Stock Units under this Section 6(iv) shall be made as soon as practicable following the Participant’s Separation from Service, but in no event later than two and one-half (2½) months following the end of the calendar year that includes the date on which the Separation from Service occurs.

(v)Except as otherwise provided in this Section 6, all of the Stock Units shall be forfeited and all of the Participant’s rights to such Stock Units shall terminate without further obligation on the part of the Company unless the Participant remains in the continuous employment of the Company (such continuous employment shall, for this purpose, include a period of time during which the Participant is absent from active employment in accordance with a leave of absence policy adopted by the Company) until the earlier of the Restriction Period Termination Date or a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue the outstanding Stock Units.  Notwithstanding the foregoing, the Committee may, if it finds that the circumstances in the particular case so warrant, allow a Participant who ceases to be so continuously employed and has a Separation from Service prior to the earlier of the Restriction Period Termination Date or such Change in Control to retain some or all of the Stock Unitswhich are earned (as determined by the Committee) based on achievement of the applicable Performance Criteria through the end of the fiscal year ending prior to the year in which the Participant incurs such Separation from Service,  provided the Company has Operating Income in one or more of the fiscal years 2016, 2017 or 2018 and further provided that any such fiscal year precedes the year in which the Participant Separates from Service.  In such event, the payment of the Stock Units under this Section 6(v) shall be as soon as practicable following the date on which the Committee authorizes such payment, but in no event later than two and one-half (2½) months following the end of the calendar year that includes the date on which the Participant’s Separation from Service occurs.

(vi)Notwithstanding the foregoing, the Participant may elect to defer receipt of payment of shares underlying the Stock Units to the extent and according to the terms, if any, provided by the Deferred Compensation Plan.  If the Participant does so elect to defer payment of shares underlying the Stock Units, such payments will be made in accordance with the Deferred Compensation Plan.

PROTECTION OF CONFIDENTIALITY

By electronically accepting the Award and these Standard Terms and Conditions, the Participant acknowledges and agrees to the following.

7. CONFIDENTIAL INFORMATION; TRADE SECRETS

The Participant acknowledges that the Company regards certain information relating to its business and operations as confidential.  This includes all confidential and proprietary information concerning the assets, business or affairs of the Company or any customers thereof ("Confidential Information").  The Participant’s electronic signature also acknowledges that the Company has certain information that derives economic value from not being known to the general public or to others who could obtain economic value from its disclosure or use, which the Company takes reasonable efforts to protect the secrecy of ("Trade Secrets").

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8. TYPES OF CONFIDENTIAL INFORMATION OR TRADE SECRETS

The Participant acknowledges that he or she developed or has had and will in the future continue to have access to one or more of the following types of Confidential Information or Trade Secrets: information about rates or costs; customer or supplier agreements and negotiations; business opportunities; scheduling and delivery methods; business and marketing plans; financial information or plans; communications within the attorney-client privilege or other privileges; operating procedures and methods; construction methods and plans; proprietary computer systems design, programming or software; strategic plans; succession plans; proprietary company training programs; employee performance, compensation or benefits; negotiations or strategies relating to collective bargaining agreements and/or labor disputes; and internal or external claims or complaints regarding personal injuries, employment laws or policies, environmental protection, or hazardous materials. The Participant agrees that any unauthorized disclosures by him or her to any third party of such Confidential Information or Trade Secrets would constitute gross misconduct.

9. AGREEMENT TO MAINTAIN CONFIDENTIAL INFORMATION

The Participant agrees that he or she will not, unless he or she receives prior written consent from the senior human resources officer or such other person designated by the Company (hereinafter collectively referred to as the "Sr. HR Officer"), or unless ordered by a court or government agency, (i) divulge, use, furnish or disclose to any subsequent employer or any other person, whether or not a competitor of the Company, any Confidential Information or Trade Secrets, or (ii) retain or take with him or her when he or she leaves the Company any property of the Company or any documents (including any electronic or computer records) relating to any Confidential Information or Trade Secrets.

10. PRIOR NOTICE OF EMPLOYMENT, ETC

(i)  The Participant acknowledges that if he or she become an employee, contractor, or consultant for any other person or entity engaged in the Business of the Company as defined in Section 12, this would create a substantial risk that he or she would, intentionally or unintentionally, disclose or rely upon the Company’s Confidential Information or Trade Secrets for the benefit of the other railroad to the detriment of the Company.  The Participant further acknowledges that such disclosures would be particularly damaging if made shortly after he or she leaves the Company.  Therefore, by electronically accepting the Award and these Standard Terms and Conditions, the Participant agrees that for a period of one-year after he or she leaves the Company, before accepting any employment or affiliation with another railroad he or she will give written notice to the Sr. HR Officer of his or her intention to accept such employment or affiliation.  The Participant also agrees to confer in good faith with the Sr. HR Officer concerning whether his or her proposed employment or affiliation could reasonably be expected to be performed without improper disclosure of Confidential Information or Trade Secrets.

(ii)  If the Sr. HR Officer and the Participant are unable to reach agreement on this issue, he or she agrees to submit this issue to arbitration, to be conducted under the rules of the American Arbitration Association, for final resolution.  The Participant also agrees that he or she will not begin to work for another person or entity engaged in the Business of the Company as defined in Section 12, until the Sr. HR Officer or an arbitrator has determined that such employment could reasonably be expected to be performed without improper disclosure of the Company’s Confidential Information or Trade Secrets.

11. FAILURE TO COMPLY

The Participant agrees that, if he or she fails to comply with any of the promises that he or she made in Section 9 or 10 above, he or she will be required to immediately deliver to the Company any shares of Common Stock (or the market value of any shares of Common Stock received)

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which he or she received at any time from 180 days prior to the earlier of (i) the date when he or she leaves the Company or (ii) the date he or she fails to comply with any such promise made in Section 9 or 10, to 180 days after the date when the Company learns that he or she has not complied with any such promise.  The Participant agrees that he or she will deliver such shares of Common Stock (or the cash equivalent) to the Company on such terms and conditions as may be required by the Company.  The Participant further agrees that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the market value of any such shares of Common Stock against any amount that might be owed to him or her by the Company.  The Participant acknowledges that the Company would not have awarded the Participant the shares of Common Stock granted to him or her under the Award absent the Participant’s agreement to be bound by the promises made in Sections 9 and 10 above.

NO DIRECT COMPETITION

By electronically accepting the Award and these Standard Terms and Conditions, the Participant acknowledges and agrees to the following.

12. NON-SOLICITATION OF CUSTOMERS; NON-COMPETITION

The Participant agrees that for a period of one year following his or her departure from the Company, he or she will not (directly or in association with others) call on or solicit any of the Company’s customers with whom he or she had personal contact while he or she was employed by the Company, for the purpose of providing the customers with goods and/or services similar in nature to those provided by the Company in its Business as defined below.  The Participant further agrees that for the same time period, he or she will not, directly or indirectly, engage in any activity which is the same as or competitive with the Business (as defined below) including, without limitation, engagement as an officer, director, proprietor, employee, partner, investor (other than as a holder of less than 2% of the outstanding capital stock of a publicly traded corporation), guarantor, consultant, advisor, agent, sales representative or other participant, in any market in which the Company conducts its Business.  For purposes of these Standard Terms and Conditions, the term “Business” means the transportation of goods in interstate commerce and related services in or through or for any state in which the Company or any of its affiliates provides such services directly or indirectly and any other activity that supports such operations including by the way of example but not limitation, marketing, information systems, logistics, technology development or implementation, terminal services and any other activity of the Company or any of its affiliates.  This Section 12 is not intended to prevent the Participant from engaging in any activity that is not the same as or competitive with the Business.  The Participant acknowledges that the Company would not have awarded him or her the shares of Common Stock granted under the Award absent his or her agreement to be bound by the promises made in this Section 12.

13. ACKNOWLEDGMENT; INJUNCTIVE RELIEF

The Participant acknowledges that he or she has carefully read and considered all these Standard Terms and Conditions, including the restraints imposed upon him or her pursuant to Sections 9, 10 and 12.  The Participant also agrees that each of the restraints contained herein is necessary for the protection of the goodwill, Confidential Information, Trade Secrets and other legitimate interests of the Company; that each and every one of these restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent him or her from obtaining other suitable employment during the period in which he or she are bound by such restraints.  The Participant further acknowledges that, were he or she to breach any of the covenants contained in Sections 9, 10 and 12, the damage to the Company would be irreparable.  The Participant therefore agrees that the Company, in addition to any other remedies available to it, including, without

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limitation, the remedies set forth in Sections 11 and 14, shall be entitled to injunctive relief against his or her breach or threaten breach of said covenants.  The Participant and the Company further agree that, in the event that any provision of Sections 9, 10 and 12 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.

14. VIOLATION OF PROMISES

The Participant agrees that if he or she violates any of his or her promises in Section 12, then he or she will be required to immediately deliver to the Company any shares of Common Stock (or the fair market value thereof) granted to him or her by the Grant Notice which he or she received at any time from 180 days prior to the date when he or she leaves the Company to 180 days after the date when the Company learns that he or she has not complied with the promises he or she made in Section 12.  The Participant agrees that he or she will deliver such shares of Common Stock (or the fair market value thereof) to the Company on such terms and conditions as may be required by the Company.  The Participant further agrees that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the market value of any such shares of Common Stock against any amount that might be owed to him or her by the Company.

GENERAL

15. ARBITRATION

The Participant agrees and the Company agrees that any controversy, claim, or dispute arising out of or relating to this Award or the breach of any of these terms and conditions, or arising out of or relating to his or her employment relationship with the Company or any of its affiliates, or the termination of such relationship, shall be resolved by binding arbitration before a neutral arbitrator under the rules set forth in the Federal  Arbitration Act, except for claims by the Company relating to his or her breach of any of the employee covenants set forth in Paragraphs 7, 8, 9, 10 or 12 above. By way of example only, claims subject to this agreement to arbitrate include claims litigated under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the Civil Rights Act of 1994, the Americans with Disabilities Act, the law of contract and the law of tort.  The Participant and the Company agree that such claims may be brought in an appropriate administrative forum, but at the point at which the Participant or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration becomes effective, and the Participant and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury.  The foregoing not to the contrary, the Company may seek to enforce the employee covenants set forth in Paragraphs 7, 8, 9, 10 or 12 above, in any court of competent jurisdiction.

This agreement to arbitrate shall continue in full force and effect despite the expiration or termination of these Standard Terms and Conditions or the Participant’s employment relationship with the Company or any of its affiliates.  The Participant and the Company agree that any award rendered by the arbitrator shall be final and binding and that judgment upon the final award may be entered in any court having jurisdiction thereof.  The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the Participant, the Company or any of its affiliates had the mater been heard in court.  All expenses of the arbitration, including the required travel and other expenses of the arbitrator and any witnesses, and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by the Participant and the Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award.  The arbitrator’s compensation shall be borne equally by the Participant and the Company unless otherwise mutually agreed or unless the law provides otherwise.

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16. SEVERABILITY

If any provision of these Standard Terms and Conditions is, becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Company, it shall be stricken and the remainder of these Standard Terms and Conditions shall remain in force and effect.

17. CHOICE OF LAW; JURISDICTION

All questions pertaining to the construction, regulation, validity, and effect of these Standard Terms and Conditions shall be determined in accordance with the laws of the State of Utah, without regard to the conflict of laws doctrine.  The Company and the Participant hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in the county of Salt Lake City within the State of Utah for resolution of any and all claims, causes of action or disputes arising out of or related to these Standard Terms and Conditions.  Sections 10(ii) and 12 shall not apply to employees who are subject to California law.

18. AMENDMENTS

The Plan and these Standard Terms and Conditions may be amended or altered by the Committee or the Company’s Board of Directors to the extent provided in the Plan.

19. RESTRICTIONS ON RESALES OF SHARES

The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Common Stock issued in respect of vested Stock Units, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

20. INCOME TAXES

The Company shall not deliver shares in respect of any Stock Units unless and until the Participant has made satisfactory arrangements to satisfy all applicable tax withholding obligations.  Unless the Participant pays the tax withholding obligations to the Company by cash or check in connection with the delivery of the Common Stock, withholding may be effected, at the Company’s option, by withholding Common Stock issuable in connection with the vesting of the Stock Units (provided that shares of Common Stock may be withheld only to the extent that such tax withholding will not result in adverse accounting treatment for the Company).  The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the delivery of the Stock Units from any amounts payable by it to the Participant (including, without limitation, future cash wages).

21. NON-TRANSFERABILITY OF AWARD

The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan, the Stock Units may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of prior to the payment of the Common Stock to the Participant as provided in Section 6 hereof.

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22. RESTATEMENTS OF FINANCIAL RESULTS

By electronically accepting this Award, the Participant agrees that he or she will return such shares of Common Stock (or the fair market value thereof) to the Company as determined by the Committee in its exclusive discretion, which shall be final, conclusive and binding upon the Company and the Participant.  The Committee will exercise its discretion only in the event that the Committee’s certification of the level of ROIC and OIG was based on financial results subsequently revised by a restatement of such financial results and only to the extent that such restated financial results would have entitled the Participant to a lesser award of Common Stock under the Performance Criteria.

23. LIMITATION OF INTEREST IN SHARES SUBJECT TO RESTRICTED STOCK UNITS

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan, the Long Term Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person upon vesting of the Stock Units.  Nothing in the Plan, the Long Term Plan, the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

24. OTHER AGREEMENTS SUPERSEDED

The Grant Notice, these Standard Terms and Conditions, the Plan and the Long Term Plan constitute the entire understanding between the Participant and the Company regarding the Stock Units.  Any prior agreements, commitments or negotiations concerning the Stock Units are superseded.

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EX-10.(B)

Exhibit 10(b)

UNION PACIFIC CORPORATION

GRANT NOTICE FOR 2013 STOCK INCENTIVE PLAN

STOCK UNITS

FOR GOOD AND VALUABLE CONSIDERATION, Union Pacific Corporation (the “Company”), hereby grants to Participant named below the number of Stock Units specified below (the “Award”), upon the terms and subject to the conditions set forth in this Grant Notice, the Union Pacific Corporation 2013 Stock Incentive Plan (the “Plan”), the Standard Terms and Conditions (the “Standard Terms and Conditions”) adopted under such Plan described in this Grant Notice, and, as applicable, the Union Pacific Corporation Key Employee Continuity Plan (the “Key Employee Continuity Plan”), each as amended from time to time.  Each Stock Unit subject to this Award represents the right to receive one share of the Company’s common stock, par value $2.50 (the “Common Stock”), subject to the conditions set forth in this Grant Notice, the Plan and the Standard Terms and Conditions.  This Award is granted pursuant to the Plan and, as applicable, the Key Employee Continuity Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions.

Name of Participant:	FIRST_NAME  LAST_NAME ID: EMPLOYEE_ID
Grant Date:	2/4/2016
Grant Number:	OPTION_NUMBER
Number of Stock Units subject to the Award:	X,XXX
Restriction Period:	4 years
Restriction Period Commencement Date:	2/4/2016
Restriction Period Termination Date:	2/4/2020

By electronically accepting this Award, Participant acknowledges that he or she has received and read, and agrees that this Award shall be subject to, the terms of this Grant Notice, the Plan, the Standard Terms and Conditions and, if applicable, the Key Employee Continuity Plan (including, but not limited to, the Key Employee Continuity Plan’s requirement that the Participant execute a general release of employment-related claims).  The Participant also hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Stock Units via Company website or other electronic delivery.

THE PARTICIPANT WILL BE DEEMED TO HAVE ACCEPTED THE AWARD AND THE STANDARD TERMS AND CONDITIONS IF THE PARTICIPANT DOES NOT OBJECT IN WRITING WITHIN NINETY (90) DAYS FOLLOWING DELIVERY OF THIS GRANT NOTICE AND THE STANDARD TERMS AND CONDITIONS.

UNION PACIFIC CORPORATION

STANDARD TERMS AND CONDITIONS FOR

STOCK UNITS

These Standard Terms and Conditions apply to the Award of stock units granted pursuant to the Union Pacific Corporation 2013 Stock Incentive Plan (the “Plan”), which are evidenced by a Grant Notice that specifically refers to these Standard Terms and Conditions.  In addition to these Standard Terms and Conditions, the stock units shall be subject to the terms of the Plan and, if applicable, the Key Employee Continuity Plan, which are incorporated into these Standard Terms and Conditions by this reference.  Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

STOCK UNITS

1. TERMS OF STOCK UNITS

Union Pacific Corporation, a Utah corporation (the “Company”), has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) an award of a number of stock units (the “Award” or the “Stock Units”) specified in the Grant Notice.  Each Stock Unit represents the right to receive (i) one share of the Company’s common stock, $2.50 par value per share (the “Common Stock”) and (ii) a payment in cash equal to the amount of dividends that would have been payable on one share of Common Stock from time to time (“Dividend Equivalent Payments”), upon the terms and subject to the conditions set forth in the Grant Notice, these Standard Terms and Conditions, the Plan and, if applicable, the Key Employee Continuity Plan, each as amended from time to time.  For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

2. VESTING OF STOCK UNITS

The Award shall not be vested as of the Grant Date set forth in the Grant Notice and shall be forfeitable unless and until otherwise vested pursuant to the terms of the Grant Notice and these Standard Terms and Conditions, the terms of the Plan and, if applicable, the Key Employee Continuity Plan.  After the end of the Restriction Period, subject to termination or acceleration as provided in these Standard Terms and Conditions, the Plan and, if applicable, the Key Employee Continuity Plan, the Award shall become vested as of the Restriction Period Termination Date described in the Grant Notice with respect to that number of Stock Units as set forth in the Grant Notice.  Unless the Compensation and Benefits Committee of the Company’s Board of Directors (the “Committee”) shall determine otherwise, a period of time in which the Participant is on a leave of absence during the Restriction Period in accordance with a leave of absence policy adopted by the Company or a Subsidiary shall count toward satisfaction of the Restriction Period.

3. DIVIDEND EQUIVALENT RIGHTS

The Participant will have the rights of a shareholder only after shares of Common Stock have been issued to the Participant following the Restriction Period Termination Date as described in the Grant Notice (or such earlier date as otherwise provided in Section 5(i) or Section 5(iii) hereof) and satisfaction of all other conditions to the issuance of those shares.  Stock Units shall not entitle the Participant to any rights of a shareholder of Common Stock and there are no voting rights with respect to the Stock Units.  During the Restriction Period and during any period following the end of the Restriction Period in which delivery of shares of Common Stock is: (i) deferred pursuant to the Company’s Deferred Compensation Plan; or (ii) delayed in accordance with Section 5(i) hereof; unless otherwise determined by the Committee, the Participant shall be entitled to receive Dividend Equivalent Payments.  Such Dividend Equivalent Payments shall be made on the payment date established by the Board of Directors for the underlying dividend payments; provided, however, that (i) if the Participant has elected to defer receipt of the Stock

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Units in accordance with the terms of the Company’s Deferred Compensation Plan, Dividend Equivalent Payments with respect to such deferred Stock Units which relate to dividends paid on and after the date of the deferral of such Stock Units (i.e., the date that the Stock Units would have been payable to the Participant under the Plan had such Stock Units not been deferred under the Company’s Deferred Compensation Plan) shall be reinvested as part of the Award Account under the Company’s Deferred Compensation Plan, and shall be deferred for payment at the same time as the Award Account is paid under the terms of the Company’s Deferred Compensation Plan; and (ii) the Company may delay payment of a Dividend Equivalent Payment if the Company reasonably anticipates that its deduction with respect to such payment would not be permitted by application of Internal Revenue Code section 162(m).  A Dividend Equivalent Payment that is delayed as described in the preceding sentence (or if such Dividend Equivalent Payment is invested in additional Stock Units at the Company’s discretion, the shares of Common Stock underlying such additional Stock Units), shall be paid to the Participant as soon as reasonably practicable following the date the Company anticipates that its deduction with respect to the payment of the Dividend Equivalent Payment would no longer be restricted due to the application of Internal Revenue Code section 162(m).  Except as provided above, a Participant’s right to receive Dividend Equivalent Payments shall terminate without further obligation on the part of the Company at the earliest of the Participant’s Separation from Service with the Company or a Subsidiary, payment of the Common Stock under Section 5 hereof or at the Restriction Period Termination Date, except that:

(A) in the event the Participant remains continuously employed with the Company or a Subsidiary until September 30, 2016, and is age 62 with 10 years of service under the provisions of the Company’s or a Subsidiary’s pension plan at any time during the Restriction Period during the Participant’s period of continuous employment (satisfaction of both the September 30, 2016 continuous employment requirement and age and service requirements is known as “Retirement Status”), such Participant shall be entitled to receive Dividend Equivalent Payments in accordance with this Section 3 hereof until the earlier of the Restriction Period Termination Date or payment of the Common Stock under Section 5 hereof, notwithstanding any Separation from Service with the Company or a Subsidiary on or after attaining Retirement Status; and

(B) in the event the Participant remains continuously employed with the Company or a Subsidiary, but is on a leave of absence during the Restriction Period in accordance with a leave of absence policy adopted by the Company or a Subsidiary, such Participant shall be entitled to receive Dividend Equivalent Payments in accordance with this Section 3 hereof during the period of such leave of absence until the earlier of the date that is the end of such leave of absence, the Restriction Period Termination Date or payment of the Common Stock under Section 5 hereof, notwithstanding any Separation from Service with the Company or a Subsidiary as a result of such leave of absence.

4. ACCELERATION/LAPSE OF RESTRICTION PERIOD

Unless provided otherwise by the Committee, the Stock Units shall be treated as follows in connection with the Participant’s Separation from Service:

(i)If the Participant has a Separation from Service prior to the Restriction Period Termination Date by reason of the Participant’s death, the Stock Units shall immediately vest, all restrictions applicable to such Stock Units shall lapse and such Stock Units shall be paid in full to the Participant’s beneficiary or estate, as the case may be, in accordance with Section 5 hereof.

(ii) In the event the Participant is determined to be disabled under the provisions of the Company’s or a Subsidiary’s long-term disability plan, the Stock Units shall immediately vest, all restrictions applicable to such Stock Units shall lapse and such Stock Units shall be paid in full in accordance with Section 5 hereof.

(iii) If the Participant incurs a Separation from Service because such Participant’s employment is involuntarily terminated by the Company or any of its Subsidiaries (other than a termination as a

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result of disability, cause or gross misconduct as determined by the Committee), within two (2) years following a Change in Control (as defined in the Plan), the Stock Units shall immediately vest and the remaining restrictions with respect to the Stock Units, including any remaining Restriction Period, shall lapse and such Stock Units shall be paid in full in accordance with Section 5 hereof.

(iv) In the event of a Change in Control prior to the Restriction Period Termination Date in which the acquiring or surviving company in the transaction does not assume or continue the Stock Units upon the Change in Control, the Restriction Period and all other restrictions applicable to such Stock Units shall lapse immediately prior to the Change in Control and such Stock Units shall be paid in accordance with Section 5 hereof.

(v) In the event the Participant has attained Retirement Status (within the meaning of Section 3(A) hereof) at any time during the Restriction Period that is on or after September 30, 2016 and during the Participant’s period of continuous employment, the Restriction Period shall lapse on the date the Participant attains Retirement Status and such Stock Units shall be paid in accordance with Section 5 hereof.  

(vi) Notwithstanding the foregoing paragraphs (i) through (v), if the Participant is an Eligible Employee (within the meaning of the Key Employee Continuity Plan) in the Key Employee Continuity Plan and incurs a Severance within the meaning of the Key Employee Continuity Plan, the Participant’s Stock Units shall vest and be paid in accordance with the terms and conditions of the Key Employee Continuity Plan, including without limitation the requirement that the Participant execute an appropriate general release of employment-related claims.

(vii) Except as otherwise provided in this Section 4 hereof, all of the Stock Units shall be forfeited and all of the Participant’s rights to such Stock Units and the right to receive Common Stock shall terminate without further obligation on the part of the Company unless the Participant remains in the continuous employment of the Company or a Subsidiary (such continuous employment shall, for this purpose, include a period of time during which the Participant is absent from active employment in accordance with a leave of absence policy adopted by the Company or a Subsidiary) for the entire Restriction Period.  Notwithstanding the foregoing, the Committee may, if it finds that the circumstances in the particular case so warrant, allow a Participant who ceases to be so continuously employed and has a Separation from Service prior to the Restriction Period Termination Date to retain some or all of the Stock Units.  In such event, the Restriction Period and all other restrictions with respect to the retained Stock Units shall lapse, and such Stock Units shall be paid in accordance with Section 5 hereof.

5. PAYMENT OF STOCK UNITS

(i) Subject to Section 25 of the Plan and Sections 4, 5(ii) and 5(iii) hereof, vested Stock Units shall be settled by the delivery to the Participant (through the Participant’s account at the Company’s designated third party stock administrator) or the Participant’s beneficiary or estate, as the case may be, of one share of Common Stock per vested Stock Unit:

(A) except as provided in (B) below, within 30 days of the first to occur of the Restriction Period Termination Date or the Participant’s right to payment arising under Section 4(i), 4(ii), 4(iii), 4(iv) or 4(vii) hereof;

(B) if the Participant’s Stock Units are determined to constitute “deferred compensation” subject to Internal Revenue Code section 409A, such Stock Units shall be paid to the Participant within thirty (30) days of the Restriction Period Termination Date in the event that the Participant’s right to payment:

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(1) under Section 4(ii) or Section 4(iv) hereof arises before the Restriction Period Termination Date and after the date the Restriction Period lapses in accordance with Section 4(v) hereof;

(2)arises under Section 4(iii) hereof; or

(3)arises under Section 4(vii) hereof.

Notwithstanding the foregoing, (i) the Company shall not be obligated to deliver any shares of Common Stock during any period in which the Company reasonably anticipates that the delivery of shares hereunder would: (A) violate any federal, state or other applicable laws and/or may issue shares subject to any restrictive legend that, as determined by the Company’s counsel, is necessary to comply with securities or other regulatory requirements; or (B) result in the reduction or elimination of the Company’s deduction under Internal Revenue Code section 162(m) with respect to such delivery of shares, and (ii) the date on which shares are delivered to the Participant (and any Dividend Equivalent Payment thereon) may include a delay to provide the Company such time as it determines appropriate to calculate and address tax withholding and to address other administrative matters; provided, however, that delivery of shares of Common Stock underlying Stock Units (and any Dividend Equivalent Payments on such Stock Units, or if such Dividend Equivalent Payments are invested in additional Stock Units at the Company’s discretion, the shares of Common Stock underlying such additional Stock Units) for Stock Units that are determined to be exempt from the requirements of Internal Revenue Code § 409A shall in all events be made at a time that satisfies the “short-term deferral” exception described in Treas. Reg. section 1.409A-1(b)(4) and for Stock Units subject to Internal Revenue Code section 409A shall in all events be made at a time that satisfies Treas. Reg. 1.409A-2(b)(7).

(ii) Notwithstanding the foregoing, the Participant may elect to defer receipt of payment of Common Stock underlying the Stock Units pursuant to the terms of, and in accordance with the provisions of, the Company’s Deferred Compensation Plan.  If the Participant elects to defer payment of Common Stock underlying the Stock Units, such payment will be made in accordance with the Company’s Deferred Compensation Plan.

(iii) Notwithstanding the foregoing, if the Participant is an Eligible Employee (within the meaning of the Key Employee Continuity Plan) in the Key Employee Continuity Plan and incurs a Severance within the meaning of the Key Employee Continuity Plan, the payment of Common Stock underlying the Stock Units shall be paid in accordance with Section 2.4 of the Key Employee Continuity Plan, provided the Participant has executed a general release of employment-related claims in the form prescribed by the Key Employee Continuity Plan.

PROTECTION OF CONFIDENTIALITY

By electronically accepting the Award and these Standard Terms and Conditions, the Participant acknowledges and agrees to the following.

6. CONFIDENTIAL INFORMATION; TRADE SECRETS

The Participant acknowledges that the Company regards certain information relating to its business and operations as confidential.  This includes all confidential and proprietary information concerning the assets, business or affairs of the Company or any Subsidiary or any customers thereof ("Confidential Information").  The Participant’s electronic signature also acknowledges that the Company has certain information that derives economic value from not being known to the general public or to others who could obtain economic value from its disclosure or use, which the Company takes reasonable efforts to protect the secrecy of ("Trade Secrets").

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7. TYPES OF CONFIDENTIAL INFORMATION OR TRADE SECRETS

The Participant acknowledges that he or she developed or have had and will in the future continue to have access to one or more of the following types of Confidential Information or Trade Secrets: information about rates or costs; customer or supplier agreements and negotiations; business opportunities; scheduling and delivery methods; business and marketing plans; financial information or plans; communications within the attorney-client privilege or other privileges; operating procedures and methods; construction methods and plans; proprietary computer systems design, programming or software; strategic plans; succession plans; proprietary company training programs; employee performance, compensation or benefits; negotiations or strategies relating to collective bargaining agreements and/or labor disputes; and internal or external claims or complaints regarding personal injuries, employment laws or policies, environmental protection, or hazardous materials.  By electronically accepting the Grant Notice and these Standard terms and Conditions, the Participant agrees that any unauthorized disclosures by him or her to any third party of such Confidential Information or Trade Secrets would constitute gross misconduct.

8. AGREEMENT TO MAINTAIN CONFIDENTIAL INFORMATION

The Participant agrees that he or she will not, unless he or she receives prior written consent from the senior human resources officer or such other person designated by the Company (hereinafter collectively referred to as the "Sr. HR Officer"), or unless ordered by a court or government agency, (i) divulge, use, furnish or disclose to any subsequent employer or any other person, whether or not a competitor of the Company, any Confidential Information or Trade Secrets, or (ii) retain or take with him or her when he or she leaves the Company any property of the Company or any documents (including any electronic or computer records) relating to any Confidential Information or Trade Secrets.

9. PRIOR NOTICE OF EMPLOYMENT, ETC

(i)  The Participant acknowledges that if he or she become an employee, contractor, or consultant for any other person or entity engaged in the Business of the Company as defined in Section 11 (“Entity”), this would create a substantial risk that he or she would, intentionally or unintentionally, disclose or rely upon the Company’s Confidential Information or Trade Secrets for the benefit of the other Entity to the detriment of the Company.  The Participant further acknowledges that such disclosures would be particularly damaging if made shortly after he or she leaves the Company.  Therefore, by electronically accepting the Grant Notice and these Standard Terms and Conditions, the Participant agrees that for a period of one-year after he or she leaves the Company, before accepting any employment or affiliation with another Entity he or she will give written notice to the Sr. HR Officer of his or her intention to accept such employment or affiliation.  The Participant also agrees to confer in good faith with the Sr. HR Officer concerning whether his or her proposed employment or affiliation could reasonably be expected to be performed without improper disclosure of Confidential Information or Trade Secrets.

(ii)  If the Sr. HR Officer and the Participant are unable to reach agreement on this issue, he or she agrees to submit this issue to arbitration, to be conducted under the rules of the American Arbitration Association, for final resolution.  The Participant also agrees that he or she will not begin to work for another person or entity engaged in the Business of the Company as defined in Section 11, until the Sr. HR Officer or an arbitrator has determined that such employment could reasonably be expected to be performed without improper disclosure of the Company’s Confidential Information or Trade Secrets.

10. FAILURE TO COMPLY

The Participant agrees that, if he or she fails to comply with any of the promises that he or she made in Section 8 or 9 above, he or she will be required to immediately deliver to the Company any shares of Common Stock (or the market value of any shares of Common Stock received)

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which he or she received at any time from 180 days prior to the earlier of (i) the date when he or she leaves the Company or (ii) the date he or she fails to comply with any such promise made in Section 8 or 9, to 180 days after the date when the Company learns that he or she has not complied with any such promise.  The Participant agrees that he or she will deliver such shares of Common Stock (or the cash equivalent) to the Company on such terms and conditions as may be required by the Company.  The Participant further agrees that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the market value of any such shares of Common Stock against any amount that might be owed to him or her by the Company.  The Participant acknowledges that the Company would not have awarded the Participant the shares of Common Stock granted to him or her under the Grant Notice absent the Participant’s agreement to be bound by the promises made in Sections 8 and 9 above.

NO DIRECT COMPETITION

By electronically accepting the Award and these Standard Terms and Conditions, the Participant acknowledges and agrees to the following.

11. NON-SOLICITATION OF CUSTOMERS; NON-COMPETITION

The Participant agrees that for a period of one year following his or her departure from the Company, he or she will not (directly or in association with others) call on or solicit any of the Company’s customers with whom he or she had personal contact while he or she was employed by the Company, for the purpose of providing the customers with goods and/or services similar in nature to those provided by the Company in its Business as defined below.  The Participant further agrees that for the same time period, he or she will not, directly or indirectly, engage in any activity which is the same as or competitive with the Business (as defined below) including, without limitation, engagement as an officer, director, proprietor, employee, partner, investor (other than as a holder of less than 2% of the outstanding capital stock of a publicly traded corporation), guarantor, consultant, advisor, agent, sales representative or other participant, in any market in which the Company conducts its Business.  For purposes of these Standard Terms and Conditions, the term “Business” means the transportation of goods in interstate commerce and related services in or through or for any state in which the Company or any of its affiliates provides such services directly or indirectly and any other activity that supports such operations including by the way of example but not limitation, marketing, information systems, logistics, technology development or implementation, terminal services and any other activity of the Company or any of its affiliates.  This Section 11 is not intended to prevent the Participant from engaging in any activity that is not the same as or competitive with the Business.  The Participant acknowledges that the Company would not have awarded him or her the shares of Common Stock granted under the Grant Notice absent his or her agreement to be bound by the promises made in this Section 11.

12. ACKNOWLEDGMENT; INJUNCTIVE RELIEF

The Participant acknowledges that he or she has carefully read and considered all these Standard Terms and Conditions, including the restraints imposed upon him or her pursuant to Sections 8, 9 and 11.  The Participant also agrees that each of the restraints contained herein is necessary for the protection of the goodwill, Confidential Information, Trade Secrets and other legitimate interests of the Company; that each and every one of these restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent him or her from obtaining other suitable employment during the period in which he or she are bound by such restraints.  The Participant further acknowledges that, were he or she to breach any of the covenants contained in Sections 8, 9 and 11, the damage to the Company would be irreparable.  The Participant therefore agrees that the Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 10 and 13, shall be entitled to injunctive relief against his or her

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breach or threaten breach of said covenants.  The Participant and the Company further agree that, in the event that any provision of Sections 8, 9 and 11 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.

13. VIOLATION OF PROMISES

The Participant agrees that if he or she violates any of his or her promises in Section 11, then he or she will be required to immediately deliver to the Company any shares of Common Stock (or the fair market value thereof) granted to him or her by the Grant Notice which he or she received at any time from 180 days prior to the date when he or she leaves the Company to 180 days after the date when the Company learns that he or she has not complied with the promises he or she made in Section 11.  The Participant agrees that he or she will deliver such shares of Common Stock (or the fair market value thereof) to the Company on such terms and conditions as may be required by the Company.  The Participant further agrees that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the market value of any such shares of Common Stock against any amount that might be owed to him or her by the Company.

GENERAL

14. ARBITRATION

The Participant agrees and the Company agrees that any controversy, claim, or dispute arising out of or relating to this Agreement or the breach of any of these terms and conditions, or arising out of or relating to his or her employment relationship with the Company or any of its affiliates, or the termination of such relationship, shall be resolved by binding arbitration before a neutral arbitrator under the rules set forth in the Federal  Arbitration Act, except for claims by the Company relating to his or her breach of any of the employee covenants set forth in Paragraphs 6, 7, 8, 9 or 11 above. By way of example only, claims subject to this agreement to arbitrate include claims litigated under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the Civil Rights Act of 1994, the Americans with Disabilities Act, the law of contract and the law of tort.  The Participant and the Company agree that such claims may be brought in an appropriate administrative forum, but at the point at which the Participant or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration becomes effective, and the Participant and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury.  The foregoing not to the contrary, the Company may seek to enforce the employee covenants set forth in Paragraphs 6, 7, 8, 9 or 11 above, in any court of competent jurisdiction.

This agreement to arbitrate shall continue in full force and effect despite the expiration or termination of these Standard Terms and Conditions or the Participant’s employment relationship with the Company or any of its affiliates.  The Participant and the Company agree that any award rendered by the arbitrator shall be final and binding and that judgment upon the final award may be entered in any court having jurisdiction thereof.  The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the Participant, the Company or any of its affiliates had the mater been heard in court.  All expenses of the arbitration, including the required travel and other expenses of the arbitrator and any witnesses, and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by the Participant and the Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award.  The arbitrator’s compensation shall be borne equally by the Participant and the Company unless otherwise mutually agreed or unless the law provides otherwise.

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15. SEVERABILITY

If any provision of these Standard Terms and Conditions is, becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Company, it shall be stricken and the remainder of these Standard Terms and Conditions shall remain in force and effect.

16. CHOICE OF LAW; JURISDICTION

All questions pertaining to the construction, regulation, validity, and effect of these Standard Terms and Conditions shall be determined in accordance with the laws of the State of Utah, without regard to the conflict of laws doctrine.  The Company and the Participant hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in the county of Salt Lake City within the State of Utah for resolution of any and all claims, causes of action or disputes arising out of or related to these Standard Terms and Conditions.  Sections 9(ii) and 11 shall not apply to employees who are subject to California law.

17. AMENDMENTS

The Plan and these Standard Terms and Conditions may be amended or altered by the Committee or the Company’s Board of Directors to the extent provided in the Plan.

18. RESTRICTIONS ON RESALES OF SHARES

The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Common Stock issued in respect of vested Stock Units, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

19. INCOME TAXES

The Company shall not deliver shares in respect of any Stock Units unless and until the Participant has made satisfactory arrangements to satisfy all applicable tax withholding obligations.  Unless the Participant pays the tax withholding obligations to the Company by cash or check in connection with the delivery of the Common Stock, withholding may be effected, at the Company’s option, by withholding Common Stock issuable in connection with the vesting of the Stock Units (provided that shares of Common Stock may be withheld only to the extent that such tax withholding will not result in adverse accounting treatment for the Company).  The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the delivery of the Stock Units from any amounts payable by it to the Participant (including, without limitation, future cash wages).

20. NON-TRANSFERABILITY OF AWARD

The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan, the Stock Units may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of prior to the payment of the Common Stock to the Participant as provided in Section 5 hereof.

21. LIMITATION OF INTEREST IN SHARES SUBJECT TO STOCK UNITS

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan, the Key Employee Continuity Plan or subject to the Grant Notice or these Standard Terms and Conditions

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except as to such shares of Common Stock, if any, as shall have been issued to such person upon vesting of the Stock Units.  Nothing in the Plan, in the Key Employee Continuity Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

22. OTHER AGREEMENTS SUPERSEDED

The Grant Notice, these Standard Terms and Conditions, the Plan and, as applicable, the Key Employee Continuity Plan constitute the entire understanding between the Participant and the Company regarding the Stock Units.  Any prior agreements, commitments or negotiations concerning the Stock Units are superseded.

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EX-10.(C)

Exhibit 10(c)

UNION PACIFIC CORPORATION

GRANT NOTICE FOR 2013 STOCK INCENTIVE PLAN

NONQUALIFIED STOCK OPTION

FOR GOOD AND VALUABLE CONSIDERATION, Union Pacific Corporation (the “Company”), hereby grants to Participant named below the nonqualified stock option (the “Option”) to purchase any part or all of the number of shares of its common stock, par value $2.50 (the “Common Stock”), that are covered by this Option, as specified below, at the Exercise Price per share specified below and upon the terms and subject to the conditions set forth in this Grant Notice, the Union Pacific Corporation 2013 Stock Incentive Plan (the “Plan”) and the Standard Terms and Conditions (the “Standard Terms and Conditions”) adopted under such Plan, and provided to the Participant, each as amended from time to time.  This Option is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions.

Name of Participant:	FIRST_NAME  LAST_NAME
	ID: EMPLOYEE_ID
Grant Date:	2/4/2016
Grant Number:	OPTION_NUMBER
Number of Shares of Common Stock covered by Option:	X,XXX
Exercise Price Per Share:	$XXX.XX
Expiration Date:	2/4/2026
Vesting Schedule:	Shares	Vest Date
	X,XXX	2/4/2017
	X,XXX	2/4/2018
	X,XXX	2/4/2019

This Option is not intended to qualify as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended.

By electronically accepting this Option,  the Participant acknowledges that he or she has received and read, and agrees that this Option shall be subject to, the terms of this Grant Notice, the Plan and the Standard Terms and Conditions.  The Participant also hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Option via Company website or other electronic delivery.

THE PARTICIPANT WILL BE DEEMED TO HAVE ACCEPTED THE OPTION AND THE STANDARD TERMS AND CONDITIONS IF THE PARTICIPANT DOES NOT OBJECT IN WRITING WITHIN NINETY (90) DAYS FOLLOWING DELIVERY OF THIS GRANT NOTICE AND THE STANDARD TERMS AND CONDITIONS.

UNION PACIFIC CORPORATION

STANDARD TERMS AND CONDITIONS FOR
NONQUALIFIED STOCK OPTION

These Standard Terms and Conditions apply to the Option granted pursuant to the Union Pacific Corporation 2013 Stock Incentive Plan (the “Plan”), which is identified as nonqualified stock option and is evidenced by a Grant Notice that specifically refers to these Standard Terms and Conditions.  In addition to these Terms and Conditions, the Option shall be subject to the terms of the Plan, which are incorporated into these Standard Terms and Conditions by this reference.  Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

OPTION

1. TERMS OF OPTION

Union Pacific Corporation (the “Company”), has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) a nonqualified stock option (the “Option”) to purchase up to the number of shares of the Company’s common stock (the “Common Stock”), set forth in the Grant Notice.  The exercise price per share and the other terms and conditions of the Option are set forth in the Grant Notice, these Standard Terms and Conditions (as amended from time to time), and the Plan.  For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

2. NONQUALIFIED STOCK OPTION

The Option is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and will be interpreted accordingly.

3. EXERCISE OF OPTION

The Option shall not be exercisable as of the Grant Date set forth in the Grant Notice.  After the Grant Date, to the extent not previously exercised, and subject to termination or acceleration as provided in these Standard Terms and Conditions and the Plan, the Option shall be exercisable only to the extent it becomes vested, as described in the Grant Notice, these Standard Terms and Conditions and/or the terms of the Plan, to purchase up to that number of shares of Common Stock as set forth in the Grant Notice, provided that (except as may be provided otherwise in Section 4 below) the Participant remains employed with the Company and does not experience a termination of employment. 

The exercise price (the “Exercise Price”) of the Option is set forth in the Grant Notice.  The Company shall not be obligated to issue any shares of Common Stock until the Participant shall have paid the total Exercise Price for that number of shares of Common Stock.  To exercise the Option (or any part thereof), the Participant shall deliver to the Company appropriate notice specifying the number of whole shares of Common Stock the Participant wishes to purchase accompanied by valid payment in the form of (i) a check, (ii) an attestation form confirming the Participant’s current ownership of whole shares of Common Stock equal in value to the total Exercise Price for that number of shares of Common Stock, and/or (iii) an authorization to sell shares equal in value to the total Exercise Price for that number of shares of Common Stock.  Notices and authorizations shall be delivered and all checks shall be payable to the Company’s third party stock plan administrator, or as otherwise directed by the Company.

Fractional shares may not be exercised.  Shares of Common Stock will be issued as soon as practicable after exercise.  Notwithstanding the above, for administrative or other reasons, including, but not limited to the Company’s determination that exercisability of the Option would

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violate any federal, state or other applicable laws, the Company may from time to time suspend the ability of the Participant to exercise an Option for limited periods of time, which suspensions shall not change the period in which the Option is exercisable, except as otherwise provided in the Plan.

4. EXPIRATION OF OPTION

Except as otherwise may be provided by the Committee consistent with the terms of the Plan, the Option shall expire and cease to be exercisable as of the earlier of (a) the Expiration Date set forth in the Grant Notice or (b) the date specified below in Sections 4A. through 4G., as applicable.

A. If the Participant’s termination of employment is by reason of death or the Participant is determined to be disabled under the provisions of the Company’s or a Subsidiary’s long-term disability plan, then any vesting period with respect to the Option shall be deemed to be satisfied and the Option shall become fully vested and exercisable (by the Participant or the Participant’s estate, beneficiary or legal representative, as the case may be) at the date of such termination of employment or the first day on which the Participant is determined to be disabled under such long-term disability plan, as the case may be, until the date that is five (5) years following the date of such termination of employment or the first day of disability as determined under such long-term disability plan, as the case may be.

B. If the Participant remains continuously employed with the Company or a Subsidiary until September 30, 2016, (which shall include a period of time during which the Participant is absent from active employment in accordance with a leave of absence policy adopted by the Company or a Subsidiary), and retires at or after attaining age 62 with 10 years of service under the provisions of the Company’s or a Subsidiary’s pension plan (“62/10 Status”), then the Option shall be exercisable in accordance with and at the times it becomes vested, as described in the Grant Notice, notwithstanding the Participant’s termination of employment with the Company or a Subsidiary, until the date that is five (5) years following the date of such termination of employment.

C. If the Participant’s employment is involuntarily terminated by the Company or any of its Subsidiaries (other than a termination as a result of disability, cause or gross misconduct) within two (2) years following a Change in Control (as defined in the Plan), any vesting period with respect to the Option shall be deemed to be satisfied and the Participant may exercise the Option upon the date of such termination of employment, and the Option shall remain exercisable until the date that is three (3) years following the date of such termination of employment (or until the date that is five (5) years following the date of such termination of employment, in the case of a termination of employment by reason of the Participant’s death or a termination of employment described in Section 4B. or Section 4D. hereof).  Furthermore, the Option exercise period shall be as described in Section 4A. in the event the Participant is determined to be disabled under the provisions of the Company’s or a Subsidiary’s long-term disability plan prior to the Participant’s termination of employment described in this Section 4C.

D. If the Participant terminates employment and at the time of such termination of employment the Participant is eligible (age 65 or at least age 55 with 10 years of vesting service) to begin receiving pension payments immediately (whether or not such Participant actually begins to receive payments) from a qualified pension plan sponsored by the Company or a Subsidiary, the Participant may exercise any portion of the Option that is vested and exercisable at the time of the Participant’s termination of employment until the date that is five (5) years following the date of such termination of employment.

E. In the event of a Change in Control in which the acquiring or surviving company in the transaction does not assume or continue the Option upon the Change in Control, any 3  

vesting period with respect to the Option shall be deemed to be satisfied and the Option shall become fully vested and exercisable (provided that the Option may be canceled upon the consummation of the Change in Control without payment of any additional consideration if the exercise price of the Option is less than the consideration per Share payable to shareholders of the Company in such Change in Control) and the Participant may exercise the Option not assumed or continued until the date that is five (5) years following the date of such Change in Control.  If the Participant terminates employment following such Change in Control for a reason described in 4F., any unexercised portion of the Option shall be immediately forfeited and canceled as of the date of such termination of employment.

F. Notwithstanding any other provision of this Section 4, if the Participant’s employment is terminated by the Company for deliberate, willful or gross misconduct, the unexercised portion of the Option, whether or not then vested and exercisable, shall be immediately forfeited and canceled as of the date of such termination of employment.

G. Except as otherwise provided in this Section 4 hereof: (i) the Participant may exercise any portion of the Option that is vested and exercisable at the time of the Participant’s termination of employment until the date that is three (3) months following the date of such termination of employment; and (ii) any portion of the Option that is not vested and exercisable at the time of such termination of employment shall be forfeited and canceled as of the date of such termination of employment.

PROTECTION OF CONFIDENTIALITY

By electronically accepting the Option and these Standard Terms and Conditions, the Participant acknowledges and agrees to the following.

5. CONFIDENTIAL INFORMATION; TRADE SECRETS

The Participant acknowledges that the Company regards certain information relating to its business and operations as confidential.  This includes all confidential and proprietary information concerning the assets, business or affairs of the Company or any Subsidiary or any customers thereof ("Confidential Information").  The Participant’s electronic signature also acknowledges that the Company has certain information that derives economic value from not being known to the general public or to others who could obtain economic value from its disclosure or use, which the Company takes reasonable efforts to protect the secrecy of ("Trade Secrets").

6. TYPES OF CONFIDENTIAL INFORMATION OR TRADE SECRETS

The Participant acknowledges that he or she developed or have had and will in the future continue to have access to one or more of the following types of Confidential Information or Trade Secrets: information about rates or costs; customer or supplier agreements and negotiations; business opportunities; scheduling and delivery methods; business and marketing plans; financial information or plans; communications within the attorney-client privilege or other privileges; operating procedures and methods; construction methods and plans; proprietary computer systems design, programming or software; strategic plans; succession plans; proprietary company training programs; employee performance, compensation or benefits; negotiations or strategies relating to collective bargaining agreements and/or labor disputes; and internal or external claims or complaints regarding personal injuries, employment laws or policies, environmental protection, or hazardous materials.  By electronically accepting the Grant Notice and these Standard terms and Conditions, the Participant agrees that any unauthorized disclosures by him or her to any third party of such Confidential Information or Trade Secrets would constitute gross misconduct.

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7. AGREEMENT TO MAINTAIN CONFIDENTIAL INFORMATION

The Participant agrees that he or she will not, unless he or she receives prior written consent from the senior human resources officer or such other person designated by the Company (hereinafter collectively referred to as the "Sr. HR Officer"), or unless ordered by a court or government agency, (i) divulge, use, furnish or disclose to any subsequent employer or any other person, whether or not a competitor of the Company, any Confidential Information or Trade Secrets, or (ii) retain or take with him or her when he or she leaves the Company any property of the Company or any documents (including any electronic or computer records) relating to any Confidential Information or Trade Secrets.

8. PRIOR NOTICE OF EMPLOYMENT, ETC

(i)  The Participant acknowledges that if he or she become an employee, contractor, or consultant for any other person or entity engaged in the Business of the Company as defined in Section 10 (“Entity”), this would create a substantial risk that he or she would, intentionally or unintentionally, disclose or rely upon the Company’s Confidential Information or Trade Secrets for the benefit of the other Entity to the detriment of the Company.  The Participant further acknowledges that such disclosures would be particularly damaging if made shortly after he or she leaves the Company.  Therefore, by electronically accepting the Grant Notice and these Standard Terms and Conditions, the Participant agrees that for a period of one-year after he or she leaves the Company, before accepting any employment or affiliation with another Entity he or she will give written notice to the Sr. HR Officer of his or her intention to accept such employment or affiliation.  The Participant also agrees to confer in good faith with the Sr. HR Officer concerning whether his or her proposed employment or affiliation could reasonably be expected to be performed without improper disclosure of Confidential Information or Trade Secrets.

(ii)  If the Sr. HR Officer and the Participant are unable to reach agreement on this issue, he or she agrees to submit this issue to arbitration, to be conducted under the rules of the American Arbitration Association, for final resolution.  The Participant also agrees that he or she will not begin to work for another person or entity engaged in the Business of the Company as defined in Section 10, until the Sr. HR Officer or an arbitrator has determined that such employment could reasonably be expected to be performed without improper disclosure of the Company’s Confidential Information or Trade Secrets.

9. FAILURE TO COMPLY

The Participant agrees that, if he or she fails to comply with any of the promises that he or she made in Section 7 or 8 above, (a) the Option, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Participant will be required to immediately deliver to the Company an amount (in cash or in shares of Common Stock) equal to the market value (on the date of exercise) of any shares of Common Stock acquired on exercise of the Option less the exercise price paid for such shares to the extent such shares were acquired by the Participant upon exercise of the Option at any time from 180 days prior to the earlier of (i) the date when he or she leaves the Company or (ii) the date he or she fails to comply with any such promise that hr or she made in Section 7 or 8, to 180 days after the date when the Company learns that the Participant has not complied with any such promise. The Participant agrees that he or she will deliver such shares of Common Stock (or the cash equivalent) to the Company on such terms and conditions as may be required by the Company.  The Participant further agrees that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the market value of any such shares of Common Stock against any amount that might be owed to him or her by the Company.  The Participant acknowledges that the Company would not have awarded the Participant the shares of Common Stock granted to him or her under the Grant Notice absent the Participant’s agreement to be bound by the promises made in Sections 7 and 8 above.

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NO DIRECT COMPETITION

By electronically accepting the Option and these Standard Terms and Conditions, the Participant acknowledges and agrees to the following.

10. NON-SOLICITATION OF CUSTOMERS; NON-COMPETITION

The Participant agrees that for a period of one year following his or her departure from the Company, he or she will not (directly or in association with others) call on or solicit any of the Company’s customers with whom he or she had personal contact while he or she was employed by the Company, for the purpose of providing the customers with goods and/or services similar in nature to those provided by the Company in its Business as defined below.  The Participant further agrees that for the same time period, he or she will not, directly or indirectly, engage in any activity which is the same as or competitive with the Business (as defined below) including, without limitation, engagement as an officer, director, proprietor, employee, partner, investor (other than as a holder of less than 2% of the outstanding capital stock of a publicly traded corporation), guarantor, consultant, advisor, agent, sales representative or other participant, in any market in which the Company conducts its Business.  For purposes of these Standard Terms and Conditions, the term “Business” means the transportation of goods in interstate commerce and related services in or through or for any state in which the Company or any of its affiliates provides such services directly or indirectly and any other activity that supports such operations including by the way of example but not limitation, marketing, information systems, logistics, technology development or implementation, terminal services and any other activity of the Company or any of its affiliates.  This Section 10 is not intended to prevent the Participant from engaging in any activity that is not the same as or competitive with the Business.  The Participant acknowledges that the Company would not have awarded him or her the shares of Common Stock granted under the Grant Notice absent his or her agreement to be bound by the promises made in this Section 10.

11. ACKNOWLEDGMENT; INJUNCTIVE RELIEF

The Participant acknowledges that he or she has carefully read and considered all these Standard Terms and Conditions, including the restraints imposed upon him or her pursuant to Sections 7, 8 and 10.  The Participant also agrees that each of the restraints contained herein is necessary for the protection of the goodwill, Confidential Information, Trade Secrets and other legitimate interests of the Company; that each and every one of these restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent him or her from obtaining other suitable employment during the period in which he or she are bound by such restraints.  The Participant further acknowledges that, were he or she to breach any of the covenants contained in Sections 7, 8 and 10, the damage to the Company would be irreparable.  The Participant therefore agrees that the Company, in addition to any other remedies available to it, including, without limitation, the remedies set forth in Sections 9 and 12, shall be entitled to injunctive relief against his or her breach or threaten breach of said covenants.  The Participant and the Company further agree that, in the event that any provision of Sections 7, 8 and 10 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.

12. VIOLATION OF PROMISES

The Participant agrees that if he or she violates any of his or her promises in Section 10 above, (a) the Option, to the extent then unexercised, whether vested or unvested, will be immediately forfeited and cancelled and (b) the Participant will be required to immediately deliver to the Company an amount (in cash or in shares of Common Stock) equal to the market value (on the date of exercise) of any shares of Common Stock acquired on exercise of the Option less the

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exercise price paid for such shares to the extent such shares were acquired by him or her upon exercise of the Option at any time from 180 days prior to the date when he or she leaves the Company to 180 days after the date when the Company learns that he or she has not complied with any such promise.  The Participant agrees that he or she will deliver such shares of Common Stock (or the fair market value thereof) to the Company on such terms and conditions as may be required by the Company.  The Participant further agrees that the Company will be entitled to enforce this repayment obligation by all legal means available, including, without limitation, to set off the market value of any such shares of Common Stock against any amount that might be owed to him or her by the Company.

GENERAL

13. ARBITRATION

The Participant agrees and the Company agrees that any controversy, claim, or dispute arising out of or relating to this Agreement or the breach of any of these terms and conditions, or arising out of or relating to his or her employment relationship with the Company or any of its affiliates, or the termination of such relationship, shall be resolved by binding arbitration before a neutral arbitrator under the rules set forth in the Federal  Arbitration Act, except for claims by the Company relating to his or her breach of any of the employee covenants set forth in Paragraphs 5, 6, 7, 8 or 10 above. By way of example only, claims subject to this agreement to arbitrate include claims litigated under federal, state and local statutory or common law, such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, including the Civil Rights Act of 1994, the Americans with Disabilities Act, the law of contract and the law of tort.  The Participant and the Company agree that such claims may be brought in an appropriate administrative forum, but at the point at which the Participant or the Company seek a judicial forum to resolve the matter, this agreement for binding arbitration becomes effective, and the Participant and the Company hereby knowingly and voluntarily waive any right to have any such dispute tried and adjudicated by a judge or jury.  The foregoing not to the contrary, the Company may seek to enforce the employee covenants set forth in Paragraphs 5, 6, 7, 8 or 10 above, in any court of competent jurisdiction.

This agreement to arbitrate shall continue in full force and effect despite the expiration or termination of these Standard Terms and Conditions or the Participant’s employment relationship with the Company or any of its affiliates.  The Participant and the Company agree that any award rendered by the arbitrator shall be final and binding and that judgment upon the final award may be entered in any court having jurisdiction thereof.  The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the Participant, the Company or any of its affiliates had the mater been heard in court.  All expenses of the arbitration, including the required travel and other expenses of the arbitrator and any witnesses, and the costs relating to any proof produced at the direction of the arbitrator, shall be borne equally by the Participant and the Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award.  The arbitrator’s compensation shall be borne equally by the Participant and the Company unless otherwise mutually agreed or unless the law provides otherwise.

14. SEVERABILITY

If any provision of these Standard Terms and Conditions is, becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Company, it shall be stricken and the remainder of these Standard Terms and Conditions shall remain in force and effect.

7

15. CHOICE OF LAW; JURISDICTION

All questions pertaining to the construction, regulation, validity, and effect of these Standard Terms and Conditions shall be determined in accordance with the laws of the State of Utah, without regard to the conflict of laws doctrine.  The Company and the Participant hereby consent and submit to the personal jurisdiction and venue of any state or federal court located in the county of Salt Lake City within the State of Utah for resolution of any and all claims, causes of action or disputes arising out of or related to these Standard Terms and Conditions.  Sections 8(ii) and 10 shall not apply to employees who are subject to California law.

16. AMENDMENTS

The Plan and these Standard Terms and Conditions may be amended or altered by the Committee or the Company’s Board of Directors to the extent provided in the Plan.

17. RESTRICTIONS ON RESALES OF SHARES ACQUIRED PURSUANT TO OPTION EXERCISE

The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Common Stock issued as a result of the exercise of the Option, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other optionholders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

18. INCOME TAXES

The Company shall not deliver shares of Common Stock in respect of the exercise of any Option unless and until the Participant has made satisfactory arrangements to satisfy all applicable tax withholding obligations.  Unless the Participant pays the tax withholding obligations to the Company by cash or check in connection with the exercise of the Option, tax withholding may be effected, at the Company’s option, by withholding Common Stock issuable in connection with the exercise of the Option (provided that shares of Common Stock may be withheld only to the extent that such tax withholding will not result in adverse accounting treatment for the Company).  The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the exercise of the Option from any amounts payable by it to the Participant (including, without limitation, future cash wages).

19. NON-TRANSFERABILITY OF OPTION

Except as permitted under the Plan, the Participant may not assign or transfer the Option to anyone other than by will or the laws of descent and distribution and the Option shall be exercisable only by the Participant during his or her lifetime or, following a Participant’s death, by the Participant’s beneficiary.  The Company may cancel the Participant’s Option if the Participant attempts to assign or transfer it in a manner inconsistent with this Section 19.

20. LIMITATION OF INTEREST IN SHARES SUBJECT TO OPTION

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person upon exercise of the Option or any part of it.  Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

8

21. OTHER AGREEMENTS SUPERSEDED

The Grant Notice, these Standard Terms and Conditions and the Plan constitute the entire understanding between the Participant and the Company regarding the Option.  Any prior agreements, commitments or negotiations concerning the Option are superseded.

9

EX-12

Exhibit 12

RATIO OF EARNINGS TO FIXED CHARGES

Union Pacific Corporation and Subsidiary Companies

Millions, Except for Ratios	2015		2014		2013		2012		2011
Fixed charges:
Interest expense including
amortization of debt discount	$	622	$	561	$	526	$	535	$	572
Portion of rentals representing an interest factor		93		101		121		132		135
Total fixed charges	$	715	$	662	$	647	$	667	$	707
Earnings available for fixed charges:
Net income	$	4,772	$	5,180	$	4,388	$	3,943	$	3,292
Equity earnings net of distributions		(63)		(59)		(57)		(55)		(38)
Income taxes		2,884		3,163		2,660		2,375		1,972
Fixed charges		715		662		647		667		707
Earnings available for fixed charges	$	8,308	$	8,946	$	7,638	$	6,930	$	5,933
Ratio of earnings to fixed charges		11.6		13.5		11.8		10.4		8.4

EX-21

Exhibit 21

SIGNIFICANT SUBSIDIARIES OF UNION PACIFIC CORPORATION

Name of Corporation	State of Incorporation
Union Pacific Railroad Company	Delaware

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Post-Effective Amendment No. 1 to Registration Statement No. 33-12513, Registration Statement No. 33-53968, Registration Statement No. 33-49785, Registration Statement No. 33-49849, Registration Statement No. 333-10797, Registration Statement No. 333-88709, Registration Statement No. 333-42768, Registration Statement No. 333-106707, Registration Statement No. 333-106708, Registration Statement No. 333-105714, Registration Statement No. 333-105715, Registration Statement No. 333-116003, Registration Statement No. 333-132324, Registration Statement No. 333-155708, Registration Statement No. 333-170209, Registration Statement No. 333-170208, and Registration No. 333-188671 on Form S-8 and Registration Statement No. 333-201958 on Form S-3 of our reports dated February 5, 2016, relating to the consolidated financial statements and financial statement schedule of Union Pacific Corporation and Subsidiary Companies (the Corporation) and the effectiveness of the Corporation's internal control over financial reporting appearing in this Annual Report on Form 10-K of Union Pacific Corporation and Subsidiary Companies for the year ended December 31, 2015.

Omaha, Nebraska

February 5, 2016

EX-24

Exhibit 24

UNION PACIFIC CORPORATION

Powers of Attorney

Each of the undersigned directors of Union Pacific Corporation, a Utah corporation (the Company), do hereby appoint each of Lance M. Fritz, Diane K. Duren, and James J. Theisen, Jr. his or her true and lawful attorney-in-fact and agent, to sign on his or her behalf the Company’s Annual Report on Form 10-K, for the year ended December 31, 2015, and any and all amendments thereto, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as of February 4, 2016.

/s/ Andrew H. Card, Jr.	/s/ Michael R. McCarthy
Andrew H. Card, Jr.	Michael R. McCarthy
/s/ Erroll B. Davis, Jr.	/s/ Michael W. McConnell
Erroll B. Davis, Jr.	Michael W. McConnell
/s/ David B. Dillon	/s/ Thomas F. McLarty III
David B. Dillon	Thomas F. McLarty III
/s/ Judith Richards Hope	/s/ Steven R. Rogel
Judith Richards Hope	Steven R. Rogel
/s/ Charles C. Krulak	/s/ Jose H. Villarreal
Charles C. Krulak	Jose H. Villarreal

EX-31.(A)

Exhibit 31(a)

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Lance M. Fritz, certify that:

1. I have reviewed this annual report on Form 10-K of Union Pacific Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 5, 2016

/s/ Lance M. Fritz

Lance M. Fritz

Chairman, President and

Chief Executive Officer

EX-31.(B)

Exhibit 31(b)

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Robert M. Knight, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Union Pacific Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 5, 2016

/s/ Robert M. Knight, Jr.

Robert M. Knight, Jr.

Executive Vice President – Finance and

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Annual Report of Union Pacific Corporation (the Corporation) on Form 10-K for the period ending December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Lance M. Fritz, Chairman, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

By:  /s/ Lance M. Fritz

Lance M. Fritz

Chairman, President and

Chief Executive Officer

Union Pacific Corporation

February 5, 2016

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Annual Report of Union Pacific Corporation (the Corporation) on Form 10-K for the period ending December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert M. Knight, Jr., Executive Vice President - Finance and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

By:  /s/ Robert M. Knight, Jr.

Robert M. Knight, Jr.

Executive Vice President - Finance and

Chief Financial Officer

Union Pacific Corporation

February 5, 2016

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2015	Jan. 29, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Document type	10-K
Document period end date	Dec. 31, 2015
Amendment flag	false
Entity registrant name	UNION PACIFIC CORP
Entity central index key	0000100885
Entity current reporting status	Yes
Entity voluntary filers	No
Current fiscal year end date	--12-31
Entity filer category	Large Accelerated Filer
Entity well known seasoned issuer	Yes
Entity public float			$ 82.7
Document fiscal year focus	2015
Document fiscal period focus	FY
Trading Symbol	unp
Entity common stock shares outstanding		846,414,350

XML

Consolidated Statements Of Income - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Operating revenues:
Freight revenues	$ 20,397	$ 22,560	$ 20,684
Other revenues	1,416	1,428	1,279
Total operating revenues	21,813	23,988	21,963
Operating expenses:
Compensation and benefits	5,161	5,076	4,807
Purchased services and materials	2,421	2,558	2,315
Fuel	2,013	3,539	3,534
Depreciation	2,012	1,904	1,777
Equipment and other rents	1,230	1,234	1,235
Other	924	924	849
Total operating expenses	13,761	15,235	14,517
Operating income	8,052	8,753	7,446
Other income (Note 7)	226	151	128
Interest expense	(622)	(561)	(526)
Income before income taxes	7,656	8,343	7,048
Income taxes (Note 8)	(2,884)	(3,163)	(2,660)
Net income	$ 4,772	$ 5,180	$ 4,388
Share and Per Share (Note 9):
Earnings per share - basic	$ 5.51	$ 5.77	$ 4.74
Earnings per share - diluted	$ 5.49	$ 5.75	$ 4.71
Weighted average number of shares - basic	866.2	897.1	926.5
Weighted average number of shares - diluted	869.4	901.1	931.5
Dividends declared per share	$ 2.20	$ 1.91	$ 1.48

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements of Comprehensive Income [Abstract]
Net income		$ 4,772	$ 5,180	$ 4,388
Other comprehensive income/(loss):
Defined benefit plans		58	(448)	436
Foreign currency translation		$ (43)	$ (12)	(1)
Derivatives				1
Total other comprehensive income/(loss)	[1]	$ 15	$ (460)	436
Comprehensive income		$ 4,787	$ 4,720	$ 4,824

[1] Net of deferred taxes of ($8) million, $291 million, and ($264) million during 2015, 2014, and 2013, respectively.

XML

Consolidated Statements Of Comprehensive Income (Parentheticals) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements of Comprehensive Income [Abstract]
Deferred taxes activity other comprehensive income/(loss)	$ (8)	$ 291	$ (264)

XML

Consolidated Statements Of Financial Position - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 1,391	$ 1,586
Accounts receivable, net (Note 11)	1,356	1,611
Materials and supplies	736	712
Other current assets	647	492
Total current assets	4,130	4,401
Investments	1,410	1,390
Net properties (Note 12)	48,866	46,272
Other assets	194	309
Total assets	54,600	52,372
Current liabilities:
Accounts payable and other current liabilities (Note 13)	2,612	3,303
Debt due within one year (Note 15)	594	461
Total current liabilities	3,206	3,764
Debt due after one year (Note 15)	13,607	10,952
Deferred income taxes (Note 8)	15,241	14,403
Other long-term liabilities	$ 1,844	$ 2,064
Commitments and contingencies (Notes 17 and 18)
Total liabilities	$ 33,898	$ 31,183
Common shareholders' equity:
Common shares, $2.50 par value, 1,400,000,000 authorized; 1,110,426,354 and 1,110,100,423 issued; 849,211,436 and 883,366,476 outstanding, respectively	2,776	2,775
Paid-in-surplus	4,417	4,321
Retained earnings	30,233	27,367
Treasury stock	(15,529)	(12,064)
Accumulated other comprehensive loss (Note 10)	(1,195)	(1,210)
Total common shareholders' equity	20,702	21,189
Total liabilities and common shareholders' equity	$ 54,600	$ 52,372

XML

Consolidated Statements Of Financial Position (Parentheticals) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Consolidated Statements Of Financial Position [Abstract]
Common shares, par value	$ 2.50	$ 2.50
Common shares authorized	1,400,000,000	1,400,000,000
Common shares issued	1,110,426,354	1,110,100,423
Common shares outstanding	849,211,436	883,366,476

XML

Consolidated Statements Of Cash Flows $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($)		Dec. 31, 2014 USD ($)		Dec. 31, 2013 USD ($)
Operating Activities
Net income	$ 4,772		$ 5,180		$ 4,388
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	2,012		1,904		1,777
Deferred and other income taxes	765		895		723
Net gain on non-operating asset dispositions	(144)		(69)		(32)
Other operating activities, net	116		(216)		(194)
Changes in current assets and liabilities:
Accounts receivable, net	255		(197)		(83)
Materials and supplies	(24)		(59)		7
Other current assets	(47)		(35)		1
Accounts payable and other current liabilities	(276)		295		40
Income and other taxes	(85)		(313)		196
Cash provided by operating activities	7,344		7,385		6,823
Investing Activities
Capital investments	(4,650)		(4,346)		(3,496)
Proceeds from asset sales	251		138		98
Other investing activities, net	(77)		(41)		(7)
Cash used in investing activities	(4,476)		(4,249)		(3,405)
Financing Activities
Common share repurchases (Note 19)	(3,465)		(3,225)		(2,218)
Debt issued	3,328		2,588		1,443
Dividends paid	(2,344)		(1,632)		(1,333)
Debt repaid	$ (556)		$ (710)		(640)
Debt exchange					(289)
Other financing activities, net	$ (26)		$ (3)		(12)
Cash used in financing activities	(3,063)		(2,982)		(3,049)
Net change in cash and cash equivalents	(195)		154		369
Cash and cash equivalents at beginning of year	1,586		1,432		1,063
Cash and cash equivalents at end of year	1,391		1,586		1,432
Non-cash investing and financing activities:
Capital investments accrued but not yet paid	100		$ 174		133
Capital lease financings	$ 13				39
Cash dividends declared but not yet paid (Note 13)		[1]	$ 438	[1]	356
Cash paid during the year for:
Income taxes, net of refunds	$ (2,156)		(2,492)		(1,656)
Interest, net of amounts capitalized	$ (592)		$ (554)		$ (528)

[1] Beginning in 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter. The 2015 dividends paid amount includes the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015, the second quarter 2015 dividend of $479 million, which was paid on June 30, 2015, the third quarter 2015 dividend of $476 million, which was paid on September 30, 2015, as well as the fourth quarter 2015 dividend of $467 million, which was paid on December 30, 2015.

XML

Consolidated Statements Of Changes In Common Shareholders' Equity - USD ($) $ in Millions	Common Shares [Member]	Paid-in-Surplus [Member]	Retained Earnings [Member]	Treasury Stock [Member]	AOCI [Member]	[1]	Total
Shareholders' equity, beginning balance at Dec. 31, 2012	$ 2,773	$ 4,113	$ 20,884	$ (6,707)	$ (1,186)		$ 19,877
Common shares, beginning balance at Dec. 31, 2012	1,109,300,000			(170,300,000)
Net income			$ 4,388				4,388
Other comp. income/(loss)					$ 436		436	[2]
Conversion, stock option exercises, forfeitures, and other	$ 1	$ 97		$ 15			113
Conversion, stock option exercises, forfeitures, and other (shares)	400,000			1,600,000
Share repurchases (Note 19)				$ (2,218)			(2,218)
Share repurchases (Note 19) (shares)				(29,000,000)
Cash dividends declared			$ (1,371)				(1,371)
Shareholders' equity, ending balance at Dec. 31, 2013	$ 2,774	$ 4,210	23,901	$ (8,910)	$ (750)		21,225
Common shares, ending balance at Dec. 31, 2013	1,109,700,000			(197,700,000)
Net income			$ 5,180				5,180
Other comp. income/(loss)					$ (460)		(460)	[2]
Conversion, stock option exercises, forfeitures, and other	$ 1	$ 111		$ 71			183
Conversion, stock option exercises, forfeitures, and other (shares)	400,000			3,000,000
Share repurchases (Note 19)				$ (3,225)			$ (3,225)
Share repurchases (Note 19) (shares)				(32,000,000)			(32,043,400)
Cash dividends declared			$ (1,714)				$ (1,714)
Shareholders' equity, ending balance at Dec. 31, 2014	$ 2,775	$ 4,321	27,367	$ (12,064)	$ (1,210)		$ 21,189
Common shares, ending balance at Dec. 31, 2014	1,110,100,000			(226,700,000)			883,366,476
Net income			$ 4,772				$ 4,772
Other comp. income/(loss)					$ 15		15	[2]
Conversion, stock option exercises, forfeitures, and other	$ 1	$ 96					97
Conversion, stock option exercises, forfeitures, and other (shares)	300,000			800,000
Share repurchases (Note 19)				$ (3,465)			$ (3,465)
Share repurchases (Note 19) (shares)				(35,300,000)			(35,304,154)
Cash dividends declared			$ (1,906)				$ (1,906)
Shareholders' equity, ending balance at Dec. 31, 2015	$ 2,776	$ 4,417	$ 30,233	$ (15,529)	$ (1,195)		$ 20,702
Common shares, ending balance at Dec. 31, 2015	1,110,400,000			(261,200,000)			849,211,436

[1] AOCI = Accumulated Other Comprehensive Income/(Loss) (Note 10)

[2] Net of deferred taxes of ($8) million, $291 million, and ($264) million during 2015, 2014, and 2013, respectively.

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Consolidated Statements of Changes in Common Shareholders' Equity (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements Of Changes In Common Shareholders' Equity [Abstract]
Cash dividends declared per share	$ 2.20	$ 1.91	$ 1.48

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Nature Of Operations

12 Months Ended

Dec. 31, 2015

Nature Of Operations [Abstract]

Nature of Operations

For purposes of this report, unless the context otherwise requires, all references herein to the “Corporation”, “Company”, “UPC”, “we”, “us”, and “our” mean Union Pacific Corporation and its subsidiaries, including Union Pacific Railroad Company, which will be separately referred to herein as “UPRR” or the “Railroad”.

1. Nature of Operations

Operations and Segmentation – We are a Class I railroad operating in the U.S. Our network includes 32,084 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and Eastern U.S. gateways and providing several corridors to key Mexican gateways. We own 26,064 miles and operate on the remainder pursuant to trackage rights or leases. We serve the western two-thirds of the country and maintain coordinated schedules with other rail carriers for the handling of freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. Export and import traffic is moved through Gulf Coast and Pacific Coast ports and across the Mexican and Canadian borders.

The Railroad, along with its subsidiaries and rail affiliates, is our one reportable operating segment. Although we provide and analyze revenue by commodity group, we treat the financial results of the Railroad as one segment due to the integrated nature of our rail network. The following table provides freight revenue by commodity group:

Millions	2015		2014		2013
Agricultural Products	$	3,581	$	3,777	$	3,276
Automotive		2,154		2,103		2,077
Chemicals		3,543		3,664		3,501
Coal		3,237		4,127		3,978
Industrial Products		3,808		4,400		3,822
Intermodal		4,074		4,489		4,030
Total freight revenues	$	20,397	$	22,560	$	20,684
Other revenues		1,416		1,428		1,279
Total operating revenues	$	21,813	$	23,988	$	21,963

Although our revenues are principally derived from customers domiciled in the U.S., the ultimate points of origination or destination for some products transported by us are outside the U.S. Each of our commodity groups includes revenue from shipments to and from Mexico. Included in the above table are freight revenues from our Mexico business which amounted to $2.2 billion in 2015, $2.3 billion in 2014, and $2.1 billion in 2013.

Basis of Presentation – The Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the U.S. (GAAP) as codified in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Certain prior period amounts in the statement of cash flows and income tax footnote have been aggregated or disaggregated further to conform to the current period financial presentation.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Significant Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

Principles of Consolidation – The Consolidated Financial Statements include the accounts of Union Pacific Corporation and all of its subsidiaries. Investments in affiliated companies (20% to 50% owned) are accounted for using the equity method of accounting. All intercompany transactions are eliminated. We currently have no less than majority-owned investments that require consolidation under variable interest entity requirements.

Cash and Cash Equivalents – Cash equivalents consist of investments with original maturities of three months or less.

Accounts Receivable – Accounts receivable includes receivables reduced by an allowance for doubtful accounts. The allowance is based upon historical losses, credit worthiness of customers, and current economic conditions.  Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements of Financial Position.

Investments – Investments represent our investments in affiliated companies (20% to 50% owned) that are accounted for under the equity method of accounting and investments in companies (less than 20% owned) accounted for under the cost method of accounting.

Materials and Supplies – Materials and supplies are carried at the lower of average cost or market.

Property and Depreciation – Properties and equipment are carried at cost and are depreciated on a straight-line basis over their estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those subject to abandonment, yard and switching tracks, and electronic yards), for which lives are measured in millions of gross tons per mile of track.  We use the group method of depreciation in which all items with similar characteristics, use, and expected lives are grouped together in asset classes, and are depreciated using composite depreciation rates.  The group method of depreciation treats each asset class as a pool of resources, not as singular items.  We determine the estimated service lives of depreciable railroad assets by means of depreciation studies.  Under the group method of depreciation, no gain or loss is recognized when depreciable property is retired or replaced in the ordinary course of business.

Impairment of Long-lived Assets – We review long-lived assets, including identifiable intangibles, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the long-lived assets, the carrying value is reduced to the estimated fair value as measured by the discounted cash flows.

Revenue Recognition – We recognize freight revenues as freight moves from origin to destination. The allocation of revenue between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Other revenues, which include revenues earned by our subsidiaries, revenues from our commuter rail operations, and accessorial revenue, are recognized as service is performed or contractual obligations are met. Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a reduction to operating revenues based on actual or projected future customer shipments.

Translation of Foreign Currency – Our portion of the assets and liabilities related to foreign investments are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average rates of exchange prevailing during the year. Unrealized gains or losses are reflected within common shareholders’ equity as accumulated other comprehensive income or loss.

Fair Value Measurements – We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels include:

Level 1:  Quoted market prices in active markets for identical assets or liabilities.

Level 2:  Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:  Unobservable inputs that are not corroborated by market data.

We have applied fair value measurements to our pension plan assets and short- and long-term debt.

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.

We measure and recognize compensation expense for all stock-based awards made to employees and directors, including stock options. Compensation expense is based on the calculated fair value of the awards as measured at the grant date and is expensed ratably over the service period of the awards (generally the vesting period). The fair value of retention awards is the closing stock price on the date of grant, while the fair value of stock options is determined by using the Black-Scholes option pricing model.

Earnings Per Share – Basic earnings per share are calculated on the weighted-average number of common shares outstanding during each period. Diluted earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive.

Income Taxes – We account for income taxes by recording taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on current tax law; the effects of future tax legislation are not anticipated.  Future tax legislation, such as a change in the corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity.

When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based on management’s judgments using available evidence for purposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset.

We recognize tax benefits that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

Pension and Postretirement Benefits – We incur certain employment-related expenses associated with pensions and postretirement health benefits. In order to measure the expense associated with these benefits, we must make various assumptions including discount rates used to value certain liabilities, expected return on plan assets used to fund these expenses, compensation increases, employee turnover rates, anticipated mortality rates, and expected future health care costs. The assumptions used by us are based on our historical experience as well as current facts and circumstances. We use an actuarial analysis to measure the expense and liability associated with these benefits.

Personal Injury – The cost of injuries to employees and others on our property is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability. Our personal injury liability is not discounted to present value. Legal fees and incidental costs are expensed as incurred.

Asbestos – We estimate a liability for asserted and unasserted asbestos-related claims based on an assessment of the number and value of those claims. We use a statistical analysis to assist us in properly measuring our potential liability. Our liability for asbestos-related claims is not discounted to present value due to the uncertainty surrounding the timing of future payments. Legal fees and incidental costs are expensed as incurred.

Environmental – When environmental issues have been identified with respect to property currently or formerly owned, leased, or otherwise used in the conduct of our business, we perform, with the assistance of our consultants, environmental assessments on such property. We expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be reasonably estimated. We do not discount our environmental liabilities when the timing of the anticipated cash payments is not fixed or readily determinable. Legal fees and incidental costs are expensed as incurred.

Use of Estimates – The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported assets and liabilities,and the disclosure of certain contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual future results may differ from such estimates.

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Accounting Pronouncements

12 Months Ended

Dec. 31, 2015

Accounting Pronouncements [Abstract]

Accounting Pronouncements

3. Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers (Topic 606).  ASU 2014-09 supersedes the revenue recognition guidance in Topic 605, Revenue Recognition.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services.  This standard is effective for annual reporting periods beginning after December 15, 2017, and can be adopted either retrospectively or as a cumulative effect adjustment as of the date of adoption.  ASU 2014-09 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03 (ASU 2015-03), Interest - Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs in the financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. Amortization of debt issuance costs will be reported as interest expense. This standard is effective for annual reporting periods beginning after December 15, 2015. We elected to early adopt ASU 2015-03 on December 31, 2015. As a result, the Company reclassified debt issuance costs from other assets to debt on the Consolidated Statements of Financial Position. ASU 2015-03 did not have a material impact on our consolidated financial position, and had no impact on our results of operations or cash flows.  All prior period financial information presented herein has been adjusted to reflect the retrospective application of this ASU.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17), Balance Sheet Classification of Deferred Taxes (Subtopic 740-10). ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the requirement for companies to present deferred tax liabilities and assets as current and non-current on the Consolidated Statements of Financial Position.  Instead, companies will be required to classify all deferred tax assets and liabilities as non-current.  This guidance is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted.  We elected to early adopt ASU 2015-17 on December 31, 2015.  ASU 2015-17 did not have a material impact on our consolidated financial position,and had no impact on our results of operations or cash flows.  All prior period financial information presented herein has been adjusted to reflect the retrospective application of this ASU.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01 (ASU 2016-01), Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). ASU 2016-01 provides guidance for the recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. ASU 2016-01 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows.

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Stock Split

12 Months Ended

Dec. 31, 2015

Stock Split [Abstract]

Stock Split

4. Stock Split

On June 6, 2014, we completed a two-for-one stock split, effected in the form of a 100% stock dividend. The stock split entitled all shareholders of record at the close of business on May 27, 2014, to receive one additional share of our common stock, par value $2.50 per share, for each share of common stock held on that date. All references to common shares and per share amounts have been retroactively adjusted to reflect the stock split for all periods presented.

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Stock Options And Other Stock Plans

12 Months Ended

Dec. 31, 2015

Stock Options And Other Stock Plans [Abstract]

Stock Options and Other Stock Plans

5. 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 2,200,000 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 4,000 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 20,000 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, 2015, 36,000 restricted shares and 45,400 options were outstanding under the Directors Plan.

The Union Pacific Corporation 2004 Stock Incentive Plan (2004 Plan) was approved by shareholders in April 2004. The 2004 Plan reserved 84,000,000 shares of our common stock for issuance, plus any shares subject to awards made under previous plans 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, 2015, 3,652,954 options and 2,092,721 retention shares and stock units were outstanding under the 2004 Plan.  We no longer grant any stock options or other stock or unit awards under this plan.

The Union Pacific Corporation 2013 Stock Incentive Plan (2013 Plan) was approved by shareholders in May 2013. The 2013 Plan reserved 78,000,000 shares of our common stock for issuance, plus any shares subject to awards made under previous plans as of February 28, 2013, that are subsequently cancelled, expired, forfeited or otherwise not issued under previous plans.  Under the 2013 Plan, non-qualified options, incentive stock options, 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 2013 Plan. As of December 31, 2015, 1,873,014 options and 2,061,737 retention shares and stock units were outstanding under the 2013 Plan.

Pursuant to the above plans 76,548,520;77,786,772; and 79,574,896 shares of our common stock were authorized and available for grant at December 31, 2015, 2014, and 2013, 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	2015		2014		2013
Stock-based compensation, before tax:
Stock options	$	17	$	21	$	19
Retention awards		81		91		79
Total stock-based compensation, before tax	$	98	$	112	$	98
Excess tax benefits from equity compensation plans	$	62	$	118	$	76

Stock Options – We estimate the fair value of our stock option awards using the Black-Scholes option pricing model. The table below shows the annual weighted-average assumptions used for valuation purposes:

Weighted-Average Assumptions	2015		2014		2013
Risk-free interest rate		1.3%		1.6%		0.8%
Dividend yield		1.8%		2.1%		2.1%
Expected life (years)		5.1		5.2		5.0
Volatility		23.4%		30.0%		36.2%
Weighted-average grant-date fair value of options granted	$	22.30	$	20.18	$	17.49

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the expected dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected exercise behavior; and expected volatility is based on the historical volatility of our stock price over the expected life of the option.

A summary of stock option activity during 2015 is presented below:

	Options (thous.)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value (millions)
Outstanding at January 1, 2015	5,387	$	53.56	5.8	yrs.	$	353
Granted	934		122.85	N/A			N/A
Exercised	(716)		40.10	N/A			N/A
Forfeited or expired	(34)		89.24	N/A			N/A
Outstanding at December 31, 2015	5,571	$	66.69	5.4	yrs.	$	114
Vested or expected to vest      at December 31, 2015	5,532	$	66.32	5.4	yrs.	$	114
Options exercisable at December 31, 2015	3,672	$	49.00	4.1	yrs.	$	110

Stock options are granted at the closing price on the date of grant, have ten-year contractual terms, and vest no later than three years from the date of grant. None of the stock options outstanding at December 31, 2015, are subject to performance or market-based vesting conditions.

At December 31, 2015, there was $18 million of unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.0 year. Additional information regarding stock option exercises appears in the table below:

Millions	2015		2014		2013
Intrinsic value of stock options exercised	$	50	$	194	$	112
Cash received from option exercises		27		54		51
Treasury shares repurchased for employee payroll taxes		(12)		(24)		(21)
Tax benefit realized from option exercises		19		74		43
Aggregate grant-date fair value of stock options vested		19		17		16

Retention Awards – The fair value of retention awards is based on the closing price of the stock on the grant date. Dividends and dividend equivalents are paid to participants during the vesting periods.

Changes in our retention awards during 2015 were as follows:

	Shares (thous.)	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2015	3,403	$	64.39
Granted	521		122.79
Vested	(934)		47.66
Forfeited	(90)		72.87
Nonvested at December 31, 2015	2,900	$	80.01

Retention awards are granted at no cost to the employee or non-employee director and vest over periods lasting up to four years. At December 31, 2015, there was $88 million of total unrecognized compensation expense related to nonvested retention awards, which is expected to be recognized over a weighted-average period of 1.5 years.

Performance Retention Awards – In February 2015, our Board of Directors approved performance stock unit grants. Other than different performance targets, the basic terms of these performance stock units are identical to those granted in February 2013 and February 2014, including using annual return on invested capital (ROIC) as the performance measure.   We define ROIC as net operating profit adjusted for interest expense (including interest on the present value of operating leases) and taxes on interest divided by average invested capital adjusted for the present value of operating leases.

Stock units awarded to selected employees under these grants are subject to continued employment for 37 months and the attainment of certain levels of ROIC.We expense the fair value of the units that are probable of being earned based on our forecasted ROIC over the 3-year performance period. We measure the fair value of these performance stock units based upon the closing price of the underlying common stock as of the date of grant, reduced by the present value of estimated future dividends. Dividend equivalents are paid to participants only after the units are earned.

The assumptions used to calculate the present value of estimated future dividends related to the February 2015 grant were as follows:

	2015
Dividend per share per quarter	$	0.55
Risk-free interest rate at date of grant		0.8%

Changes in our performance retention awards during 2015 were as follows:

	Shares (thous.)	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2015	1,583	$	65.33
Granted	339		117.42
Vested	(580)		54.38
Forfeited	(87)		86.66
Nonvested at December 31, 2015	1,255	$	82.98

At December 31, 2015, there was $19 million of total unrecognized compensation expense related to nonvested performance retention awards, which is expected to be recognized over a weighted-average period of 0.7 years. This expense is subject to achievement of the ROIC levels established for the performance stock unit grants.

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Retirement Plans

12 Months Ended

Dec. 31, 2015

Retirement Plans [Abstract]

Retirement Plans

6. Retirement Plans

Pension and Other Postretirement Benefits

Pension Plans – We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements.

Other Postretirement Benefits (OPEB) – We provide medical and life insurance benefits for eligible retirees. These benefits are funded as medical claims and life insurance premiums are paid.

Funded Status

We are required by GAAP to separately recognize the overfunded or underfunded status of our pension and OPEB plans as an asset or liability. The funded status represents the difference between the projected benefit obligation (PBO) and the fair value of the plan assets. Our non-qualified (supplemental) pension plan is unfunded by design. The PBO of the pension plans is the present value of benefits earned to date by plan participants, including the effect of assumed future compensation increases. The PBO of the OPEB plan is equal to the accumulated benefit obligation, as the present value of the OPEB liabilities is not affected by compensation increases. Plan assets are measured at fair value. We use a December 31 measurement date for plan assets and obligations for all our retirement plans.

Changes in our PBO and plan assets were as follows for the years ended December 31:

Funded Status	Pension				OPEB
Millions	2015		2014		2015		2014
Projected Benefit Obligation
Projected benefit obligation at beginning of year	$	4,142	$	3,372	$	354	$	330
Service cost		106		70		3		2
Interest cost		163		158		13		14
Actuarial loss/(gain)		(267)		735		(18)		33
Gross benefits paid		(186)		(193)		(23)		(25)
Projected benefit obligation at end of year	$	3,958	$	4,142	$	329	$	354
Plan Assets
Fair value of plan assets at beginning of year	$	3,654	$	3,429	$	-	$	-
Actual return on plan assets		(43)		185		-		-
Voluntary funded pension plan contributions		100		200		-		-
Non-qualified plan benefit contributions		19		33		23		25
Gross benefits paid		(186)		(193)		(23)		(25)
Fair value of plan assets at end of year	$	3,544	$	3,654	$	-	$	-
Funded status at end of year	$	(414)	$	(488)	$	(329)	$	(354)

Amounts recognized in the statement of financial position as of December 31, 2015 and 2014 consist of:

	Pension				OPEB
Millions	2015		2014		2015		2014
Noncurrent assets	$	1	$	1	$	-	$	-
Current liabilities		(22)		(19)		(23)		(23)
Noncurrent liabilities		(393)		(470)		(306)		(331)
Net amounts recognized at end of year	$	(414)	$	(488)	$	(329)	$	(354)

Pre-tax amounts recognized in accumulated other comprehensive income/(loss) as of December 31, 2015 and 2014 consist of:

	2015						2014
Millions	Pension		OPEB		Total		Pension		OPEB		Total
Prior service (cost)/credit	$	-	$	7	$	7	$	-	$	17	$	17
Net actuarial loss		(1,652)		(117)		(1,769)		(1,727)		(148)		(1,875)
Total	$	(1,652)	$	(110)	$	(1,762)	$	(1,727)	$	(131)	$	(1,858)

Pre-tax changes recognized in other comprehensive income/(loss) during 2015, 2014 and 2013 were as follows:

	Pension						OPEB
Millions	2015		2014		2013		2015		2014		2013
Net actuarial (loss)/gain	$	(31)	$	(780)	$	561	$	18	$	(33)	$	34
Amortization of:
Prior service cost/(credit)		-		-		-		(10)		(11)		(16)
Actuarial loss		106		71		106		13		10		15
Total	$	75	$	(709)	$	667	$	21	$	(34)	$	33

Amounts included in accumulated other comprehensive income/(loss) expected to be amortized into net periodic cost during 2016:

Millions	Pension		OPEB		Total
Prior service credit	$	-	$	9	$	9
Net actuarial loss		(80)		(10)		(90)
Total	$	(80)	$	(1)	$	(81)

Underfunded Accumulated Benefit Obligation – The accumulated benefit obligation (ABO) is the present value of benefits earned to date, assuming no future compensation growth. The underfunded accumulated benefit obligation represents the difference between the ABO and the fair value of plan assets. At December 31, 2015 and 2014, the non-qualified (supplemental) plan ABO was $388 million and $379 million, respectively. The following table discloses only the PBO, ABO, and fair value of plan assets for pension plans where the accumulated benefit obligation is in excess of the fair value of the plan assets as of December 31:

Underfunded Accumulated Benefit Obligation
Millions	2015		2014
Projected benefit obligation	$	398	$	388
Accumulated benefit obligation	$	388	$	379
Fair value of plan assets		-		-
Underfunded accumulated benefit obligation	$	(388)	$	(379)

The ABO for all defined benefit pension plans was $3.7 billion and $3.9 billion at December 31, 2015 and 2014, respectively.

Assumptions – The weighted-average actuarial assumptions used to determine benefit obligations at December 31:

	Pension		OPEB
Percentages	2015	2014	2015	2014
Discount rate	4.37%	3.94%	4.16%	3.74%
Compensation increase	4.10%	4.00%	N/A	N/A
Health care cost trend rate (employees under 65)	N/A	N/A	6.52%	6.34%
Ultimate health care cost trend rate	N/A	N/A	4.50%	4.50%
Year ultimate trend rate reached	N/A	N/A	2038	2028

Expense

Both pension and OPEB expense are determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a five-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately, but are deferred in accumulated other comprehensive income and, if necessary, amortized as pension or OPEB expense.

The components of our net periodic pension and OPEB cost/(benefit) were as follows for the years ended December 31:

	Pension						OPEB
Millions	2015		2014		2013		2015		2014		2013
Net Periodic Benefit Cost:
Service cost	$	106	$	70	$	72	$	3	$	2	$	3
Interest cost		163		158		134		13		14		12
Expected return on plan assets		(255)		(230)		(202)		-		-		-
Amortization of:
Prior service cost/(credit)		-		-		-		(10)		(11)		(16)
Actuarial loss		106		71		106		13		10		15
Net periodic benefit cost/(benefit)	$	120	$	69	$	110	$	19	$	15	$	14

Assumptions – The weighted-average actuarial assumptions used to determine expense were as follows:

	Pension			OPEB
Percentages	2015	2014	2013	2015	2014	2013
Discount rate	3.94%	4.72%	3.78%	3.74%	4.47%	3.48%
Expected return on plan assets	7.50%	7.50%	7.50%	N/A	N/A	N/A
Compensation increase	4.00%	4.00%	3.43%	N/A	N/A	N/A
Health care cost trend rate (employees under 65)	N/A	N/A	N/A	6.34%	6.49%	6.64%
Ultimate health care cost trend rate	N/A	N/A	N/A	4.50%	4.50%	4.50%
Year ultimate trend reached	N/A	N/A	N/A	2028	2028	2028

The discount rate was based on a yield curve of high quality corporate bonds with cash flows matching our plans’ expected benefit payments.  The expected return on plan assets is based on our asset allocation mix and our historical return, taking into account current and expected market conditions. The actual return on pension plan assets, net of fees, was approximately (1)% in 2015, 6% in 2014, and 17% in 2013.

Assumed health care cost trend rates have an effect on the expense and liabilities reported for health care plans. The assumed health care cost trend rate is based on historical rates and expected market conditions. The 2016 assumed health care cost trend rate for employees under 65 is 6.34%.  It is assumed the rate will decrease gradually to an ultimate rate of 4.5% in 2028 and will remain at that level.  A one-percentage point change in the assumed health care cost trend rates would have the following effects on OPEB:

Millions	One % pt. Increase		One % pt. Decrease
Effect on total service and interest cost components	$	1	$	(1)
Effect on accumulated benefit obligation		17		(14)

Cash Contributions

The following table details our cash contributions for the qualified pension plans and the benefit payments for the non-qualified (supplemental) pension and OPEB plans:

	Pension
Millions	Qualified		Non-qualified		OPEB
2014	$	200	$	33	$	25
2015		100		19		23

Our policy with respect to funding the qualified plans is to fund at least the minimum required by law and not more than the maximum amount deductible for tax purposes. All contributions made to the qualified pension plans in 2015 were voluntary and were made with cash generated from operations.

The non-qualified pension and OPEB plans are not funded and are not subject to any minimum regulatory funding requirements. Benefit payments for each year represent supplemental pension payments and claims paid for medical and life insurance. We anticipate our 2016 supplemental pension and OPEB payments will be made from cash generated from operations.

Benefit Payments

The following table details expected benefit payments for the years 2016 through 2025:

Millions	Pension		OPEB
2016	$	191	$	23
2017		194		23
2018		198		23
2019		202		23
2020		205		22
Years 2021 - 2025		1,077		102

Asset Allocation Strategy

Our pension plan asset allocation at December 31, 2015 and 2014, and target allocation for 2016, are as follows:

		Percentage of Plan Assets
	Target	December 31,
	Allocation 2016	2015	2014
Equity securities	60% to 70%	67%	68%
Debt securities	20% to 30%	23	23
Real estate	2% to 8%	6	4
Commodities	4% to 6%	4	5
Total		100%	100%

The investment strategy for pension plan assets is to maintain a broadly diversified portfolio designed to achieve our target average long-term rate of return of 7.5%. While we believe we can achieve a long-term average rate of return of 7.5%, we cannot be certain that the portfolio will perform to our expectations. Assets are strategically allocated among equity, debt, and other investments in order to achieve a diversification level that reduces fluctuations in investment returns. Asset allocation target ranges for equity, debt, and other portfolios are evaluated at least every three years with the assistance of an independent consulting firm. Actual asset allocations are monitored monthly, and rebalancing actions are executed at least quarterly, if needed.

The pension plan investments are held in a Master Trust. The majority of pension plan assets are invested in equity securities because equity portfolios have historically provided higher returns than debt and other asset classes over extended time horizons and are expected to do so in the future. Correspondingly, equity investments also entail greater risks than other investments.  Equity risks are balanced by investing a significant portion of the plans’ assets in high quality debt securities. The average credit rating of the debt portfolio exceeded A as of December 31, 2015 and A+ as of December 31, 2014. The debt portfolio is also broadly diversified and invested primarily in U.S. Treasury, mortgage, and corporate securities. The weighted-average maturity of the debt portfolio was 12 years at both December 31, 2015 and 2014.

The investment of pension plan assets in securities issued by UPC is explicitly prohibited by the plan for both the equity and debt portfolios, other than through index fund holdings.

Fair Value Measurements

The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Temporary Cash Investments – These investments consist of U.S. dollars and foreign currencies held in master trust accounts at The Northern Trust Company (the Trustee).  Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as Level 1 investments.

Registered Investment Companies – Registered Investment Companies are real estate investments and bond investments registered with the Securities and Exchange Commission.  The real estate investments are traded actively on public exchanges. The share prices for these investments are published at the close of each business day.  The Plan’s holdings of real estate investments are classified as Level 1 investments.  The bond investments are not traded publicly, but the underlying assets held in these funds are traded on active markets and the prices for these assets are readily observable.  The Plan’s holdings in bond investments are classified as Level 2 investments.

Federal Government Securities – Federal Government Securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or by government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.  Federal Government Securities are classified as Level 2 investments.

Bonds and Debentures – Bonds and debentures consist of fixed income securities issued by U.S. and non-U.S. corporations as well as state and local governments.  These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.  Corporate, state, and municipal bonds and debentures are classified as Level 2 investments.

Corporate Stock – This investment category consists of common and preferred stock issued by U.S. and non-U.S. corporations.  Most common shares are traded actively on exchanges and price quotes for these shares are readily available. Common stock is classified as a Level 1 investment.  Preferred shares included in this category are valued using a bid evaluation process with bid data provided by independent pricing sources.  Preferred stock is classified as a Level 2 investment.

Venture Capital and Buyout Partnerships – This investment category is comprised of interests in limited partnerships that invest primarily in privately-held companies.  Due to the private nature of the partnership investments, pricing inputs are not readily observable.  Asset valuations are developed by the general partners that manage the partnerships.  These valuations are based on the application of public market multiples to private company cash flows, market transactions that provide valuation information for comparable companies, and other methods.  The fair value recorded by the Plan is calculated using each partnership’s net asset value (NAV), which is derived from the valuation method described here. The Plan’s holdings of limited partnership interests are classified as Level 3 investments.

Real Estate Partnerships – Most of the Plan’s real estate investments are partnership interests.  The Real Estate Partnership category also includes real estate investments held in similar structures such as private real estate investment trusts and limited liability companies. Valuations for the holdings in this category are not based on readily observable inputs and are primarily derived from property appraisals. The fair value recorded by the Plan is calculated using the NAV for each investment, which is derived from the valuation methods described here. The Plan’s interests in private real estate partnerships, investment trusts, and limited liability companies are classified as Level 3 investments.

Collective Trust and Other Funds – Collective trust funds are comprised of shares or units in commingled funds that are not publicly traded.  The underlying assets in these funds (U.S. stock funds, non-U.S. stock funds, commodity funds, and short term investment funds) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. The Plan’s holdings of common trust funds are classified as Level 2 investments.

This category also includes investments in limited liability companies that invest in publicly-traded securities. The limited liability company investments are funds that invest in both long and short positions in convertible securities, stocks, commodities, and fixed income securities.  The underlying securities held by the funds are traded actively on public exchanges and price quotes for these investments are readily available.  Interests in the limited liability companies are classified as Level 2 investments.

As of December 31, 2015, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Inputs		Inputs		Inputs
Millions	(Level 1)		(Level 2)		(Level 3)		Total
Plan assets:
Temporary cash investments	$	13	$	-	$	-	$	13
Registered investment companies		179		270		-		449
Federal government securities		-		125		-		125
Bonds & debentures		-		383		-		383
Corporate stock		1,034		7		-		1,041
Venture capital and buyout partnerships		-		-		256		256
Real estate partnerships		-		-		199		199
Collective trust and other funds		-		1,075		-		1,075
Total plan assets at fair value	$	1,226	$	1,860	$	455		3,541
Other assets [a]								3
Total plan assets							$	3,544

[a] Other assets include accrued receivables and pending broker settlements.

As of December 31, 2014, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Inputs		Inputs		Inputs
Millions	(Level 1)		(Level 2)		(Level 3)		Total
Plan assets:
Temporary cash investments	$	22	$	-	$	-	$	22
Registered investment companies		12		282		-		294
Federal government securities		-		163		-		163
Bonds & debentures		-		381		-		381
Corporate stock		1,076		15		-		1,091
Venture capital and buyout partnerships		-		-		234		234
Real estate partnerships		-		-		139		139
Collective trust and other funds		-		1,340		-		1,340
Total plan assets at fair value	$	1,110	$	2,181	$	373		3,664
Other assets [a]								(10)
Total plan assets							$	3,654

[a] Other assets include accrued receivables and pending broker settlements.

For the years ended December 31, 2015 and 2014, there were no significant transfers in or out of Levels 1, 2, or 3.

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3 investments) during 2015:

	Venture Capital
	and Buyout		Real Estate
Millions	Partnerships		Partnerships		Total
Beginning balance - January 1, 2015	$	234	$	139	$	373
Realized gain		18		5		23
Unrealized gain		13		8		21
Purchases		54		74		128
Sales		(63)		(27)		(90)
Ending balance - December 31, 2015	$	256	$	199	$	455

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3 investments) during 2014:

	Venture Capital
	and Buyout		Real Estate
Millions	Partnerships		Partnerships		Total
Beginning balance - January 1, 2014	$	213	$	139	$	352
Realized gain		17		8		25
Unrealized gain		5		6		11
Purchases		54		19		73
Sales		(55)		(33)		(88)
Ending balance - December 31, 2014	$	234	$	139	$	373

Other Retirement Programs

401(k)/Thrift Plan – We provide a defined contribution plan (401(k)/thrift plan) to eligible non-union and union employees for whom we make matching contributions. We match 50 cents for each dollar contributed by employees up to the first six percent of compensation contributed. Our plan contributions were $20 million in 2015, $19 million in 2014, and $18 million in 2013.

Railroad Retirement System – All Railroad employees are covered by the Railroad Retirement System (the System). Contributions made to the System are expensed as incurred and amounted to approximately $749 million in 2015, $711 million in 2014, and $670 million in 2013.

Collective Bargaining Agreements –  Under collective bargaining agreements, we participate in multi-employer benefit plans that provide certain postretirement health care and life insurance benefits for eligible union employees.  Premiums paid under these plans are expensed as incurred and amounted to $46 million in 2015, $52 million in 2014, and $57 million in 2013.

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Other Income

12 Months Ended

Dec. 31, 2015

Other Income [Abstract]

Other Income

7. Other Income

Other income included the following for the years ended December 31:

Millions	2015		2014		2013
Net gain on non-operating asset dispositions [a]	$	144	$	69	$	32
Rental income [b]		96		96		106
Interest income		5		4		4
Non-operating environmental costs and other [c]		(19)		(18)		(14)
Total	$	226	$	151	$	128

[a] 2015 includes $113 million related to a real estate sale.

[b] 2013 includes $17 million related to a land lease contract settlement.

[c] 2014 includes $14 million related to the sale of a permanent easement.

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Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes [Abstract]

Income Taxes

8. Income Taxes

Components of income tax expense were as follows for the years ended December 31:

Millions	2015		2014		2013
Current tax expense:
Federal	$	1,901	$	2,019	$	1,727
State		210		239		199
Foreign		8		10		11
Total current tax expense		2,119		2,268		1,937
Deferred and other tax expense:
Federal		644		753		605
State		121		142		118
Total deferred and other tax expense		765		895		723
Total income tax expense	$	2,884	$	3,163	$	2,660

For the years ended December 31, reconciliations between statutory and effective tax rates are as follows:

Tax Rate Percentages	2015		2014		2013
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State statutory rates, net of federal benefits	3.1		3.1		3.1
Tax credits	(0.5)		(0.4)		(0.2)
Deferred tax adjustments	-		-		(0.1)
Other	0.1		0.2		(0.1)
Effective tax rate	37.7	%	37.9	%	37.7	%

Deferred tax assets and liabilities are recorded for the expected future tax consequences of events that are reported in different periods for financial reporting and income tax purposes.  The majority of our deferred tax assets relate to deductions that already have been claimed for financial reporting purposes but not for tax purposes.  The majority of our deferred tax liabilities relate to differences between the tax bases and financial reporting amounts of our land and depreciable property, due to accelerated tax depreciation (including bonus depreciation), revaluation of assets in purchase accounting transactions, and differences in capitalization methods.

Deferred income tax (liabilities)/assets were comprised of the following at December 31:

Millions	2015		2014
Deferred income tax liabilities:
Property	$	(16,079)	$	(15,173)
Other		(352)		(411)
Total deferred income tax liabilities		(16,431)		(15,584)
Deferred income tax assets:
Accrued wages		76		74
Accrued casualty costs		237		228
Stock compensation		72		69
Debt and leases		149		86
Retiree benefits		204		392
Credits		156		164
Other		296		168
Total deferred income tax assets [a]	$	1,190	$	1,181
Net deferred income tax liability	$	(15,241)	$	(14,403)

[a] Prior to the adoption of Accounting Standard Update (ASU) 2015-17, deferred tax assets were required to be presented as current and non-current on the Consolidated Statement of Financial Position.  In 2015, UP adopted ASU 2015-17 retrospectively.  Current deferred income tax assets at December 31, 2014 of $277 million were reclassified from current to non-current for 2015 presentation.

When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized based on management’s judgments using available evidence for purposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset. In 2015 and 2014, there were no valuation allowances.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

A reconciliation of changes in unrecognized tax benefits liabilities/(assets) from the beginning to the end of the reporting period is as follows:

Millions	2015		2014		2013
Unrecognized tax benefits at January 1	$	151	$	59	$	115
Increases for positions taken in current year		38		92		24
Increases for positions taken in prior years		13		22		15
Decreases for positions taken in prior years		(87)		(14)		(35)
Payments to and settlements with taxing authorities		(13)		(8)		(58)
Increases/(decreases) for interest and penalties		(5)		1		-
Lapse of statutes of limitations		(3)		(1)		(2)
Unrecognized tax benefits at December 31	$	94	$	151	$	59

We recognize interest and penalties as part of income tax expense. Total accrued liabilities for interest and penalties were $2 million and $6 million at December 31, 2015 and 2014, respectively. Total interest and penalties recognized as part of income tax expense (benefit) were $(3) million for 2015, $9 million for 2014, and $7 million for 2013.

Internal Revenue Service (IRS) examinations have been completed and settled for all years prior to 2011, and the statute of limitations bars any additional tax assessments. UPC is not currently under audit by the Internal Revenue Service.

In the third quarter of 2015, UPC and the IRS signed a closing agreement resolving all tax matters for tax years 2009-2010. The settlement had an immaterial effect on our income tax expense. In connection with the settlement, UPC paid $10 million in the fourth quarter of 2015.

In the fourth quarter of 2014, UPC and the IRS signed a closing agreement resolving all tax matters for tax years 2005-2008. The settlement had an immaterial effect on our income tax expense. In connection with the settlement, UPC paid $11 million in 2014.

Several state tax authorities are examining our state income tax returns for years 2006 through 2012.

We do not expect our unrecognized tax benefits to change significantly in the next 12 months. At December 31, 2015, we had a net unrecognized tax benefit liability of $94 million.

The portion of our unrecognized tax benefits that relates to permanent changes in tax and interest would reduce our effective tax rate, if recognized. The remaining unrecognized tax benefits relate to tax positions for which only the timing of the benefit is uncertain. Recognition of the tax benefits with uncertain timing would reduce our effective tax rate only through a reduction of accrued interest and penalties.  The unrecognized tax benefits that would reduce our effective tax rate are as follows:

Millions	2015		2014		2013
Unrecognized tax benefits that would reduce the effective tax rate	$	31	$	33	$	34
Unrecognized tax benefits that would not reduce the effective tax rate		63		118		25
Total unrecognized tax benefits	$	94	$	151	$	59

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Earnings Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

9. Earnings Per Share

The following table provides a reconciliation between basic and diluted earnings per share for the years ended December 31:

Millions, Except Per Share Amounts	2015		2014		2013
Net income	$	4,772	$	5,180	$	4,388
Weighted-average number of shares outstanding:
Basic		866.2		897.1		926.5
Dilutive effect of stock options		1.5		2.1		2.4
Dilutive effect of retention shares and units		1.7		1.9		2.6
Diluted		869.4		901.1		931.5
Earnings per share – basic	$	5.51	$	5.77	$	4.74
Earnings per share – diluted	$	5.49	$	5.75	$	4.71

Common stock options totaling 1.1 million, 0.4 million, and 0.5 million for 2015, 2014, and 2013, respectively, were excluded from the computation of diluted earnings per share because the exercise prices of these options exceeded the average market price of our common stock for the respective periods, and the effect of their inclusion would be anti-dilutive.

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Accumulated Other Comprehensive Income/(Loss)

12 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Income/(Loss) [Abstract]

Accumulated Other Comprehensive Income/(Loss)

10. Accumulated Other Comprehensive Income/(Loss)

Reclassifications out of accumulated other comprehensive income/(loss) were as follows (net of tax):

Millions	Defined benefit plans		Foreign currency translation		Total
Balance at January 1, 2015	$	(1,161)	$	(49)	$	(1,210)
Other comprehensive income/(loss) before reclassifications		(4)		(43)		(47)
Amounts reclassified from accumulated other comprehensive income/(loss) [a]		62		-		62
Net year-to-date other comprehensive income/(loss), net of taxes of $(8) million		58		(43)		15
Balance at December 31, 2015	$	(1,103)	$	(92)	$	(1,195)
Balance at January 1, 2014	$	(713)	$	(37)	$	(750)
Other comprehensive income/(loss) before reclassifications		10		(12)		(2)
Amounts reclassified from accumulated other comprehensive income/(loss) [a]		(458)		-		(458)
Net year-to-date other comprehensive income/(loss), net of taxes of $291 million		(448)		(12)		(460)
Balance at December 31, 2014	$	(1,161)	$	(49)	$	(1,210)

[a] The accumulated other comprehensive income/(loss) reclassification components are 1) prior service cost/(benefit) and 2) net actuarial loss which are both included in the computation of net periodic pension cost.  See Note 6 Retirement Plans for additional details.

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Accounts Receivable

12 Months Ended

Dec. 31, 2015

Accounts Receivable [Abstract]

Accounts Receivable

11. Accounts Receivable

Accounts receivable includes freight and other receivables reduced by an allowance for doubtful accounts. The allowance is based upon historical losses, credit worthiness of customers, and current economic conditions. At both December 31, 2015, and 2014, our accounts receivable were reduced by$5 million.  Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements of Financial Position.  At December 31, 2015, and 2014, receivables classified as other assets were reduced by allowances of $11 million and $16 million, respectively.

Receivables Securitization Facility – The Railroad maintains a $650 million, 3-year receivables securitization facility maturing in July 2017 under which it sells most of its eligible third-party receivables to Union Pacific Receivables, Inc. (UPRI), a consolidated, wholly-owned, bankruptcy-remote subsidiary that may subsequently transfer, without recourse, an undivided interest in accounts receivable to investors. The investors have no recourse to the Railroad’s other assets except for customary warranty and indemnity claims. Creditors of the Railroad do not have recourse to the assets of UPRI.

The amount outstanding under the facility was $400 million at both December 31, 2015, and December 31, 2014. The facility was supported by $0.9 billion and $1.2 billion of accounts receivable as collateral at December 31, 2015, and December 31, 2014, respectively, which, as a retained interest, is included in accounts receivable, net in our Consolidated Statements of Financial Position.

The outstanding amount the Railroad is allowed to maintain under the facility, with a maximum of $650 million, may fluctuate based on the availability of eligible receivables and is directly affected by business volumes and credit risks, including receivables payment quality measures such as default and dilution ratios. If default or dilution ratios increase one percent, the allowable outstanding amount under the facility would not materially change.

The costs of the receivables securitization facility include interest, which will vary based on prevailing benchmark and commercial paper rates, program fees paid to participating banks, commercial paper issuance costs, and fees of participating banks for unused commitment availability.  The costs of the receivables securitization facility are included in interest expense and were $5 million, $4 million and $5 million for 2015, 2014, and 2013, respectively.

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Properties

12 Months Ended

Dec. 31, 2015

Properties [Abstract]

Properties

12. Properties

The following tables list the major categories of property and equipment, as well as the weighted-average estimated useful life for each category (in years):

Millions, Except Estimated Useful Life			Accumulated		Net Book		Estimated
As of December 31, 2015	Cost		Depreciation		Value		Useful Life
Land	$	5,195	$	N/A	$	5,195	N/A
Road:
Rail and other track material		15,236		5,495		9,741	37
Ties		9,439		2,595		6,844	33
Ballast		5,024		1,350		3,674	34
Other roadway [a]		17,374		3,021		14,353	47
Total road		47,073		12,461		34,612	N/A
Equipment:
Locomotives		9,027		3,726		5,301	19
Freight cars		2,203		962		1,241	24
Work equipment and other		897		191		706	19
Total equipment		12,127		4,879		7,248	N/A
Technology and other		919		358		561	11
Construction in progress		1,250		-		1,250	N/A
Total	$	66,564	$	17,698	$	48,866	N/A

Millions, Except Estimated Useful Life			Accumulated		Net Book		Estimated
As of December 31, 2014	Cost		Depreciation		Value		Useful Life
Land	$	5,194	$	N/A	$	5,194	N/A
Road:
Rail and other track material		14,588		5,241		9,347	33
Ties		9,102		2,450		6,652	33
Ballast		4,826		1,264		3,562	34
Other roadway [a]		16,476		2,852		13,624	47
Total road		44,992		11,807		33,185	N/A
Equipment:
Locomotives		8,276		3,694		4,582	20
Freight cars		2,116		968		1,148	25
Work equipment and other		684		153		531	18
Total equipment		11,076		4,815		6,261	N/A
Technology and other		872		320		552	10
Construction in progress		1,080		-		1,080	N/A
Total	$	63,214	$	16,942	$	46,272	N/A

[a] Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.

Property and Depreciation – Our railroad operations are highly capital intensive, and our large base of homogeneous, network-type assets turns over on a continuous basis.  Each year we develop a capital program for the replacement of assets and for the acquisition or construction of assets that enable us to enhance our operations or provide new service offerings to customers.  Assets purchased or constructed throughout the year are capitalized if they meet applicable minimum units of property criteria.  Properties and equipment are carried at cost and are depreciated on a straight-line basis over their estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those subject to abandonment, yard and switching tracks, and electronic yards) for which lives are measured in millions of gross tons per mile of track.  We use the group method of depreciation in which all items with similar characteristics, use, and expected lives are grouped together in asset classes, and are depreciated using composite depreciation rates.  The group method of depreciation treats each asset class as a pool of resources, not as singular items.  We currently have more than 60 depreciable asset classes, and we may increase or decrease the number of asset classes due to changes in technology, asset strategies, or other factors.

We determine the estimated service lives of depreciable railroad assets by means of depreciation studies.  We perform depreciation studies at least every three years for equipment and every six years for track assets (i.e., rail and other track material, ties, and ballast) and other road property.  Our depreciation studies take into account the following factors:

· Statistical analysis of historical patterns of use and retirements of each of our asset classes;

· Evaluation of any expected changes in current operations and the outlook for continued use of the assets;

· Evaluation of technological advances and changes to maintenance practices; and

· Expected salvage to be received upon retirement.

For rail in high-density traffic corridors, we measure estimated service lives in millions of gross tons per mile of track.  It has been our experience that the lives of rail in high-density traffic corridors are closely correlated to usage (i.e., the amount of weight carried over the rail).  The service lives also vary based on rail weight, rail condition (e.g., new or secondhand), and rail type (e.g., straight or curve).  Our depreciation studies for rail in high-density traffic corridors consider each of these factors in determining the estimated service lives.  For rail in high-density traffic corridors, we calculate depreciation rates annually by dividing the number of gross ton-miles carried over the rail (i.e., the weight of loaded and empty freight cars, locomotives and maintenance of way equipment transported over the rail) by the estimated service lives of the rail measured in millions of gross tons per mile.  For all other depreciable assets, we compute depreciation based on the estimated service lives of our assets as determined from the analysis of our depreciation studies.  Changes in the estimated service lives of our assets and their related depreciation rates are implemented prospectively.

Under group depreciation, the historical cost (net of salvage) of depreciable property that is retired or replaced in the ordinary course of business is charged to accumulated depreciation and no gain or loss is recognized.  The historical cost of certain track assets is estimated using (i) inflation indices published by the Bureau of Labor Statistics and (ii) the estimated useful lives of the assets as determined by our depreciation studies.  The indices were selected because they closely correlate with the major costs of the properties comprising the applicable track asset classes.  Because of the number of estimates inherent in the depreciation and retirement processes and because it is impossible to precisely estimate each of these variables until a group of property is completely retired, we continually monitor the estimated service lives of our assets and the accumulated depreciation associated with each asset class to ensure our depreciation rates are appropriate. In addition, we determine if the recorded amount of accumulated depreciation is deficient (or in excess) of the amount indicated by our depreciation studies. Any deficiency (or excess) is amortized as a component of depreciation expense over the remaining service lives of the applicable classes of assets.

For retirements of depreciable railroad properties that do not occur in the normal course of business, a gain or loss may be recognized if the retirement meets each of the following three conditions: (i) is unusual, (ii) is material in amount, and (iii) varies significantly from the retirement profile identified through our depreciation studies.  A gain or loss is recognized in other income when we sell land or dispose of assets that are not part of our railroad operations.

When we purchase an asset, we capitalize all costs necessary to make the asset ready for its intended use.  However, many of our assets are self-constructed.  A large portion of our capital expenditures is for replacement of existing track assets and other road properties, which is typically performed by our employees, and for track line expansion and other capacity projects.  Costs that are directly attributable to capital projects (including overhead costs) are capitalized.  Direct costs that are capitalized as part of self-constructed assets include material, labor, and work equipment.  Indirect costs are capitalized if they clearly relate to the construction of the asset.

General and administrative expenditures are expensed as incurred. Normal repairs and maintenance are also expensed as incurred, while costs incurred that extend the useful life of an asset, improve the safety of our operations or improve operating efficiency are capitalized. These costs are allocated using appropriate statistical bases. Total expense for repairs and maintenance incurred was $2.5 billion for 2015, $2.4 billion for 2014, and $2.3 billion for 2013.

Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease.

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Accounts Payable And Other Current Liabilities

12 Months Ended

Dec. 31, 2015

Accounts Payable And Other Current Liabilties [Abstract]

Accounts Payable And Other Current Liabilities

13. Accounts Payable and Other Current Liabilities

	Dec. 31,		Dec. 31,
Millions	2015		2014
Accounts payable	$	743	$	877
Income and other taxes payable		434		412
Accrued wages and vacation		391		409
Interest payable		208		178
Accrued casualty costs		181		249
Equipment rents payable		105		100
Dividends payable [a]		-		438
Other		550		640
Total accounts payable and other current liabilities	$	2,612	$	3,303

[a]Beginning in 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter. The 2015 dividends paid amount includes the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015, the second quarter 2015 dividend of $479 million, which was paid on June 30, 2015, the third quarter 2015 dividend of $476 million, which was paid on September 30, 2015, as well as the fourth quarter 2015 dividend of $467 million, which was paid on December 30, 2015.

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Financial Instruments

12 Months Ended

Dec. 31, 2015

Financial Instruments [Abstract]

Financial Instruments

14. Financial Instruments

Strategy and Risk – We may use derivative financial instruments in limited instances for other than trading purposes to assist in managing our overall exposure to fluctuations in interest rates and fuel prices. We are not a party to leveraged derivatives and, by policy, do not use derivative financial instruments for speculative purposes. Derivative financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. We formally document the nature and relationships between the hedging instruments and hedged items at inception, as well as our risk-management objectives, strategies for undertaking the various hedge transactions, and method of assessing hedge effectiveness. Changes in the fair market value of derivative financial instruments that do not qualify for hedge accounting are charged to earnings. We may use swaps, collars, futures, and/or forward contracts to mitigate the risk of adverse movements in interest rates and fuel prices; however, the use of these derivative financial instruments may limit future benefits from favorable interest rate and fuel price movements.

Market and Credit Risk – We address market risk related to derivative financial instruments by selecting instruments with value fluctuations that highly correlate with the underlying hedged item. We manage credit risk related to derivative financial instruments, which is minimal, by requiring high credit standards for counterparties and periodic settlements. At December 31, 2015, and 2014, we were not required to provide collateral, nor had we received collateral, relating to our hedging activities.

Interest Rate Fair Value Hedges – We manage our overall exposure to fluctuations in interest rates by adjusting the proportion of fixed and floating rate debt instruments within our debt portfolio over a given period. We generally manage the mix of fixed and floating rate debt through the issuance of targeted amounts of each as debt matures or as we require incremental borrowings. We employ derivatives, primarily swaps, as one of the tools to obtain the targeted mix. In addition, we also obtain flexibility in managing interest costs and the interest rate mix within our debt portfolio by evaluating the issuance of and managing outstanding callable fixed-rate debt securities.

Swaps allow us to convert debt from fixed rates to variable rates and thereby hedge the risk of changes in the debt’s fair value attributable to the changes in interest rates. We account for swaps as fair value hedges using the short-cut method; therefore, we do not record any ineffectiveness within our Consolidated Financial Statements. As of December 31, 2015, and 2014, we had no interest rate fair value hedges outstanding.

Interest Rate Cash Flow Hedges – We report changes in the fair value of cash flow hedges in accumulated other comprehensive loss until the hedged item affects earnings. As of December 31, 2015, and 2014, we had no interest rate cash flow hedges outstanding.

Earnings Impact – Our use of derivative financial instruments had no impact on pre-tax income for the years ended December 31, 2015, 2014, and 2013.

Fair Value of Financial Instruments – The fair value of our short- and long-term debt was estimated using a market value price model, which utilizes applicable U.S. Treasury rates along with current market quotes on comparable debt securities. All of the inputs used to determine the fair market value of the Corporation’s long-term debt are Level 2 inputs and obtained from an independent source. At December 31, 2015, the fair value of total debt was $15.2 billion, approximately $1.0 billion more than the carrying value.  At December 31, 2014, the fair value of total debt was $13.0 billion, approximately $1.5 billion more than the carrying value. The fair value of the Corporation’s debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules. At December 31, 2015, and 2014, approximately $155 million and $163 million, respectively, of debt securities contained call provisions that allow us to retire the debt instruments prior to final maturity, with the payment of fixed call premiums, or in certain cases, at par.  The fair value of our cash equivalents approximates their carrying value due to the short-term maturities of these instruments.

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Debt

12 Months Ended

Dec. 31, 2015

Debt [Abstract]

Debt

15. Debt

Total debt as of December 31, 2015, and 2014, is summarized below:

Millions	2015		2014
Notes and debentures, 1.8% to 7.9% due through 2065	$	11,964	$	9,266
Capitalized leases, 3.1% to 8.4% due through 2028		1,268		1,520
Equipment obligations, 2.8% to 6.7% due through 2031		963		597
Receivables Securitization (Note 11)		400		400
Term loans - floating rate, due in 2016		200		200
Mortgage bonds, 4.8% due through 2030		57		57
Medium-term notes, 9.3% to 10.0% due through 2020		23		23
Tax-exempt financings - floating rate, due in 2015		-		8
Unamortized discount and deferred issuance costs [a]		(674)		(658)
Total debt		14,201		11,413
Less: current portion		(594)		(461)
Total long-term debt	$	13,607	$	10,952

[a] Includes deferred debt issuance costs of $89 million and $67 million as of December 31, 2015, and 2014, respectively, as a result of the retrospective adoption of Accounting Standard Update (ASU) 2015-03 on December 31, 2015.  Prior to the ASU adoption, deferred debt issuance costs were presented in other assets.

Debt Maturities – The following table presents aggregate debt maturities as of December 31, 2015, excluding market value adjustments:

Millions
2016	$	594
2017		1,052
2018		566
2019		637
2020		1,034
Thereafter		10,318
Total debt	$	14,201

Equipment Encumbrances – Equipment with a carrying value of approximately $2.6 billion and $2.8 billion at December 31, 2015, and 2014, respectively, served as collateral for capital leases and other types of equipment obligations in accordance with the secured financing arrangements utilized to acquire such railroad equipment.

As a result of the merger of Missouri Pacific Railroad Company (MPRR) with and into UPRR on January 1, 1997, and pursuant to the underlying indentures for the MPRR mortgage bonds, UPRR must maintain the same value of assets after the merger in order to comply with the security requirements of the mortgage bonds. As of the merger date, the value of the MPRR assets that secured the mortgage bonds was approximately $6.0 billion. In accordance with the terms of the indentures, this collateral value must be maintained during the entire term of the mortgage bonds irrespective of the outstanding balance of such bonds.

Credit Facilities – At December 31, 2015, we had $1.7 billion of credit available under the facility, which is designated for general corporate purposes and supports the issuance of commercial paper. We did not draw on the facility during 2015. Commitment fees and interest rates payable under the facility are similar to fees and rates available to comparably rated, investment-grade borrowers. The facility allows for borrowings at floating rates based on London Interbank Offered Rates, plus a spread, depending upon credit ratings for our senior unsecured debt. The facility matures in May 2019 under a five-year term and requires UPC to maintain a debt-to-net-worth coverage ratio.

The definition of debt used for purposes of calculating the debt-to-net-worth coverage ratio includes, among other things, certain credit arrangements, capital leases, guarantees and unfunded and vested pension benefits under Title IV of ERISA. At December 31, 2015, the debt-to-net-worth coverage ratio allowed us to carry up to $41.4 billion of debt (as defined in the facility), and we had $14.3 billion of debt (as defined in the facility) outstanding at that date.  Under our current capital plans, we expect to continue to satisfy the debt-to-net-worth coverage ratio; however, many factors beyond our reasonable control could affect our ability to comply with this provision in the future. The facility does not include any other financial restrictions, credit rating triggers (other than rating-dependent pricing), or any other provision that could require us to post collateral. The facility also includes a $125 million cross-default provision and a change-of-control provision.

During 2015, we did not issue or repay any commercial paper, and at December 31, 2015, and 2014, we had no commercial paper outstanding. Our revolving credit facility supports our outstanding commercial paper balances, and, unless we change the terms of our commercial paper program, our aggregate issuance of commercial paper will not exceed the amount of borrowings available under the facility.

Dividend Restrictions – Our revolving credit facility includes a debt-to-net worth covenant (discussed in the Credit Facilities section above) that, under certain circumstances, restricts the payment of cash dividends to our shareholders. The amount of retained earnings available for dividends was $13.6 billion and $15.4 billion at December 31, 2015, and 2014, respectively.

Shelf Registration Statement and Significant New Borrowings – We filed a new shelf registration statement with the SEC that became effective on February 9, 2015. The Board of Directors authorized the issuance of up to $4.0 billion of debt securities, replacing the $4.0 billion authorized under our shelf registration filed in February 2013, which was fully utilized after our January 2015 debt offering noted below. Under our current shelf registration, we may issue, from time to time, any combination of debt securities, preferred stock, common stock, or warrants for debt securities or preferred stock in one or more offerings.

During 2015, we issued the following unsecured, fixed-rate debt securities under our shelf registrations:

Date	Description of Securities
January 29, 2015	$250 million of 1.80% Notes due February 1, 2020
	$450 million of 3.375% Notes due February 1, 2035
	$450 million of 3.875% Notes due February 1, 2055
June 19, 2015	$400 million of 2.250% Notes due June 19, 2020
	$300 million of 3.250% Notes due August 15, 2025
October 29, 2015	$200 million of reopened 3.250% Notes due August 15, 2025
	$500 million of 4.050% Notes due November 15, 2045
	$400 million of 4.375% Notes due November 15, 2065

We used the net proceeds from the offerings for general corporate purposes, including the repurchase of common stock pursuant to our share repurchase program. These debt securities include change-of-control provisions. At December 31, 2015, we had remaining authority to issue up to $2.2 billion of debt securities under our shelf registration.

Equipment Trust – On May 12, 2015, UPRR consummated a pass-through (P/T) financing, whereby a P/T trust was created, which issued $399 million of P/T trust certificates with a stated interest rate of 2.695%. The P/T trust certificates will mature on May 12, 2027. The proceeds from the issuance of the P/T trust certificates were used to purchase equipment trust certificates to be issued by UPRR to finance the acquisition of 182 locomotives. The equipment trust certificates are secured by a lien on the locomotives. The $399 million is classified as debt due after one year in our Consolidated Statements of Financial Position.

Debt Exchange – On August 21, 2013, we exchanged $1,170 million of various outstanding notes and debentures due between 2016 and 2040 (the Existing Notes) for $439 million of 3.646% notes (the New 2024 Notes) due February 15, 2024 and $700 million of 4.821% notes (the New 2044 Notes) due February 1, 2044, plus cash consideration of approximately $280 million in addition to $8 million for accrued and unpaid interest on the Existing Notes.  In accordance with ASC 470-50-40, Debt-Modifications and Extinguishments-Derecognition, this transaction was accounted for as a debt exchange, as the exchanged debt instruments are not considered to be substantially different.  The cash consideration was recorded as an adjustment to the carrying value of debt, and the balance of the unamortized discount and issue costs from the Existing Notes is being amortized as an adjustment of interest expense over the terms of the New 2024 Notes and the New 2044 Notes.  No gain or loss was recognized as a result of the exchange.  Costs related to the debt exchange that were payable to parties other than the debt holders totaled approximately $9 million and were included in interest expense during the year ended December 31, 2013.

The following table lists the outstanding notes and debentures that were exchanged:

	Principal amount
Millions	exchanged
The 2024 Offers
7.000% Debentures due 2016	$	8
5.650% Notes due 2017		38
5.750% Notes due 2017		70
5.700% Notes due 2018		103
7.875% Notes due 2019		20
6.125% Notes due 2020		238
The 2044 Offers
7.125% Debentures due 2028		73
6.625% Debentures due 2029		177
6.250% Debentures due 2034		19
6.150% Debentures due 2037		138
5.780% Notes due 2040		286
Total	$	1,170

Receivables Securitization Facility – As of both December 31, 2015 and 2014, we recorded $400 million of borrowings under our receivables securitization facility, as secured debt. (See further discussion of our receivables securitization facility in Note 11).

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Variable Interest Entities

12 Months Ended

Dec. 31, 2015

Variable Interest Entities [Abstract]

Variable Interest Entities

16. Variable Interest Entities

We have entered into various lease transactions in which the structure of the leases contain variable interest entities (VIEs). These VIEs were created solely for the purpose of doing lease transactions (principally involving railroad equipment and facilities) and have no other activities, assets or liabilities outside of the lease transactions.  Within these lease arrangements, we have the right to purchase some or all of the assets at fixed prices. Depending on market conditions, fixed-price purchase options available in the leases could potentially provide benefits to us; however, these benefits are not expected to be significant.

We maintain and operate the assets based on contractual obligations within the lease arrangements, which set specific guidelines consistent within the railroad industry. As such, we have no control over activities that could materially impact the fair value of the leased assets. We do not hold the power to direct the activities of the VIEs and, therefore, do not control the ongoing activities that have a significant impact on the economic performance of the VIEs. Additionally, we do not have the obligation to absorb losses of the VIEs or the right to receive benefits of the VIEs that could potentially be significant to the VIEs.

We are not considered to be the primary beneficiary and do not consolidate these VIEs because our actions and decisions do not have the most significant effect on the VIE’s performance and our fixed-price purchase options are not considered to be potentially significant to the VIEs.  The future minimum lease payments associated with the VIE leases totaled $2.6 billion as of December 31, 2015.

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Leases

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Leases

17. Leases

We lease certain locomotives, freight cars, and other property. The Consolidated Statements of Financial Position as of December 31, 2015 and 2014 included $2,273 million, net of $1,189 million of accumulated depreciation, and $2,454 million, net of $1,210 million of accumulated depreciation, respectively, for properties held under capital leases. A charge to income resulting from the depreciation for assets held under capital leases is included within depreciation expense in our Consolidated Statements of Income. Future minimum lease payments for operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2015, were as follows:

Millions	Operating Leases		Capital Leases
2016	$	491	$	217
2017		446		220
2018		371		198
2019		339		184
2020		282		193
Later years		1,501		575
Total minimum lease payments	$	3,430	$	1,587
Amount representing interest		N/A		(319)
Present value of minimum lease payments		N/A	$	1,268

Approximately 95% of capital lease payments relate to locomotives. Rent expense for operating leases with terms exceeding one month was $590 million in 2015, $593 million in 2014, and $618 million in 2013. When cash rental payments are not made on a straight-line basis, we recognize variable rental expense on a straight-line basis over the lease term. Contingent rentals and sub-rentals are not significant.

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies [Abstract]

Commitments And Contingencies

18. Commitments and Contingencies

Asserted and Unasserted Claims – Various claims and lawsuits are pending against us and certain of our subsidiaries. We cannot fully determine the effect of all asserted and unasserted claims on our consolidated results of operations, financial condition, or liquidity. To the extent possible, we have recorded a liability where asserted and unasserted claims are considered probable and where such claims can be reasonably estimated. We do not expect that any known lawsuits, claims, environmental costs, commitments, contingent liabilities, or guarantees will have a material adverse effect on our consolidated results of operations, financial condition, or liquidity after taking into account liabilities and insurance recoveries previously recorded for these matters.

Personal Injury – The cost of personal injuries to employees and others related to our activities is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability, including unasserted claims. The Federal Employers’ Liability Act (FELA) governs compensation for work-related accidents. Under FELA, damages are assessed based on a finding of fault through litigation or out-of-court settlements. We offer a comprehensive variety of services and rehabilitation programs for employees who are injured at work.

Our personal injury liability is not discounted to present value due to the uncertainty surrounding the timing of future payments. Approximately 94% of the recorded liability is related to asserted claims and approximately 6% is related to unasserted claims at December 31, 2015. Because of the uncertainty surrounding the ultimate outcome of personal injury claims, it is reasonably possible that future costs to settle these claims may range from approximately $318 million to $345 million. We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other.  Estimates can vary over time due to evolving trends in litigation.

Our personal injury liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	335	$	294	$	334
Current year accruals		89		96		87
Changes in estimates for prior years		(3)		9		(38)
Payments		(103)		(64)		(89)
Ending balance at December 31	$	318	$	335	$	294
Current portion, ending balance at December 31	$	63	$	111	$	82

In conjunction with the liability update performed in 2015, we also reassessed our estimated insurance recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2015, and 2014.

Asbestos – We are a defendant in a number of lawsuits in which current and former employees and other parties allege exposure to asbestos. We assess our potential liability using a statistical analysis of resolution costs for asbestos-related claims.  This liability is updated annually and excludes future defense and processing costs. The liability for resolving both asserted and unasserted claims was based on the following assumptions:

· The ratio of future claims by alleged disease would be consistent with historical averages adjusted for inflation.

· The number of claims filed against us will decline each year.

· The average settlement values for asserted and unasserted claims will be equivalent to historical averages.

· The percentage of claims dismissed in the future will be equivalent to historical averages.

Our liability for asbestos-related claims is not discounted to present value due to the uncertainty surrounding the timing of future payments. Approximately 22% of the recorded liability related to asserted claims and approximately 78% related to unasserted claims at December 31, 2015.  Because of the uncertainty surrounding the ultimate outcome of asbestos-related claims, it is reasonably possible that future costs to settle these claims may range from approximately $120 million to $129 million.  We record an accrual at the low end of the range as no amount of loss within the range is more probable than any other.

Our asbestos-related liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	126	$	131	$	139
Accruals/(Credits)		-		1		2
Payments		(6)		(6)		(10)
Ending balance at December 31	$	120	$	126	$	131
Current portion, ending balance at December 31	$	6	$	8	$	9

In conjunction with the liability update performed in 2015, we also reassessed our estimated insurance recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2015, and 2014.  The amounts recorded for asbestos-related liabilities and related insurance recoveries were based on currently known facts. However, future events, such as the number of new claims filed each year, average settlement costs, and insurance coverage issues, could cause the actual costs and insurance recoveries to be higher or lower than the projected amounts. Estimates also may vary in the future if strategies, activities, and outcomes of asbestos litigation materially change; federal and state laws governing asbestos litigation increase or decrease the probability or amount of compensation of claimants; and there are material changes with respect to payments made to claimants by other defendants.

Environmental Costs – We are subject to federal, state, and local environmental laws and regulations. We have identified 290 sites at which we are or may be liable for remediation costs associated with alleged contamination or for violations of environmental requirements. This includes 31 sites that are the subject of actions taken by the U.S. government, 19 of which are currently on the Superfund National Priorities List. Certain federal legislation imposes joint and several liability for the remediation of identified sites; consequently, our ultimate environmental liability may include costs relating to activities of other parties, in addition to costs relating to our own activities at each site.

When we identify an environmental issue with respect to property owned, leased, or otherwise used in our business, we perform, with assistance of our consultants, environmental assessments on the property. We expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be reasonably estimated. Our environmental liability is not discounted to present value due to the uncertainty surrounding the timing of future payments.

Our environmental liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	182	$	171	$	170
Accruals		61		56		58
Payments		(53)		(45)		(57)
Ending balance at December 31	$	190	$	182	$	171
Current portion, ending balance at December 31	$	52	$	60	$	53

The environmental liability includes future costs for remediation and restoration of sites, as well as ongoing monitoring costs, but excludes any anticipated recoveries from third parties. Cost estimates are based on information available for each site, financial viability of other potentially responsible parties, and existing technology, laws, and regulations. The ultimate liability for remediation is difficult to determine because of the number of potentially responsible parties, site-specific cost sharing arrangements with other potentially responsible parties, the degree of contamination by various wastes, the scarcity and quality of volumetric data related to many of the sites, and the speculative nature of remediation costs. Estimates of liability may vary over time due to changes in federal, state, and local laws governing environmental remediation. Current obligations are not expected to have a material adverse effect on our consolidated results of operations, financial condition, or liquidity.

Insurance – The Company has a consolidated, wholly-owned captive insurance subsidiary (the captive), that provides insurance coverage for certain risks including FELA claims and property coverage which are subject to reinsurance.  The captive entered into annual reinsurance treaty agreements that insure workers compensation, general liability, auto liability and FELA risk. The captive cedes a portion of its FELA exposure through the treaty and assumes a proportionate share of the entire risk.  The captive receives direct premiums, which are netted against the Company’s premium costs in other expenses in the Consolidated Statements of Income. The treaty agreements provide for certain protections against the risk of treaty participants’ non-performance, and we do not believe our exposure to treaty participants’ non-performance is material at this time. In the event the Company leaves the reinsurance program, the Company is not relieved of its primary obligation to the policyholders for activity prior to the termination of the treaty agreements. We record both liabilities and reinsurance receivables using an actuarial analysis based on historical experience in our Consolidated Statements of Financial Position.

Guarantees – At December 31, 2015, and 2014, we were contingently liable for $53 million and $82 million in guarantees, respectively. We have recorded liabilities of $0 and $0.3 million for the fair value of these obligations as of December 31, 2015, and 2014, respectively. We entered into these contingent guarantees in the normal course of business, and they include guaranteed obligations related to our affiliated operations. The final guarantee expires in 2022. We are not aware of any existing event of default that would require us to satisfy these guarantees. We do not expect that these guarantees will have a material adverse effect on our consolidated financial condition, results of operations, or liquidity.

Indemnities – We are contingently obligated under a variety of indemnification arrangements, although in some cases the extent of our potential liability is limited, depending on the nature of the transactions and the agreements. Due to uncertainty as to whether claims will be made or how they will be resolved, we cannot reasonably determine the probability of an adverse claim or reasonably estimate any adverse liability or the total maximum exposure under these indemnification arrangements. We do not have any reason to believe that we will be required to make any material payments under these indemnity provisions.

Gain Contingency – UPRR and Santa Fe Pacific Pipelines (SFPP, a subsidiary of Kinder Morgan Energy Partners, L.P.) currently are engaged in a proceeding to resolve the fair market rent payable to UPRR commencing on January 1, 2004, for pipeline easements on UPRR rights-of-way (Union Pacific Railroad Company vs. Santa Fe Pacific Pipelines, Inc., SFPP, L.P., Kinder Morgan Operating L.P. “D” Kinder Morgan G.P., Inc., et al., Superior Court of the State of California for the County of Los Angeles, filed July 28, 2004). In February 2007, a trial began to resolve this issue, and in May 2012, the trial judge rendered an opinion establishing the fair market rent and entering judgment for back rent, including prejudgment interest. SFPP appealed the judgment. On November 5, 2014, the Second District Circuit Court of Appeal in California issued an opinion holding that UPRR was not entitled to collect rent from SFPP for easements on the portions of the property acquired solely through federal government land grants issued during the 1800s. The Appellate Court also reversed the award of prejudgment interest and remanded the case to the trial court. A favorable final judgment may materially affect UPRR's results of operations in the period of any monetary recoveries. Due to the uncertainty regarding the amount and timing of any recovery or any subsequent proceedings, we consider this a gain contingency and have not recognized any amounts in the Consolidated Financial Statements as of December 31, 2015.

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Share Repurchase Program

12 Months Ended

Dec. 31, 2015

Share Repurchase Program [Abstract]

Share Repurchase Program

19. Share Repurchase Program

Effective January 1, 2014, our Board of Directors authorized the repurchase of up to 120 million shares of our common stock by December 31, 2017, replacing our previous repurchase program. As of December 31, 2015, we repurchased a total of $16.0 billion of our common stock since the commencement of our repurchase programs in 2007.  The table below represents shares repurchased under this repurchase program.

	Number of Shares Purchased		Average Price Paid
	2015	2014		2015		2014
First quarter	6,881,455	7,640,000	$	117.28	$	89.43
Second quarter	7,975,100	8,320,000		104.62		96.84
Third quarter	13,800,700	8,347,000		89.65		102.54
Fourth quarter	6,646,899	7,736,400		88.19		113.77
Total	35,304,154	32,043,400	$	98.14	$	100.65
Remaining number of shares that may be repurchased under current authority				52,652,446

Management's assessments of market conditions and other pertinent factors guide the timing and volume of all repurchases. Repurchased shares are recorded in treasury stock at cost, which includes any applicable commissions and fees.

From January 1, 2016, through February 4, 2016, we repurchased 3.7 million shares at an aggregate cost of approximately $268 million.

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Related Parties

12 Months Ended

Dec. 31, 2015

Related Parties [Abstract]

Related Parties

20. Related Parties

UPRR and other North American railroad companies jointly own TTX Company (TTX).  UPRR has a 36.79% economic and voting interest in TTX while the other North American railroads own the remaining interest.  In accordance with ASC 323 Investments - Equity Method and Joint Venture, UPRR applies the equity method of accounting to our investment in TTX.

TTX is a railcar pooling company that owns railcars and intermodal wells to serve North America’s railroads.  TTX assists railroads in meeting the needs of their customers by providing railcars in an efficient, pooled environment.  All railroads have the ability to utilize TTX railcars through car hire by renting railcars at stated rates.

UPRR had $830 million and $795 million recognized as investments related to TTX in our consolidated statements of financial position as of December 31, 2015 and 2014, respectively.TTX car hire expenses of $376 million in 2015, $350 million in 2014, and $326 million in 2013 are included in equipment and other rents in our consolidated statements of income.  In addition, UPRR had accounts payable to TTX of $61 million and $53 million as of December 31, 2015 and 2014, respectively.

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Selected Quarterly Data (Unaudited)

12 Months Ended

Dec. 31, 2015

Selected Quarterly Data (Unaudited) [Abstract]

Selected Quarterly Data (Unaudited)

21. Selected Quarterly Data (Unaudited)

Millions, Except Per Share Amounts
2015	Mar. 31		Jun. 30		Sep. 30		Dec. 31
Operating revenues	$	5,614	$	5,429	$	5,562	$	5,208
Operating income		1,977		1,949		2,208		1,918
Net income		1,151		1,204		1,300		1,117
Net income per share:
Basic		1.31		1.38		1.51		1.31
Diluted		1.30		1.38		1.50		1.31

Millions, Except Per Share Amounts
2014	Mar. 31		Jun. 30		Sep. 30		Dec. 31
Operating revenues	$	5,638	$	6,015	$	6,182	$	6,153
Operating income		1,854		2,196		2,330		2,373
Net income		1,088		1,291		1,370		1,431
Net income per share:
Basic		1.20		1.43		1.53		1.62
Diluted		1.19		1.43		1.53		1.61

Per share net income for the four quarters combined may not equal the per share net income for the year due to rounding.

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Schedule Of Valuation And Qualifying Accounts

12 Months Ended

Dec. 31, 2015

Schedule Of Valuation And Qualifying Accounts [Abstract]

Schedule Of Valuation And Qualifying Accounts

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

Union Pacific Corporation and Subsidiary Companies

Millions, for the Years Ended December 31,	2015		2014		2013
Allowance for doubtful accounts:
Balance, beginning of period	$	21	$	23	$	37
Charges/(reduction) to expense		1		5		(4)
Net recoveries/(write-offs)		(6)		(7)		(10)
Balance, end of period	$	16	$	21	$	23
Allowance for doubtful accounts are presented in the Consolidated Statements of Financial Position as follows:
Current	$	5	$	5	$	1
Long-term		11		16		22
Balance, end of period	$	16	$	21	$	23
Accrued casualty costs:
Balance, beginning of period	$	757	$	702	$	734
Charges to expense		227		256		188
Cash payments and other reductions		(248)		(201)		(220)
Balance, end of period	$	736	$	757	$	702
Accrued casualty costs are presented in the Consolidated Statements of Financial Position as follows:
Current	$	181	$	249	$	207
Long-term		555		508		495
Balance, end of period	$	736	$	757	$	702

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Significant Accounting Policies [Abstract]

Principles Of Consolidation

Principles of Consolidation – The Consolidated Financial Statements include the accounts of Union Pacific Corporation and all of its subsidiaries. Investments in affiliated companies (20% to 50% owned) are accounted for using the equity method of accounting. All intercompany transactions are eliminated. We currently have no less than majority-owned investments that require consolidation under variable interest entity requirements.

Cash And Cash Equivalents

Cash and Cash Equivalents – Cash equivalents consist of investments with original maturities of three months or less.

Accounts Receivables

Accounts Receivable – Accounts receivable includes receivables reduced by an allowance for doubtful accounts. The allowance is based upon historical losses, credit worthiness of customers, and current economic conditions.  Receivables not expected to be collected in one year and the associated allowances are classified as other assets in our Consolidated Statements of Financial Position.

Investments

Investments – Investments represent our investments in affiliated companies (20% to 50% owned) that are accounted for under the equity method of accounting and investments in companies (less than 20% owned) accounted for under the cost method of accounting.

Materials and Supplies

Materials and Supplies – Materials and supplies are carried at the lower of average cost or market.

Property and Depreciation

Property and Depreciation – Properties and equipment are carried at cost and are depreciated on a straight-line basis over their estimated service lives, which are measured in years, except for rail in high-density traffic corridors (i.e., all rail lines except for those subject to abandonment, yard and switching tracks, and electronic yards), for which lives are measured in millions of gross tons per mile of track.  We use the group method of depreciation in which all items with similar characteristics, use, and expected lives are grouped together in asset classes, and are depreciated using composite depreciation rates.  The group method of depreciation treats each asset class as a pool of resources, not as singular items.  We determine the estimated service lives of depreciable railroad assets by means of depreciation studies.  Under the group method of depreciation, no gain or loss is recognized when depreciable property is retired or replaced in the ordinary course of business.

Impairment of Long-lived Assets

Impairment of Long-lived Assets – We review long-lived assets, including identifiable intangibles, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the long-lived assets, the carrying value is reduced to the estimated fair value as measured by the discounted cash flows.

Revenue Recognition

Revenue Recognition – We recognize freight revenues as freight moves from origin to destination. The allocation of revenue between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Other revenues, which include revenues earned by our subsidiaries, revenues from our commuter rail operations, and accessorial revenue, are recognized as service is performed or contractual obligations are met. Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a reduction to operating revenues based on actual or projected future customer shipments.

Translation of Foreign Currency

Translation of Foreign Currency – Our portion of the assets and liabilities related to foreign investments are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average rates of exchange prevailing during the year. Unrealized gains or losses are reflected within common shareholders’ equity as accumulated other comprehensive income or loss.

Fair Value Measurements

Fair Value Measurements – We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels include:

Level 1:  Quoted market prices in active markets for identical assets or liabilities.

Level 2:  Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:  Unobservable inputs that are not corroborated by market data.

We have applied fair value measurements to our pension plan assets and short- and long-term debt.

Stock-Based Compensation

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.

We measure and recognize compensation expense for all stock-based awards made to employees and directors, including stock options. Compensation expense is based on the calculated fair value of the awards as measured at the grant date and is expensed ratably over the service period of the awards (generally the vesting period). The fair value of retention awards is the closing stock price on the date of grant, while the fair value of stock options is determined by using the Black-Scholes option pricing model.

Earnings Per Share

Earnings Per Share – Basic earnings per share are calculated on the weighted-average number of common shares outstanding during each period. Diluted earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive.

Income Taxes

Income Taxes – We account for income taxes by recording taxes payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on current tax law; the effects of future tax legislation are not anticipated.  Future tax legislation, such as a change in the corporate tax rate, could have a material impact on our financial condition, results of operations, or liquidity.

When appropriate, we record a valuation allowance against deferred tax assets to reflect that these tax assets may not be realized. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based on management’s judgments using available evidence for purposes of estimating whether future taxable income will be sufficient to realize a deferred tax asset.

We recognize tax benefits that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.

Pension And Postretirement Benefits

Pension and Postretirement Benefits – We incur certain employment-related expenses associated with pensions and postretirement health benefits. In order to measure the expense associated with these benefits, we must make various assumptions including discount rates used to value certain liabilities, expected return on plan assets used to fund these expenses, compensation increases, employee turnover rates, anticipated mortality rates, and expected future health care costs. The assumptions used by us are based on our historical experience as well as current facts and circumstances. We use an actuarial analysis to measure the expense and liability associated with these benefits.

Personal Injury

Personal Injury – The cost of injuries to employees and others on our property is charged to expense based on estimates of the ultimate cost and number of incidents each year. We use an actuarial analysis to measure the expense and liability. Our personal injury liability is not discounted to present value. Legal fees and incidental costs are expensed as incurred.

Asbestos

Asbestos – We estimate a liability for asserted and unasserted asbestos-related claims based on an assessment of the number and value of those claims. We use a statistical analysis to assist us in properly measuring our potential liability. Our liability for asbestos-related claims is not discounted to present value due to the uncertainty surrounding the timing of future payments. Legal fees and incidental costs are expensed as incurred.

Environmental

Environmental – When environmental issues have been identified with respect to property currently or formerly owned, leased, or otherwise used in the conduct of our business, we perform, with the assistance of our consultants, environmental assessments on such property. We expense the cost of the assessments as incurred. We accrue the cost of remediation where our obligation is probable and such costs can be reasonably estimated. We do not discount our environmental liabilities when the timing of the anticipated cash payments is not fixed or readily determinable. Legal fees and incidental costs are expensed as incurred.

Use Of Estimates

Use of Estimates – The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported assets and liabilities,and the disclosure of certain contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual future results may differ from such estimates.

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Nature Of Operations (Tables)

12 Months Ended

Dec. 31, 2015

Nature Of Operations [Abstract]

Freight Revenue By Commodity Group

The following table provides freight revenue by commodity group:

Millions	2015		2014		2013
Agricultural Products	$	3,581	$	3,777	$	3,276
Automotive		2,154		2,103		2,077
Chemicals		3,543		3,664		3,501
Coal		3,237		4,127		3,978
Industrial Products		3,808		4,400		3,822
Intermodal		4,074		4,489		4,030
Total freight revenues	$	20,397	$	22,560	$	20,684
Other revenues		1,416		1,428		1,279
Total operating revenues	$	21,813	$	23,988	$	21,963

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Stock Options And Other Stock Plans (Tables)

12 Months Ended

Dec. 31, 2015

Stock Options And Other Stock Plans [Abstract]

Schedule Of Stock-Based Compensation

Information regarding stock-based compensation appears in the table below:

Millions	2015		2014		2013
Stock-based compensation, before tax:
Stock options	$	17	$	21	$	19
Retention awards		81		91		79
Total stock-based compensation, before tax	$	98	$	112	$	98
Excess tax benefits from equity compensation plans	$	62	$	118	$	76

Schedule Of Stock Options Weighted Average Assumptions

The table below shows the annual weighted-average assumptions used for valuation purposes:

Weighted-Average Assumptions	2015		2014		2013
Risk-free interest rate		1.3%		1.6%		0.8%
Dividend yield		1.8%		2.1%		2.1%
Expected life (years)		5.1		5.2		5.0
Volatility		23.4%		30.0%		36.2%
Weighted-average grant-date fair value of options granted	$	22.30	$	20.18	$	17.49

Summary Of Stock Options Activity

A summary of stock option activity during 2015 is presented below:

	Options (thous.)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value (millions)
Outstanding at January 1, 2015	5,387	$	53.56	5.8	yrs.	$	353
Granted	934		122.85	N/A			N/A
Exercised	(716)		40.10	N/A			N/A
Forfeited or expired	(34)		89.24	N/A			N/A
Outstanding at December 31, 2015	5,571	$	66.69	5.4	yrs.	$	114
Vested or expected to vest      at December 31, 2015	5,532	$	66.32	5.4	yrs.	$	114
Options exercisable at December 31, 2015	3,672	$	49.00	4.1	yrs.	$	110

Schedule Of Stock Option Exercises

Additional information regarding stock option exercises appears in the table below:

Millions	2015		2014		2013
Intrinsic value of stock options exercised	$	50	$	194	$	112
Cash received from option exercises		27		54		51
Treasury shares repurchased for employee payroll taxes		(12)		(24)		(21)
Tax benefit realized from option exercises		19		74		43
Aggregate grant-date fair value of stock options vested		19		17		16

Schedule Of Retention Awards

Changes in our retention awards during 2015 were as follows:

	Shares (thous.)	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2015	3,403	$	64.39
Granted	521		122.79
Vested	(934)		47.66
Forfeited	(90)		72.87
Nonvested at December 31, 2015	2,900	$	80.01

Schedule Of Performance Retention Awards, Present Value Calculation Assumptions

The assumptions used to calculate the present value of estimated future dividends related to the February 2015 grant were as follows:

	2015
Dividend per share per quarter	$	0.55
Risk-free interest rate at date of grant		0.8%

Schedule Of Performance Retention Awards

Changes in our performance retention awards during 2015 were as follows:

	Shares (thous.)	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2015	1,583	$	65.33
Granted	339		117.42
Vested	(580)		54.38
Forfeited	(87)		86.66
Nonvested at December 31, 2015	1,255	$	82.98

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Retirement Plans (Tables)

12 Months Ended

Dec. 31, 2015

Retirement Plans [Abstract]

Schedule Of Changes In Projected Benefit Obligation And Plan Assets

Changes in our PBO and plan assets were as follows for the years ended December 31:

Funded Status	Pension				OPEB
Millions	2015		2014		2015		2014
Projected Benefit Obligation
Projected benefit obligation at beginning of year	$	4,142	$	3,372	$	354	$	330
Service cost		106		70		3		2
Interest cost		163		158		13		14
Actuarial loss/(gain)		(267)		735		(18)		33
Gross benefits paid		(186)		(193)		(23)		(25)
Projected benefit obligation at end of year	$	3,958	$	4,142	$	329	$	354
Plan Assets
Fair value of plan assets at beginning of year	$	3,654	$	3,429	$	-	$	-
Actual return on plan assets		(43)		185		-		-
Voluntary funded pension plan contributions		100		200		-		-
Non-qualified plan benefit contributions		19		33		23		25
Gross benefits paid		(186)		(193)		(23)		(25)
Fair value of plan assets at end of year	$	3,544	$	3,654	$	-	$	-
Funded status at end of year	$	(414)	$	(488)	$	(329)	$	(354)

Schedule Of Amounts Recognized In Statement Of Financial Position

Amounts recognized in the statement of financial position as of December 31, 2015 and 2014 consist of:

	Pension				OPEB
Millions	2015		2014		2015		2014
Noncurrent assets	$	1	$	1	$	-	$	-
Current liabilities		(22)		(19)		(23)		(23)
Noncurrent liabilities		(393)		(470)		(306)		(331)
Net amounts recognized at end of year	$	(414)	$	(488)	$	(329)	$	(354)

Schedule Of Pre-Tax Amounts Recognized In Accumulated Other Comprehensive Income/(Loss)

Pre-tax amounts recognized in accumulated other comprehensive income/(loss) as of December 31, 2015 and 2014 consist of:

	2015						2014
Millions	Pension		OPEB		Total		Pension		OPEB		Total
Prior service (cost)/credit	$	-	$	7	$	7	$	-	$	17	$	17
Net actuarial loss		(1,652)		(117)		(1,769)		(1,727)		(148)		(1,875)
Total	$	(1,652)	$	(110)	$	(1,762)	$	(1,727)	$	(131)	$	(1,858)

Schedule Of Other Pre-Tax Changes Recognized In Other Comprehensive Income

Pre-tax changes recognized in other comprehensive income/(loss) during 2015, 2014 and 2013 were as follows:

	Pension						OPEB
Millions	2015		2014		2013		2015		2014		2013
Net actuarial (loss)/gain	$	(31)	$	(780)	$	561	$	18	$	(33)	$	34
Amortization of:
Prior service cost/(credit)		-		-		-		(10)		(11)		(16)
Actuarial loss		106		71		106		13		10		15
Total	$	75	$	(709)	$	667	$	21	$	(34)	$	33

Amounts Included In Accumulated Other Comprehensive Income Expected To Be Amortized Into Net Periodic Cost (Benefit)

Amounts included in accumulated other comprehensive income/(loss) expected to be amortized into net periodic cost during 2016:

Millions	Pension		OPEB		Total
Prior service credit	$	-	$	9	$	9
Net actuarial loss		(80)		(10)		(90)
Total	$	(80)	$	(1)	$	(81)

Schedule Of Underfunded Accumulated Benefit Obligation

The following table discloses only the PBO, ABO, and fair value of plan assets for pension plans where the accumulated benefit obligation is in excess of the fair value of the plan assets as of December 31:

Underfunded Accumulated Benefit Obligation
Millions	2015		2014
Projected benefit obligation	$	398	$	388
Accumulated benefit obligation	$	388	$	379
Fair value of plan assets		-		-
Underfunded accumulated benefit obligation	$	(388)	$	(379)

Weighted-Average Actuarial Assumptions Used To Determine Benefit Obligations And Expense

The weighted-average actuarial assumptions used to determine benefit obligations at December 31:

	Pension		OPEB
Percentages	2015	2014	2015	2014
Discount rate	4.37%	3.94%	4.16%	3.74%
Compensation increase	4.10%	4.00%	N/A	N/A
Health care cost trend rate (employees under 65)	N/A	N/A	6.52%	6.34%
Ultimate health care cost trend rate	N/A	N/A	4.50%	4.50%
Year ultimate trend rate reached	N/A	N/A	2038	2028

The weighted-average actuarial assumptions used to determine expense were as follows:

	Pension			OPEB
Percentages	2015	2014	2013	2015	2014	2013
Discount rate	3.94%	4.72%	3.78%	3.74%	4.47%	3.48%
Expected return on plan assets	7.50%	7.50%	7.50%	N/A	N/A	N/A
Compensation increase	4.00%	4.00%	3.43%	N/A	N/A	N/A
Health care cost trend rate (employees under 65)	N/A	N/A	N/A	6.34%	6.49%	6.64%
Ultimate health care cost trend rate	N/A	N/A	N/A	4.50%	4.50%	4.50%
Year ultimate trend reached	N/A	N/A	N/A	2028	2028	2028

Net Periodic Pension And OPEB Cost/(Benefit)

The components of our net periodic pension and OPEB cost/(benefit) were as follows for the years ended December 31:

	Pension						OPEB
Millions	2015		2014		2013		2015		2014		2013
Net Periodic Benefit Cost:
Service cost	$	106	$	70	$	72	$	3	$	2	$	3
Interest cost		163		158		134		13		14		12
Expected return on plan assets		(255)		(230)		(202)		-		-		-
Amortization of:
Prior service cost/(credit)		-		-		-		(10)		(11)		(16)
Actuarial loss		106		71		106		13		10		15
Net periodic benefit cost/(benefit)	$	120	$	69	$	110	$	19	$	15	$	14

OPEB Effects From One-Percentage Point Change Assumed Healthcare Cost Trend Rates

A one-percentage point change in the assumed health care cost trend rates would have the following effects on OPEB:

Millions	One % pt. Increase		One % pt. Decrease
Effect on total service and interest cost components	$	1	$	(1)
Effect on accumulated benefit obligation		17		(14)

Cash Contributions For Qualified Pension Plan Benefit Payments For Non-Qualified OPEB Plans

The following table details our cash contributions for the qualified pension plans and the benefit payments for the non-qualified (supplemental) pension and OPEB plans:

	Pension
Millions	Qualified		Non-qualified		OPEB
2014	$	200	$	33	$	25
2015		100		19		23

Schedule Of Expected Benefit Payments

The following table details expected benefit payments for the years 2016 through 2025:

Millions	Pension		OPEB
2016	$	191	$	23
2017		194		23
2018		198		23
2019		202		23
2020		205		22
Years 2021 - 2025		1,077		102

Schedule Of Pension Plan Asset Allocation

Our pension plan asset allocation at December 31, 2015 and 2014, and target allocation for 2016, are as follows:

		Percentage of Plan Assets
	Target	December 31,
	Allocation 2016	2015	2014
Equity securities	60% to 70%	67%	68%
Debt securities	20% to 30%	23	23
Real estate	2% to 8%	6	4
Commodities	4% to 6%	4	5
Total		100%	100%

Schedule Of Assets Measured At Fair Value On A Recurring Basis

As of December 31, 2015, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Inputs		Inputs		Inputs
Millions	(Level 1)		(Level 2)		(Level 3)		Total
Plan assets:
Temporary cash investments	$	13	$	-	$	-	$	13
Registered investment companies		179		270		-		449
Federal government securities		-		125		-		125
Bonds & debentures		-		383		-		383
Corporate stock		1,034		7		-		1,041
Venture capital and buyout partnerships		-		-		256		256
Real estate partnerships		-		-		199		199
Collective trust and other funds		-		1,075		-		1,075
Total plan assets at fair value	$	1,226	$	1,860	$	455		3,541
Other assets [a]								3
Total plan assets							$	3,544

[a] Other assets include accrued receivables and pending broker settlements.

As of December 31, 2014, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Inputs		Inputs		Inputs
Millions	(Level 1)		(Level 2)		(Level 3)		Total
Plan assets:
Temporary cash investments	$	22	$	-	$	-	$	22
Registered investment companies		12		282		-		294
Federal government securities		-		163		-		163
Bonds & debentures		-		381		-		381
Corporate stock		1,076		15		-		1,091
Venture capital and buyout partnerships		-		-		234		234
Real estate partnerships		-		-		139		139
Collective trust and other funds		-		1,340		-		1,340
Total plan assets at fair value	$	1,110	$	2,181	$	373		3,664
Other assets [a]								(10)
Total plan assets							$	3,654

[a] Other assets include accrued receivables and pending broker settlements.

Reconciliation Of Beginning Ending Balances Of Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3 investments) during 2015:

	Venture Capital
	and Buyout		Real Estate
Millions	Partnerships		Partnerships		Total
Beginning balance - January 1, 2015	$	234	$	139	$	373
Realized gain		18		5		23
Unrealized gain		13		8		21
Purchases		54		74		128
Sales		(63)		(27)		(90)
Ending balance - December 31, 2015	$	256	$	199	$	455

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3 investments) during 2014:

	Venture Capital
	and Buyout		Real Estate
Millions	Partnerships		Partnerships		Total
Beginning balance - January 1, 2014	$	213	$	139	$	352
Realized gain		17		8		25
Unrealized gain		5		6		11
Purchases		54		19		73
Sales		(55)		(33)		(88)
Ending balance - December 31, 2014	$	234	$	139	$	373

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Other Income (Tables)

12 Months Ended

Dec. 31, 2015

Other Income [Abstract]

Other Income

Other income included the following for the years ended December 31:

Millions	2015		2014		2013
Net gain on non-operating asset dispositions [a]	$	144	$	69	$	32
Rental income [b]		96		96		106
Interest income		5		4		4
Non-operating environmental costs and other [c]		(19)		(18)		(14)
Total	$	226	$	151	$	128

[a] 2015 includes $113 million related to a real estate sale.

[b] 2013 includes $17 million related to a land lease contract settlement.

[c] 2014 includes $14 million related to the sale of a permanent easement.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Taxes [Abstract]

Schedule Of Components Of Income Tax Expense

Components of income tax expense were as follows for the years ended December 31:

Millions	2015		2014		2013
Current tax expense:
Federal	$	1,901	$	2,019	$	1,727
State		210		239		199
Foreign		8		10		11
Total current tax expense		2,119		2,268		1,937
Deferred and other tax expense:
Federal		644		753		605
State		121		142		118
Total deferred and other tax expense		765		895		723
Total income tax expense	$	2,884	$	3,163	$	2,660

Reconciliations Between Statutory And Effective Tax Rates

For the years ended December 31, reconciliations between statutory and effective tax rates are as follows:

Tax Rate Percentages	2015		2014		2013
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State statutory rates, net of federal benefits	3.1		3.1		3.1
Tax credits	(0.5)		(0.4)		(0.2)
Deferred tax adjustments	-		-		(0.1)
Other	0.1		0.2		(0.1)
Effective tax rate	37.7	%	37.9	%	37.7	%

Schedule Of Deferred Income Tax Liabilities And Assets

Deferred income tax (liabilities)/assets were comprised of the following at December 31:

Millions	2015		2014
Deferred income tax liabilities:
Property	$	(16,079)	$	(15,173)
Other		(352)		(411)
Total deferred income tax liabilities		(16,431)		(15,584)
Deferred income tax assets:
Accrued wages		76		74
Accrued casualty costs		237		228
Stock compensation		72		69
Debt and leases		149		86
Retiree benefits		204		392
Credits		156		164
Other		296		168
Total deferred income tax assets [a]	$	1,190	$	1,181
Net deferred income tax liability	$	(15,241)	$	(14,403)

[a] Prior to the adoption of Accounting Standard Update (ASU) 2015-17, deferred tax assets were required to be presented as current and non-current on the Consolidated Statement of Financial Position.  In 2015, UP adopted ASU 2015-17 retrospectively.  Current deferred income tax assets at December 31, 2014 of $277 million were reclassified from current to non-current for 2015 presentation.

Reconciliation Of Changes In Unrecognized Tax Benefits Liabilities/(Assets)

A reconciliation of changes in unrecognized tax benefits liabilities/(assets) from the beginning to the end of the reporting period is as follows:

Millions	2015		2014		2013
Unrecognized tax benefits at January 1	$	151	$	59	$	115
Increases for positions taken in current year		38		92		24
Increases for positions taken in prior years		13		22		15
Decreases for positions taken in prior years		(87)		(14)		(35)
Payments to and settlements with taxing authorities		(13)		(8)		(58)
Increases/(decreases) for interest and penalties		(5)		1		-
Lapse of statutes of limitations		(3)		(1)		(2)
Unrecognized tax benefits at December 31	$	94	$	151	$	59

Unrecognized Tax Benefits That Would/Not Reduce The Effective Tax Rate

The unrecognized tax benefits that would reduce our effective tax rate are as follows:

Millions	2015		2014		2013
Unrecognized tax benefits that would reduce the effective tax rate	$	31	$	33	$	34
Unrecognized tax benefits that would not reduce the effective tax rate		63		118		25
Total unrecognized tax benefits	$	94	$	151	$	59

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Reconciliation Between Earnings Per Share

The following table provides a reconciliation between basic and diluted earnings per share for the years ended December 31:

Millions, Except Per Share Amounts	2015		2014		2013
Net income	$	4,772	$	5,180	$	4,388
Weighted-average number of shares outstanding:
Basic		866.2		897.1		926.5
Dilutive effect of stock options		1.5		2.1		2.4
Dilutive effect of retention shares and units		1.7		1.9		2.6
Diluted		869.4		901.1		931.5
Earnings per share – basic	$	5.51	$	5.77	$	4.74
Earnings per share – diluted	$	5.49	$	5.75	$	4.71

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Accumulated Other Comprehensive Income/(Loss) (Tables)

12 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Income/(Loss) [Abstract]

After-Tax Components Of Accumulated Other Comprehensive Loss

Reclassifications out of accumulated other comprehensive income/(loss) were as follows (net of tax):

Millions	Defined benefit plans		Foreign currency translation		Total
Balance at January 1, 2015	$	(1,161)	$	(49)	$	(1,210)
Other comprehensive income/(loss) before reclassifications		(4)		(43)		(47)
Amounts reclassified from accumulated other comprehensive income/(loss) [a]		62		-		62
Net year-to-date other comprehensive income/(loss), net of taxes of $(8) million		58		(43)		15
Balance at December 31, 2015	$	(1,103)	$	(92)	$	(1,195)
Balance at January 1, 2014	$	(713)	$	(37)	$	(750)
Other comprehensive income/(loss) before reclassifications		10		(12)		(2)
Amounts reclassified from accumulated other comprehensive income/(loss) [a]		(458)		-		(458)
Net year-to-date other comprehensive income/(loss), net of taxes of $291 million		(448)		(12)		(460)
Balance at December 31, 2014	$	(1,161)	$	(49)	$	(1,210)

[a] The accumulated other comprehensive income/(loss) reclassification components are 1) prior service cost/(benefit) and 2) net actuarial loss which are both included in the computation of net periodic pension cost.  See Note 6 Retirement Plans for additional details.

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Properties (Tables)

12 Months Ended

Dec. 31, 2015

Properties [Abstract]

Schedule Of Properties

The following tables list the major categories of property and equipment, as well as the weighted-average estimated useful life for each category (in years):

Millions, Except Estimated Useful Life			Accumulated		Net Book		Estimated
As of December 31, 2015	Cost		Depreciation		Value		Useful Life
Land	$	5,195	$	N/A	$	5,195	N/A
Road:
Rail and other track material		15,236		5,495		9,741	37
Ties		9,439		2,595		6,844	33
Ballast		5,024		1,350		3,674	34
Other roadway [a]		17,374		3,021		14,353	47
Total road		47,073		12,461		34,612	N/A
Equipment:
Locomotives		9,027		3,726		5,301	19
Freight cars		2,203		962		1,241	24
Work equipment and other		897		191		706	19
Total equipment		12,127		4,879		7,248	N/A
Technology and other		919		358		561	11
Construction in progress		1,250		-		1,250	N/A
Total	$	66,564	$	17,698	$	48,866	N/A

Millions, Except Estimated Useful Life			Accumulated		Net Book		Estimated
As of December 31, 2014	Cost		Depreciation		Value		Useful Life
Land	$	5,194	$	N/A	$	5,194	N/A
Road:
Rail and other track material		14,588		5,241		9,347	33
Ties		9,102		2,450		6,652	33
Ballast		4,826		1,264		3,562	34
Other roadway [a]		16,476		2,852		13,624	47
Total road		44,992		11,807		33,185	N/A
Equipment:
Locomotives		8,276		3,694		4,582	20
Freight cars		2,116		968		1,148	25
Work equipment and other		684		153		531	18
Total equipment		11,076		4,815		6,261	N/A
Technology and other		872		320		552	10
Construction in progress		1,080		-		1,080	N/A
Total	$	63,214	$	16,942	$	46,272	N/A

[a] Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.

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Accounts Payable And Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Accounts Payable And Other Current Liabilties [Abstract]

Schedule Of Accounts Payable And Other Current Liabilities

	Dec. 31,		Dec. 31,
Millions	2015		2014
Accounts payable	$	743	$	877
Income and other taxes payable		434		412
Accrued wages and vacation		391		409
Interest payable		208		178
Accrued casualty costs		181		249
Equipment rents payable		105		100
Dividends payable [a]		-		438
Other		550		640
Total accounts payable and other current liabilities	$	2,612	$	3,303

[a]Beginning in 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter. The 2015 dividends paid amount includes the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015, the second quarter 2015 dividend of $479 million, which was paid on June 30, 2015, the third quarter 2015 dividend of $476 million, which was paid on September 30, 2015, as well as the fourth quarter 2015 dividend of $467 million, which was paid on December 30, 2015.

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Debt (Tables)

12 Months Ended

Dec. 31, 2015

Debt [Abstract]

Schedule Of Debt

Total debt as of December 31, 2015, and 2014, is summarized below:

Millions	2015		2014
Notes and debentures, 1.8% to 7.9% due through 2065	$	11,964	$	9,266
Capitalized leases, 3.1% to 8.4% due through 2028		1,268		1,520
Equipment obligations, 2.8% to 6.7% due through 2031		963		597
Receivables Securitization (Note 11)		400		400
Term loans - floating rate, due in 2016		200		200
Mortgage bonds, 4.8% due through 2030		57		57
Medium-term notes, 9.3% to 10.0% due through 2020		23		23
Tax-exempt financings - floating rate, due in 2015		-		8
Unamortized discount and deferred issuance costs [a]		(674)		(658)
Total debt		14,201		11,413
Less: current portion		(594)		(461)
Total long-term debt	$	13,607	$	10,952

[a] Includes deferred debt issuance costs of $89 million and $67 million as of December 31, 2015, and 2014, respectively, as a result of the retrospective adoption of Accounting Standard Update (ASU) 2015-03 on December 31, 2015.  Prior to the ASU adoption, deferred debt issuance costs were presented in other assets.

Aggregate Debt Maturities

The following table presents aggregate debt maturities as of December 31, 2015, excluding market value adjustments:

Millions
2016	$	594
2017		1,052
2018		566
2019		637
2020		1,034
Thereafter		10,318
Total debt	$	14,201

Unsecured Fixed Rate Debt Securities Issued Under Current Shelf Registration

During 2014, we issued the following unsecured, fixed-rate debt securities under our current shelf registration:

Date	Description of Securities
January 29, 2015	$250 million of 1.80% Notes due February 1, 2020
	$450 million of 3.375% Notes due February 1, 2035
	$450 million of 3.875% Notes due February 1, 2055
June 19, 2015	$400 million of 2.250% Notes due June 19, 2020
	$300 million of 3.250% Notes due August 15, 2025
October 29, 2015	$200 million of reopened 3.250% Notes due August 15, 2025
	$500 million of 4.050% Notes due November 15, 2045
	$400 million of 4.375% Notes due November 15, 2065

Schedule Of Debt Exchange

The following table lists the outstanding notes and debentures that were exchanged:

	Principal amount
Millions	exchanged
The 2024 Offers
7.000% Debentures due 2016	$	8
5.650% Notes due 2017		38
5.750% Notes due 2017		70
5.700% Notes due 2018		103
7.875% Notes due 2019		20
6.125% Notes due 2020		238
The 2044 Offers
7.125% Debentures due 2028		73
6.625% Debentures due 2029		177
6.250% Debentures due 2034		19
6.150% Debentures due 2037		138
5.780% Notes due 2040		286
Total	$	1,170

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Leases (Tables)

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Future Minimum Lease Payments For Operating And Capital Leases

Future minimum lease payments for operating and capital leases with initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2015, were as follows:

Millions	Operating Leases		Capital Leases
2016	$	491	$	217
2017		446		220
2018		371		198
2019		339		184
2020		282		193
Later years		1,501		575
Total minimum lease payments	$	3,430	$	1,587
Amount representing interest		N/A		(319)
Present value of minimum lease payments		N/A	$	1,268

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Commitments And Contingencies (Tables)

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies [Abstract]

Commitments And Contingencies Activity

Our personal injury liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	335	$	294	$	334
Current year accruals		89		96		87
Changes in estimates for prior years		(3)		9		(38)
Payments		(103)		(64)		(89)
Ending balance at December 31	$	318	$	335	$	294
Current portion, ending balance at December 31	$	63	$	111	$	82

Our asbestos-related liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	126	$	131	$	139
Accruals/(Credits)		-		1		2
Payments		(6)		(6)		(10)
Ending balance at December 31	$	120	$	126	$	131
Current portion, ending balance at December 31	$	6	$	8	$	9

Our environmental liability activity was as follows:

Millions	2015		2014		2013
Beginning balance	$	182	$	171	$	170
Accruals		61		56		58
Payments		(53)		(45)		(57)
Ending balance at December 31	$	190	$	182	$	171
Current portion, ending balance at December 31	$	52	$	60	$	53

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Share Repurchase Program (Tables)

12 Months Ended

Dec. 31, 2015

Share Repurchase Program [Abstract]

Share Repurchase Program

The table below represents shares repurchased under this repurchase program.

	Number of Shares Purchased		Average Price Paid
	2015	2014		2015		2014
First quarter	6,881,455	7,640,000	$	117.28	$	89.43
Second quarter	7,975,100	8,320,000		104.62		96.84
Third quarter	13,800,700	8,347,000		89.65		102.54
Fourth quarter	6,646,899	7,736,400		88.19		113.77
Total	35,304,154	32,043,400	$	98.14	$	100.65
Remaining number of shares that may be repurchased under current authority				52,652,446

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Selected Quarterly Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Selected Quarterly Data (Unaudited) [Abstract]

Selected Quarterly Data (Unaudited)

Millions, Except Per Share Amounts
2015	Mar. 31		Jun. 30		Sep. 30		Dec. 31
Operating revenues	$	5,614	$	5,429	$	5,562	$	5,208
Operating income		1,977		1,949		2,208		1,918
Net income		1,151		1,204		1,300		1,117
Net income per share:
Basic		1.31		1.38		1.51		1.31
Diluted		1.30		1.38		1.50		1.31

Millions, Except Per Share Amounts
2014	Mar. 31		Jun. 30		Sep. 30		Dec. 31
Operating revenues	$	5,638	$	6,015	$	6,182	$	6,153
Operating income		1,854		2,196		2,330		2,373
Net income		1,088		1,291		1,370		1,431
Net income per share:
Basic		1.20		1.43		1.53		1.62
Diluted		1.19		1.43		1.53		1.61

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Nature Of Operations (Details) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2015 USD ($) mi	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2014 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2015 USD ($) segment mi	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Commodity Group Information [Line Items]
Freight revenues									$ 20,397	$ 22,560	$ 20,684
Other revenues									1,416	1,428	1,279
Total operating revenues	$ 5,208	$ 5,562	$ 5,429	$ 5,614	$ 6,153	$ 6,182	$ 6,015	$ 5,638	$ 21,813	23,988	21,963
Network route miles | mi	32,084								32,084
Route miles owned | mi	26,064								26,064
Reportable segments | segment									1
Agricultural Products [Member]
Commodity Group Information [Line Items]
Freight revenues									$ 3,581	3,777	3,276
Automotive [Member]
Commodity Group Information [Line Items]
Freight revenues									2,154	2,103	2,077
Chemicals [Member]
Commodity Group Information [Line Items]
Freight revenues									3,543	3,664	3,501
Coal [Member]
Commodity Group Information [Line Items]
Freight revenues									3,237	4,127	3,978
Industrial Products [Member]
Commodity Group Information [Line Items]
Freight revenues									3,808	4,400	3,822
Intermodal [Member]
Commodity Group Information [Line Items]
Freight revenues									4,074	4,489	4,030
Mexico [Member]
Commodity Group Information [Line Items]
Freight revenues									$ 2,200	$ 2,300	$ 2,100

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Stock Split (Details)		12 Months Ended
	May. 27, 2014 $ / shares	Dec. 31, 2015 $ / shares	Dec. 31, 2014 $ / shares
Stock Split [Abstract]
Stock split effective date		Jun. 06, 2014
Stock split conversion ratio	2
Percent of dividend in stock	100.00%
Stock split record date		May 27, 2014
Common shares, par value	$ 2.50	$ 2.50	$ 2.50

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Stock Options And Other Stock Plans (Narrative) (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Schedule of Share-based Compensation Arrangements [Line Items]
Shares of common stock authorized and available	76,548,520	77,786,772	79,574,896
Union Pacific Corporation 1992 Restricted Stock Plan For Non-Employee Directors [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Restricted shares outstanding	7,140
Union Pacific Corporation 2000 Directors Plan [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Stock options, shares outstanding	45,400
Restricted shares outstanding	36,000
Common stock reserved for issuance	2,200,000
Initial grant of retention stock share/units description	Under the Directors Plan, each non-employee director, upon his or her initial election to the Board of Directors, receives a grant of 4,000 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 20,000 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.
Union Pacific Corporation 2004 Stock Incentive Plan [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Stock options, shares outstanding	3,652,954
Retention shares and stock units outstanding	2,092,721
Common stock reserved for issuance	84,000,000
Union Pacific Corporation 2013 Stock Incentive Plan [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Stock options, shares outstanding	1,873,014
Retention shares and stock units outstanding	2,061,737
Common stock reserved for issuance	78,000,000

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Stock Options And Other Stock Plans (Stock Options, Retention Awards And Performance Retention Awards) (Narrative) (Details) $ / shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($) $ / shares
Stock Options [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Contractual term	10 years
Years until vest	3 years
Stock options, subject to performance or market-based vesting conditions | $ / shares	$ 0
Unrecognized compensation expense	$ 18
Expected weighted average period (in years) of nonvested stock options to be recognized	1 year
Retention Awards [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Years until vest	4 years
Unrecognized compensation expense	$ 88
Expected weighted average period (in years) of nonvested stock options to be recognized	1 year 6 months
Performance Retention Awards [Member]
Schedule of Share-based Compensation Arrangements [Line Items]
Requisite service period	37 months
Continued employment requirement	Stock units awarded to selected employees under these grants are subject to continued employment for 37 months and the attainment of certain levels of ROIC.
Contractual terms of award	We expense the fair value of the units that are probable of being earned based on our forecasted ROIC over the 3-year performance period.
ROIC performance period	3 years
Unrecognized compensation expense	$ 19
Expected weighted average period (in years) of nonvested stock options to be recognized	8 months 12 days

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Stock-based Compensation (Schedule Of Stock-Based Compensation) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock-Based Compensation, Before Tax: [Abstract]
Stock options	$ 17	$ 21	$ 19
Retention awards	81	91	79
Total stock-based compensation, before tax	98	112	98
Excess tax benefits from equity compensation plans	$ 62	$ 118	$ 76

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Stock-based Compensation (Schedule Of Stock Options Weighted Average Assumptions) (Details) - Stock Options [Member] - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Assumptions For Stock Awards [Abstract]
Risk-free interest rate	1.30%	1.60%	0.80%
Dividend yield	1.80%	2.10%	2.10%
Expected life (years)	5 years 1 month 6 days	5 years 2 months 12 days	5 years
Volatility	23.40%	30.00%	36.20%
Weighted-average grant-date fair value of options granted	$ 22.30	$ 20.18	$ 17.49

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Stock-based Compensation (Summary Of Stock Option Activities) (Details) - Stock Options [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Schedule of Share-based Compensation Arrangements [Line Items]
Stock options, shares outstanding at January 1, 2015	5,387
Stock options, shares granted	934
Stock options, shares exercised	(716)
Stock options, shares forfeited or expired	(34)
Stock options, shares outstanding at December 31, 2015	5,571	5,387
Stock options, shares vested or expected to vest at December 31, 2015	5,532
Stock options, shares exercisable at December 31, 2015	3,672
Stock options weighted-average exercise price, outstanding at January 1, 2015	$ 53.56
Stock options weighted-average exercise price, granted	122.85
Stock options weighted-average exercise price, exercised	40.10
Stock options weighted-average exercise price, forfeited or expired	89.24
Stock options weighted-average exercise price, outstanding at December 31, 2015	66.69	$ 53.56
Stock options weighted-average exercise price, vested or expected to vest at December 31, 2015	66.32
Stock options weighted-average exercise price, options exercisable at December 31, 2015	$ 49.00
Stock options weighted-average remaining contractual term in years, outstanding at January 1, 2015		5 years 9 months 18 days
Stock options weighted-average remaining contractual term in years, outstanding at December 31, 2015	5 years 4 months 24 days
Stock options weighted-average remaining contractual term in years, vested or expected to vest at December 31, 2015	5 years 4 months 24 days
Stock options weighted-average remaining contractual term in years, options exercisable at December 31, 2015	4 years 1 month 6 days
Stock options aggregate intrinsic value, outstanding at January 1, 2015	$ 353
Stock options aggregate intrinsic value, outstanding at December 31, 2015	114	$ 353
Stock options aggregate intrinsic value, vested or expected to vest at December 31, 2015	114
Stock options aggregate intrinsic value, options exercisable at December 31, 2015	$ 110

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Stock-based Compensation (Schedule Of Stock Option Exercises) (Details) - Stock Options [Member] - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock Option Aggregate Disclosures [Abstract]
Intrinsic value of stock options exercised	$ 50	$ 194	$ 112
Cash received from option exercises	27	54	51
Treasury shares repurchased for employee payroll taxes	(12)	(24)	(21)
Tax benefit realized from option exercises	19	74	43
Aggregate grant-date fair value of stock options vested	$ 19	$ 17	$ 16

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Stock-based Compensation (Schedule Of Retention Awards) (Details) - Retention Awards [Member] shares in Thousands	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Schedule of Share-based Compensation Arrangements [Line Items]
Awards, shares nonvested at January 1, 2015 | shares	3,403
Awards, shares granted | shares	521
Awards, shares vested | shares	(934)
Awards, shares forfeited | shares	(90)
Awards, shares nonvested at December 31, 2015 | shares	2,900
Awards weighted-average grant-date fair value, nonvested at January 1, 2015 | $ / shares	$ 64.39
Awards weighted-average grant-date fair value, granted | $ / shares	122.79
Awards weighted-average grant-date fair value, vested | $ / shares	47.66
Awards weighted-average grant-date fair value, forfeited | $ / shares	72.87
Awards weighted-average grant-date fair value, nonvested at December 31, 2015 | $ / shares	$ 80.01

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Stock-based Compensation (Performance Retention Awards, Present Value Calculation Assumptions) (Details) - Performance Retention Awards [Member]	12 Months Ended
	Dec. 31, 2015 $ / shares
Assumptions For Stock Awards [Abstract]
Dividend per share per quarter	$ 0.55
Risk-free interest rate at date of grant	0.80%

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Stock-based Compensation (Schedule Of Performance Retention Awards) (Details) - Performance Retention Awards [Member] shares in Thousands	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Schedule of Share-based Compensation Arrangements [Line Items]
Awards, shares nonvested at January 1, 2015 | shares	1,583
Awards, shares granted | shares	339
Awards, shares vested | shares	(580)
Awards, shares forfeited | shares	(87)
Awards, shares nonvested at December 31, 2015 | shares	1,255
Awards weighted-average grant-date fair value, nonvested at January 1, 2015 | $ / shares	$ 65.33
Awards weighted-average grant-date fair value, granted | $ / shares	117.42
Awards weighted-average grant-date fair value, vested | $ / shares	54.38
Awards weighted-average grant-date fair value, forfeited | $ / shares	86.66
Awards weighted-average grant-date fair value, nonvested at December 31, 2015 | $ / shares	$ 82.98

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Retirement Plans (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Retirement Plans [Line Items]
Pension & OPEB Descriptions		Pension Plans – We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements.Other Postretirement Benefits (OPEB) – We provide medical and life insurance benefits for eligible retirees. These benefits are funded as medical claims and life insurance premiums are paid.
Changes in fair value period		5 years
Significant transfers in or out of Levels 1, 2, or 3		$ 0	$ 0
Pension [Member]
Retirement Plans [Line Items]
Accumulated benefit obligation		388,000,000	379,000,000
Accumulated benefit obligation.		$ 3,700,000,000	$ 3,900,000,000
Actual return (loss) on pension plan assets, net of fees		(1.00%)	6.00%	17.00%
OPEB [Member]
Retirement Plans [Line Items]
Health care cost trend rate (employees under 65)		6.34%	6.49%	6.64%
Ultimate health care cost trend rate		4.50%	4.50%	4.50%
Year ultimate trend rate reached		2028	2028	2028
OPEB [Member] | 2016 Forecast [Member]
Retirement Plans [Line Items]
Health care cost trend rate (employees under 65)	6.34%
Ultimate health care cost trend rate	4.50%
Year ultimate trend rate reached	2028
Pension Non-qualified Plan [Member]
Retirement Plans [Line Items]
Accumulated benefit obligation		$ 388,000,000	$ 379,000,000

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Retirement Plans (Other Retirement Programs) (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
401(k)/Thrift Plan [Abstract]
401(k)/Thrift plan description	We provide a defined contribution plan (401(k)/thrift plan) to eligible non-union and union employees for whom we make matching contributions.
401(k)/Thrift plan contributions	$ 20	$ 19	$ 18
Railroad Retirement System [Abstract]
Railroad Retirement System description	All Railroad employees are covered by the Railroad Retirement System (the System).
Railroad Retirement System contributions	$ 749	711	670
Multiemployer Plans, Postretirement Benefit [Member]
Collective Bargaining Agreements [Abstract]
Collective bargaining agreements description	Under collective bargaining agreements, we participate in multi-employer benefit plans that provide certain postretirement health care and life insurance benefits for eligible union employees.
Collective bargaining agreements premiums	$ 46	$ 52	$ 57

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Retirement Plans (Schedule Of Changes In Projected Benefit Obligation And Plan Assets) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension [Member]
Projected Benefit Obligation [Abstract]
Projected benefit obligation at beginning of year	$ 4,142	$ 3,372
Service cost	106	70	$ 72
Interest cost	163	158	134
Actuarial loss/(gain)	(267)	735
Gross benefits paid	(186)	(193)
Projected benefit obligation at end of year	3,958	4,142	3,372
Plan Assets [Abstract]
Fair value of plan assets at beginning of year	3,654	3,429
Actual return on plan assets	(43)	185
Voluntary funded pension plan contributions	100	200
Non-qualified plan benefit contributions	19	33
Gross benefits paid	(186)	(193)
Fair value of plan assets at end of year	3,544	3,654	3,429
Defined Benefit Plan, Funded Status of Plan [Abstract]
Funded status at end of year	(414)	(488)
OPEB [Member]
Projected Benefit Obligation [Abstract]
Projected benefit obligation at beginning of year	354	330
Service cost	3	2	3
Interest cost	13	14	12
Actuarial loss/(gain)	(18)	33
Gross benefits paid	(23)	(25)
Projected benefit obligation at end of year	$ 329	$ 354	$ 330
Plan Assets [Abstract]
Fair value of plan assets at beginning of year
Actual return on plan assets
Voluntary funded pension plan contributions
Non-qualified plan benefit contributions - OPEB	$ 23	$ 25
Gross benefits paid	$ (23)	$ (25)
Fair value of plan assets at end of year
Defined Benefit Plan, Funded Status of Plan [Abstract]
Funded status at end of year	$ (329)	$ (354)

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Retirement Plans (Schedule Of Amounts Recognized In Statement Of Financial Position) (Details) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Amounts recognized - noncurrent assets	$ 1	$ 1
Amounts recognized - current liabilities	(22)	(19)
Amounts recognized - noncurrent liabilities	(393)	(470)
Net amounts recognized at end of year	$ (414)	$ (488)
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Amounts recognized - noncurrent assets
Amounts recognized - current liabilities	$ (23)	$ (23)
Amounts recognized - noncurrent liabilities	(306)	(331)
Net amounts recognized at end of year	$ (329)	$ (354)

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Retirement Plans (Schedule Of Pre-Tax Amounts Recognized In Accumulated Other Comprehensive Income/(Loss)) (Details) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Prior service (cost)/credit	$ 7	$ 17
Net actuarial loss	(1,769)	(1,875)
Total pre-tax amounts recognized in accumulated other comprehensive income/(loss)	$ (1,762)	$ (1,858)
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Prior service (cost)/credit
Net actuarial loss	$ (1,652)	$ (1,727)
Total pre-tax amounts recognized in accumulated other comprehensive income/(loss)	(1,652)	(1,727)
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Prior service (cost)/credit	7	17
Net actuarial loss	(117)	(148)
Total pre-tax amounts recognized in accumulated other comprehensive income/(loss)	$ (110)	$ (131)

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Retirement Plans (Schedule Of Other Pre-Tax Changes Recognized In Other Comprehensive Income) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Net actuarial (loss)/gain - OCI	$ (31)	$ (780)	$ 561
Amortization of prior service cost/(credit) - OCI
Amortization of actuarial loss - OCI	$ 106	$ 71	$ 106
Total other pre-tax changes recognized in other comprehensive income	75	(709)	667
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Net actuarial (loss)/gain - OCI	18	(33)	34
Amortization of prior service cost/(credit) - OCI	(10)	(11)	(16)
Amortization of actuarial loss - OCI	13	10	15
Total other pre-tax changes recognized in other comprehensive income	$ 21	$ (34)	$ 33

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Retirement Plans (Amounts Included In Accumulated Other Comprehensive Income Expected To Be Amortized Into Net Periodic Cost (Benefit)) (Details) - 2016 Forecast [Member] $ in Millions	12 Months Ended
	Dec. 31, 2016 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Prior service credit - AOCI	$ 9
Net actuarial loss - AOCI	(90)
Total amounts included in accumulated other comprehensive income expected to be amortized into net periodic cost (benefit)	$ (81)
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Prior service credit - AOCI
Net actuarial loss - AOCI	$ (80)
Total amounts included in accumulated other comprehensive income expected to be amortized into net periodic cost (benefit)	(80)
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Prior service credit - AOCI	9
Net actuarial loss - AOCI	(10)
Total amounts included in accumulated other comprehensive income expected to be amortized into net periodic cost (benefit)	$ (1)

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Retirement Plans (Underfunded Accumulated Benefit Obligation) (Details) - Pension [Member] - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Retirement Plans [Line Items]
Projected benefit obligation	$ 398	$ 388
Accumulated benefit obligation	$ 388	$ 379
Fair value of plan assets
Underfunded accumulated benefit obligation	$ (388)	$ (379)

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Retirement Plans (Weighted-Average Actuarial Assumptions Used To Determine Benefit Obligations) (Detail)	Dec. 31, 2015	Dec. 31, 2014
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate - benefit obligations	4.37%	3.94%
Compensation increase - benefit obligations	4.10%	4.00%
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate - benefit obligations	4.16%	3.74%
Health care cost trend rate (employees under 65) - benefit obligations	6.52%	6.34%
Ultimate health care cost trend rate - benefit obligations	4.50%	4.50%
Year ultimate trend reached - benefit obligations	2038	2028

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Retirement Plans (Net Periodic Pension And OPEB Cost/(Benefit)) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension [Member]
Net Periodic Pension And OPEB Cost/(Benefit) [Abstract]
Service cost	$ 106	$ 70	$ 72
Interest cost	163	158	134
Expected return on plan assets	$ (255)	$ (230)	$ (202)
Amortization of prior service credit
Amortization of actuarial loss	$ 106	$ 71	$ 106
Net periodic pension/OPEB cost	120	69	110
OPEB [Member]
Net Periodic Pension And OPEB Cost/(Benefit) [Abstract]
Service cost	3	2	3
Interest cost	$ 13	$ 14	$ 12
Expected return on plan assets
Amortization of prior service credit	$ (10)	$ (11)	$ (16)
Amortization of actuarial loss	13	10	15
Net periodic pension/OPEB cost	$ 19	$ 15	$ 14

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Retirement Plans (Weighted-Average Actuarial Assumptions Used To Determine Benefit Expense) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate - expense	3.94%	4.72%	3.78%
Expected return on plan assets - expense	7.50%	7.50%	7.50%
Compensation increase - expense	4.00%	4.00%	3.43%
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate - expense	3.74%	4.47%	3.48%
Health care cost trend rate for next year (employees under 65) - expense	6.34%	6.49%	6.64%
Ultimate health care cost trend rate - expense	4.50%	4.50%	4.50%
Year ultimate trend rate reached - expense	2028	2028	2028

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Retirement Plans (OPEB Effects From One-Percentage Point Change Assumed Healthcare Cost Trend Rates) (Details) - OPEB [Member] $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Effect on total service and interest cost components - one % pt. increase	$ 1
Effect on total service and interest cost components - one % pt. decrease	(1)
Effect on accumulated benefit obligation - one % pt. increase	17
Effect on accumulated benefit obligation - one % pt. decrease	$ (14)

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Retirement Plans (Cash Contributions For Qualified Pension Plan Benefit Payments For Non-Qualified OPEB Plans) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
OPEB [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash contributions to qualified pension plan
Cash contribution to non-qualified OPEB plan	$ 23	$ 25
Pension Qualified Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash contributions to qualified pension plan	100	200
Pension Non-qualified Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash contributions to non-qualified pension plan	$ 19	$ 33

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Retirement Plans (Schedule Of Expected Benefit Payments) (Details) $ in Millions	Dec. 31, 2015 USD ($)
Pension [Member]
Benefit Payments [Abstract]
2016	$ 191
2017	194
2018	198
2019	202
2020	205
Years 2021 - 2025	1,077
OPEB [Member]
Benefit Payments [Abstract]
2016	23
2017	23
2018	23
2019	23
2020	22
Years 2021 - 2025	$ 102

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Retirement Plans (Schedule Of Pension Plan Asset Allocation) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Asset allocation	100.00%	100.00%
Target average long-term rate of return	7.50%
Average long-term rate of return target description	The investment strategy for pension plan assets is to maintain a broadly diversified portfolio designed to achieve our target average long-term rate of return of 7.5%.
Prohibited investments description	The investment of pension plan assets in securities issued by UPC is explicitly prohibited by the plan for both the equity and debt portfolios, other than through index fund holdings.
Weighted-average maturity of Pension Plan debt portfolio	12 years	12 years
Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target allocation 2016 range minimum	60.00%
Target allocation 2016 range maximum	70.00%
Asset allocation	67.00%	68.00%
Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target allocation 2016 range minimum	20.00%
Target allocation 2016 range maximum	30.00%
Asset allocation	23.00%	23.00%
Real Estate [Member]
Defined Benefit Plan Disclosure [Line Items]
Target allocation 2016 range minimum	2.00%
Target allocation 2016 range maximum	8.00%
Asset allocation	6.00%	4.00%
Commodities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target allocation 2016 range minimum	4.00%
Target allocation 2016 range maximum	6.00%
Asset allocation	4.00%	5.00%

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Retirement Plans (Schedule Of Assets Measured At Fair Value On A Recurring Basis) (Details) - Pension [Member] - USD ($) $ in Millions		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 3,544	$ 3,654	$ 3,429
Temporary Cash Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		13	22
Registered Investment Companies [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		449	294
Federal Government Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		125	163
Bonds & Debentures [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		383	381
Corporate Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		1,041	1,091
Venture Capital And Buyout Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		256	234
Real Estate Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		199	139
Collective Trust And Other Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		1,075	1,340
Other Assets - Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	[1]	3	(10)
Total Plan Assets At Fair Value [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		3,541	3,664
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Temporary Cash Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		13	22
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Registered Investment Companies [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 179	$ 12
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Federal Government Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Bonds & Debentures [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Corporate Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 1,034	$ 1,076
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Venture Capital And Buyout Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Real Estate Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Collective Trust And Other Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Quoted Prices in Active Markets for Identical Inputs (Level 1) [Member] | Total Plan Assets At Fair Value [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 1,226	$ 1,110
Significant Other Observable Inputs (Level 2) [Member] | Temporary Cash Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Other Observable Inputs (Level 2) [Member] | Registered Investment Companies [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 270	$ 282
Significant Other Observable Inputs (Level 2) [Member] | Federal Government Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		125	163
Significant Other Observable Inputs (Level 2) [Member] | Bonds & Debentures [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		383	381
Significant Other Observable Inputs (Level 2) [Member] | Corporate Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 7	$ 15
Significant Other Observable Inputs (Level 2) [Member] | Venture Capital And Buyout Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Other Observable Inputs (Level 2) [Member] | Real Estate Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Other Observable Inputs (Level 2) [Member] | Collective Trust And Other Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 1,075	$ 1,340
Significant Other Observable Inputs (Level 2) [Member] | Total Plan Assets At Fair Value [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		1,860	2,181
Significant Unobservable Inputs (Level 3) [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 455	$ 373	352
Significant Unobservable Inputs (Level 3) [Member] | Temporary Cash Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Unobservable Inputs (Level 3) [Member] | Registered Investment Companies [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Unobservable Inputs (Level 3) [Member] | Federal Government Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Unobservable Inputs (Level 3) [Member] | Bonds & Debentures [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Unobservable Inputs (Level 3) [Member] | Corporate Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Unobservable Inputs (Level 3) [Member] | Venture Capital And Buyout Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 256	$ 234	213
Significant Unobservable Inputs (Level 3) [Member] | Real Estate Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 199	$ 139	$ 139
Significant Unobservable Inputs (Level 3) [Member] | Collective Trust And Other Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Significant Unobservable Inputs (Level 3) [Member] | Total Plan Assets At Fair Value [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		$ 455	$ 373

[1] Other assets include accrued receivables and pending broker settlements.

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Retirement Plans (Reconciliation Of Beginning Ending Balances Of Fair Value Measurements Using Significant Unobservable Inputs (Level 3)) (Details) - Pension [Member] - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year	$ 3,654	$ 3,429
Fair value of plan assets at end of year	3,544	3,654
Significant Unobservable Inputs (Level 3) [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year	373	352
Realized gain/(loss)	23	25
Unrealized gain	21	11
Purchases	128	73
Sales	(90)	(88)
Fair value of plan assets at end of year	455	373
Venture Capital And Buyout Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year	234
Fair value of plan assets at end of year	256	234
Venture Capital And Buyout Partnerships [Member] | Significant Unobservable Inputs (Level 3) [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year	234	213
Realized gain/(loss)	18	17
Unrealized gain	13	5
Purchases	54	54
Sales	(63)	(55)
Fair value of plan assets at end of year	256	234
Real Estate Partnerships [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year	139
Fair value of plan assets at end of year	199	139
Real Estate Partnerships [Member] | Significant Unobservable Inputs (Level 3) [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of year	139	139
Realized gain/(loss)	5	8
Unrealized gain	8	6
Purchases	74	19
Sales	(27)	(33)
Fair value of plan assets at end of year	$ 199	$ 139

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Other Income (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015		Dec. 31, 2014		Dec. 31, 2013
Other Income [Abstract]
Net gain on non-operating asset dispositions.	$ 144	[1]	$ 69		$ 32
Rental income	96		96		106	[2]
Interest Income	5		4		4
Non-operating environmental costs and other	(19)		(18)	[3]	(14)
Total	226		151		128
Real estate sale	$ 113
Land lease contract settlement					$ 17
Permanent easement sale			$ 14

[1] 2015 includes $113 million related to a real estate sale.

[2] 2013 includes $17 million related to a land lease contract settlement.

[3] 2014 includes $14 million related to the sale of a permanent easement.

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Abstract]
Total accrued liabilities for interest and penalties	$ 2	$ 2	$ 6
Total interest and penalties recognized as part of income tax expense			9	$ 7
Total interest and penalties recognized as part of income tax benefit		(3)
Taxes paid in connection to settlement	10		11
Net unrecognized tax benefit liability	$ 94	$ 94	$ 151	$ 59	$ 115

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Income Taxes (Schedule Of Components Of Income Tax Expense) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Current Income Tax Expense [Abstract]
Current federal income tax expense	$ 1,901	$ 2,019	$ 1,727
Current state income tax expense	210	239	199
Current foreign income tax expense	8	10	11
Total current income tax expense	2,119	2,268	1,937
Deferred Income Tax Expense [Abstract]
Deferred federal income tax expense	644	753	605
Deferred state income tax expense	121	142	118
Total deferred income tax expense	765	895	723
Total income tax expense	$ 2,884	$ 3,163	$ 2,660

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Income Taxes (Reconciliations Between Statutory And Effective Tax Rates) (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation Between Statutory And Effective Tax Rates [Abstract]
Federal statutory tax rate	35.00%	35.00%	35.00%
State statutory rates, net of federal benefits	3.10%	3.10%	3.10%
Tax credits	(0.50%)	(0.40%)	(0.20%)
Deferred tax adjustments			(0.10%)
Other tax rate adjustments	0.10%	0.20%	(0.10%)
Effective tax rate	37.70%	37.90%	37.70%

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Income Taxes (Schedule Of Deferred Income Tax Liabilities And Assets) (Details) - USD ($) $ in Millions		Dec. 31, 2015	Dec. 31, 2014
Components Of Deferred Income Tax (Liabilities)/Assets [Abstract]
Deferred income tax liabilities - property		$ (16,079)	$ (15,173)
Deferred income tax liabilities - other		(352)	(411)
Total deferred income tax liabilities		(16,431)	(15,584)
Deferred income tax asset - accrued wages		76	74
Deferred income tax asset - accrued casualty costs		237	228
Deferred income tax asset - stock compensation		72	69
Deferred income tax asset - debt and leases		149	86
Deferred income tax asset - retiree benefits		204	392
Deferred income tax asset - credits		156	164
Deferred income tax asset - other		296	168
Total deferred income tax asset	[1]	1,190	1,181
Net deferred income tax liability		(15,241)	(14,403)
Current deferred income tax assets			277
Income Tax Details [Abstract]
Deferred tax valuation allowance		$ 0	$ 0

[1] Prior to the adoption of Accounting Standard Update (ASU) 2015-17, deferred tax assets were required to be presented as current and non-current on the Consolidated Statement of Financial Position. In 2015, UP adopted ASU 2015-17 retrospectively. Current deferred income tax assets at December 31, 2014 of $277 million were reclassified from current to non-current for 2015 presentation.

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Income Taxes (Reconciliation Of Changes In Unrecognized Tax Benefits Liabilities/(Assets)) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation Of Changes In Unrecognized Tax Benefits Liabilities/(Assets) [Abstract]
Unrecognized tax benefits at January 1	$ 151	$ 59	$ 115
Increases for positions taken in current year	38	92	24
Increases for positions taken in prior years	13	22	15
Decreases for positions taken in prior years	(87)	(14)	(35)
Payments to and settlements with taxing authorities	(13)	(8)	(58)
Increases/(decreases) for interest and penalties	(5)	1
Lapse of statutes of limitations	(3)	(1)	(2)
Unrecognized tax benefits at December 31	$ 94	$ 151	$ 59

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Income Taxes (Unrecognized Tax Benefits That Would/Not Reduce The Effective Tax Rate) (Details) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Unrecognized Tax Benefits That Would Impact Effective Tax Rate [Abstract]
Unrecognized tax benefits that would reduce the effective tax rate	$ 31	$ 33	$ 34
Unrecognized tax benefits that would not reduce the effective tax rate	63	118	25
Total unrecognized tax benefits	$ 94	$ 151	$ 59	$ 115

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share [Abstract]
Net income	$ 1,117	$ 1,300	$ 1,204	$ 1,151	$ 1,431	$ 1,370	$ 1,291	$ 1,088	$ 4,772	$ 5,180	$ 4,388
Weighted-Average Number Of Shares Outstanding
Basic									866.2	897.1	926.5
Dilutive effect of stock options									1.5	2.1	2.4
Dilutive effect of retention shares and units									1.7	1.9	2.6
Diluted									869.4	901.1	931.5
Earnings per share – basic	$ 1.31	$ 1.51	$ 1.38	$ 1.31	$ 1.62	$ 1.53	$ 1.43	$ 1.20	$ 5.51	$ 5.77	$ 4.74
Earnings per share – diluted	$ 1.31	$ 1.50	$ 1.38	$ 1.30	$ 1.61	$ 1.53	$ 1.43	$ 1.19	$ 5.49	$ 5.75	$ 4.71
Stock options excluded as their inclusion would be anti-dilutive									1.1	0.4	0.5

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Accumulated Other Comprehensive Income/(Loss) (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at January 1		$ (1,210)	$ (750)
Other comprehensive income/(loss) before reclassifications		(47)	(2)
Amounts reclassified from accumulated other comprehensive income/(loss)	[1]	62	(458)
Net year-to-date other comprehensive income/(loss), net of taxes	[2]	15	(460)	$ 436
Balance at December 31		(1,195)	(1,210)	(750)
Deferred taxes activity other comprehensive income/(loss)		(8)	291	(264)
Defined Benefit Plans [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at January 1		(1,161)	(713)
Other comprehensive income/(loss) before reclassifications		(4)	10
Amounts reclassified from accumulated other comprehensive income/(loss)	[1]	62	(458)
Net year-to-date other comprehensive income/(loss), net of taxes		58	(448)
Balance at December 31		(1,103)	(1,161)	(713)
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance at January 1		(49)	(37)
Other comprehensive income/(loss) before reclassifications		$ (43)	$ (12)
Amounts reclassified from accumulated other comprehensive income/(loss)	[1]
Net year-to-date other comprehensive income/(loss), net of taxes		$ (43)	$ (12)
Balance at December 31		$ (92)	$ (49)	$ (37)

[1] The accumulated other comprehensive income/(loss) reclassification components are 1) prior service cost/(benefit) and 2) net actuarial loss which are both included in the computation of net periodic pension cost. See Note 6 Retirement Plans for additional details.

[2] Net of deferred taxes of ($8) million, $291 million, and ($264) million during 2015, 2014, and 2013, respectively.

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Accounts Receivable (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accounts Receivable Details [Abstract]
Allowance for doubtful accounts	$ 5	$ 5
Allowance for doubtful accounts - receivables not expected to be collected in one year	11	16
Receivables Securitization Facility [Abstract]
Total capacity to transfer undivided interests to investors under the receivables securitization facility	$ 650
Receivables securitization facility renewal date	2017-07
Receivables securitization facility duration	3 years
Value of the outstanding undivided interest held by investors under the receivables securitization facility	$ 400	400
Accounts receivable supporting the undivided interest held by investors	900	1,200
Cost of the receivables securitization facility - interest expense	$ 5	$ 4	$ 5

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Properties (Details) $ in Millions		12 Months Ended
		Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Property, Plant and Equipment [Line Items]
Cost		$ 66,564	$ 63,214
Accumulated depreciation		17,698	16,942
Net book value		$ 48,866	46,272
Depreciable asset classes description		We currently have more than 60 depreciable asset classes, and we may increase or decrease the number of asset classes due to changes in technology, asset strategies, or other factors.
Total repairs and maintenance expense		$ 2,500	2,400	$ 2,300
Land [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 5,195	$ 5,194
Accumulated depreciation
Net book value		$ 5,195	$ 5,194
Road: Rail and Other Track Material [Member]
Property, Plant and Equipment [Line Items]
Cost		15,236	14,588
Accumulated depreciation		5,495	5,241
Net book value		$ 9,741	$ 9,347
Estimated useful life		37 years	33 years
Road: Ties [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 9,439	$ 9,102
Accumulated depreciation		2,595	2,450
Net book value		$ 6,844	$ 6,652
Estimated useful life		33 years	33 years
Road: Ballast [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 5,024	$ 4,826
Accumulated depreciation		1,350	1,264
Net book value		$ 3,674	$ 3,562
Estimated useful life		34 years	34 years
Road: Other Roadway [Member]
Property, Plant and Equipment [Line Items]
Cost	[1]	$ 17,374	$ 16,476
Accumulated depreciation	[1]	3,021	2,852
Net book value	[1]	$ 14,353	$ 13,624
Estimated useful life	[1]	47 years	47 years
Total Road [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 47,073	$ 44,992
Accumulated depreciation		12,461	11,807
Net book value		$ 34,612	33,185
Term of Depreciation Studies		6 years
Equipment: Locomotives [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 9,027	8,276
Accumulated depreciation		3,726	3,694
Net book value		$ 5,301	$ 4,582
Estimated useful life		19 years	20 years
Equipment: Freight Cars [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 2,203	$ 2,116
Accumulated depreciation		962	968
Net book value		$ 1,241	$ 1,148
Estimated useful life		24 years	25 years
Equipment: Work Equipment and Other [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 897	$ 684
Accumulated depreciation		191	153
Net book value		$ 706	$ 531
Estimated useful life		19 years	18 years
Total Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 12,127	$ 11,076
Accumulated depreciation		4,879	4,815
Net book value		$ 7,248	6,261
Term of Depreciation Studies		3 years
Technology and Other [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 919	872
Accumulated depreciation		358	320
Net book value		$ 561	$ 552
Estimated useful life		11 years	10 years
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Cost		$ 1,250	$ 1,080
Accumulated depreciation
Net book value		$ 1,250	$ 1,080
Minimum [Member]
Property, Plant and Equipment [Line Items]
Number of depreciable asset classes | item		60

[1] Other roadway includes grading, bridges and tunnels, signals, buildings, and other road assets.

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Accounts Payable And Other Current Liabilities (Details) - USD ($) $ in Millions						12 Months Ended
	Dec. 30, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 30, 2015	Jan. 02, 2015	Dec. 31, 2015		Dec. 31, 2014		Dec. 31, 2013
Accounts Payable And Other Current Liabilities [Abstract]
Accounts payable						$ 743		$ 877
Income and other taxes payable						434		412
Accrued wages and vacation						391		409
Interest payable						208		178
Accrued casualty costs						181		249
Equipment rents payable						$ 105		100
Dividends payable							[1]	438	[1]	$ 356
Other						$ 550		640
Total accounts payable and other current liabilities						2,612		3,303
Dividends paid	$ 467	$ 476	$ 479	$ 484	$ 438	$ 2,344		$ 1,632		$ 1,333

[1] Beginning in 2015, the timing of the dividend declaration and payable dates was aligned to occur within the same quarter. The 2015 dividends paid amount includes the fourth quarter 2014 dividend of $438 million, which was paid on January 2, 2015, the first quarter 2015 dividend of $484 million, which was paid on March 30, 2015, the second quarter 2015 dividend of $479 million, which was paid on June 30, 2015, the third quarter 2015 dividend of $476 million, which was paid on September 30, 2015, as well as the fourth quarter 2015 dividend of $467 million, which was paid on December 30, 2015.

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Financial Instruments (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Market and Credit Risk [Abstract]
Collateral for hedging activity	$ 0	$ 0
Interest Rate Derivatives [Abstract]
Interest rate fair value hedges outstanding	0	0
Interest Rate Cash Flow Hedges [Abstract]
Interest rate cash flow hedges outstanding	0	0
Earnings Impact [Abstract]
Increase in pre-tax income	0	0	$ 0
Fair Value of Debt Instruments [Abstract]
Fair value of total debt	15,200	13,000
Fair value of total debt in excess of carrying value	1,000	1,500
Fixed rate debt securities containing call provisions	$ 155	$ 163

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Debt (Equipment Encumbrances) (Narrative) (Details) - USD ($) $ in Billions	Dec. 31, 2015	Dec. 31, 2014	Jan. 01, 1997
Debt [Abstract]
Carrying value of equipment serving as collateral for capital leases and other types of equipment obligations	$ 2.6	$ 2.8
Value of Missouri Pacific Railroad company assets that secured mortgage bonds			$ 6.0

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Debt (Credit Facilities) (Narrative) (Details) - Revolving Credit Facility [Member] - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Item]
Facility expiration date	May 25, 2019
Credit facility term	5 years
Revolving credit facility available credit	$ 1,700,000,000
Revolving credit facility withdrawals	0
Allowable debt per debt-to-net-worth coverage ratio (as defined in the facility)	41,400,000,000
Outstanding debt (as defined by facility)	14,300,000,000
Cross-default provision (as defined by facility)	125,000,000
Commercial paper issued	0
Commercial paper repaid	0
Commercial paper outstanding	$ 0	$ 0

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Debt (Dividend Restrictions) (Narrative) (Details) - USD ($) $ in Billions	Dec. 31, 2015	Dec. 31, 2014
Debt [Abstract]
Retained earnings available for dividends	$ 13.6	$ 15.4

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Debt (Shelf Registration And Significant New Borrowings) (Narrative) (Details) - USD ($)	Dec. 31, 2015	Feb. 09, 2015	Feb. 28, 2013
Debt [Abstract]
Board of Directors remaining debt issuance	$ 2,200,000,000
Board of Directors authorized debt issuance		$ 4,000,000,000	$ 4,000,000,000

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Debt (Equipment Trust) (Narrative) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)
Debt Instrument [Line Item]
Debt due after one year	$ 13,607	$ 10,952
Equipment Obligations [Member] | 2.695% Notes Due 2027 [Member]
Debt Instrument [Line Item]
Issuance date	May 12, 2015
Note amount	$ 399
Interest rate on note	2.695%
Maturity date on new borrowing	May 12, 2027
Total locomotives financed from proceeds | item	182
Debt due after one year	$ 399

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Debt (Debt Exchange) (Narrative) (Details) - USD ($)		12 Months Ended
	Aug. 21, 2013	Dec. 31, 2015	Dec. 31, 2013
Debt Conversion [Line Items]
Original debt	$ 1,170,000,000
3.646% Debt Due 2024 [Member]
Debt Conversion [Line Items]
Date of exchange		Aug. 21, 2013
New debt	$ 439,000,000
New rate	3.646%
New due date		Feb. 15, 2024
4.821% Debt Due 2044 [Member]
Debt Conversion [Line Items]
Date of exchange		Aug. 21, 2013
New debt	$ 700,000,000
New rate	4.821%
New due date		Feb. 01, 2044
Notes And Debentures [Member]
Debt Conversion [Line Items]
Original debt	$ 1,170,000,000
Cash consideration	280,000,000
Accrued and unpaid interest	8,000,000
Gain (loss) recognized resulting from exhange	$ 0
Debt exchange fees			$ 9,000,000

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Debt (Receivables Securitization Facility) (Narrative) (Details) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Receivables Securitization Facility [Member]
Debt Instrument [Line Item]
Debt	$ 400	$ 400

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Debt (Schedule Of Debt) (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Item]
Unamortized discount and deferred issuance costs	[1]	$ (674)	$ (658)
Total debt		14,201	11,413
Less: current portion		(594)	(461)
Total long-term debt		13,607	10,952
Deferred debt issuance costs		89	67
Notes And Debentures [Member]
Debt Instrument [Line Item]
Debt		$ 11,964	9,266
Stated percentage rate range, minimum		1.80%
Stated percentage rate range, maximum		7.90%
Debt due through		Nov. 15, 2065
Capitalized Leases [Member]
Debt Instrument [Line Item]
Debt		$ 1,268	1,520
Stated percentage rate range, minimum		3.10%
Stated percentage rate range, maximum		8.40%
Debt due through		Dec. 10, 2028
Equipment Obligations [Member]
Debt Instrument [Line Item]
Debt		$ 963	597
Stated percentage rate range, minimum		2.80%
Stated percentage rate range, maximum		6.70%
Debt due through		Jan. 02, 2031
Receivables Securitization Facility [Member]
Debt Instrument [Line Item]
Debt		$ 400	400
Floating Rate Term Loan [Member]
Debt Instrument [Line Item]
Debt		$ 200	200
Debt due through		Oct. 31, 2016
Mortgage Bonds [Member]
Debt Instrument [Line Item]
Debt		$ 57	57
Stated percentage rate		4.80%
Debt due through		Jan. 01, 2030
Medium-Term Notes [Member]
Debt Instrument [Line Item]
Debt		$ 23	23
Stated percentage rate range, minimum		9.30%
Stated percentage rate range, maximum		10.00%
Debt due through		Apr. 15, 2020
Tax-Exempt Financings [Member]
Debt Instrument [Line Item]
Debt			$ 8
Debt due through		Dec. 01, 2015

[1] Includes deferred debt issuance costs of $89 million and $67 million as of December 31, 2015, and 2014, respectively, as a result of the retrospective adoption of Accounting Standard Update (ASU) 2015-03 on December 31, 2015. Prior to the ASU adoption, deferred debt issuance costs were presented in other assets.

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Debt (Aggregate Debt Maturities) (Details) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Aggregate Debt Maturities Excluding Market Value Adjustments [Abstract]
Debt maturities - 2016	$ 594
Debt maturities - 2017	1,052
Debt maturities - 2018	566
Debt maturities - 2019	637
Debt maturities - 2020	1,034
Debt maturities - thereafter	10,318
Total debt	$ 14,201	$ 11,413

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Debt (Unsecured Fixed Rate Debt Securities Issued Under Current Shelf Registration) (Details) - Unsecured Debt [Member] - USD ($)	12 Months Ended
	Dec. 31, 2015	Oct. 29, 2015	Jun. 19, 2015	Jan. 29, 2015
1.80% Notes Due 2020 [Member]
Debt Instrument [Line Item]
Issuance date	Jan. 29, 2015
Note amount				$ 250,000,000
Interest rate on note				1.80%
Maturity date on new borrowing	Feb. 01, 2020
3.375% Notes Due 2035 [Member]
Debt Instrument [Line Item]
Issuance date	Jan. 29, 2015
Note amount				$ 450,000,000
Interest rate on note				3.375%
Maturity date on new borrowing	Feb. 01, 2035
3.875% Notes Due 2055 [Member]
Debt Instrument [Line Item]
Issuance date	Jan. 29, 2015
Note amount				$ 450,000,000
Interest rate on note				3.875%
Maturity date on new borrowing	Feb. 01, 2055
2.250% Notes Due 2020 [Member]
Debt Instrument [Line Item]
Issuance date	Jun. 19, 2015
Note amount			$ 400,000,000
Interest rate on note			2.25%
Maturity date on new borrowing	Jun. 19, 2020
3.250% Notes Due 2025 [Member]
Debt Instrument [Line Item]
Issuance date	Jun. 19, 2015
Note amount			$ 300,000,000
Interest rate on note			3.25%
Maturity date on new borrowing	Aug. 15, 2025
3.250% Reopened Notes Due 2025 [Member]
Debt Instrument [Line Item]
Issuance date	Oct. 29, 2015
Note amount		$ 200,000,000
Interest rate on note		3.25%
Maturity date on new borrowing	Aug. 15, 2025
4.050% Notes Due 2045 [Member]
Debt Instrument [Line Item]
Issuance date	Oct. 29, 2015
Note amount		$ 500,000,000
Interest rate on note		4.05%
Maturity date on new borrowing	Nov. 15, 2045
4.375% Notes Due 2065 [Member]
Debt Instrument [Line Item]
Issuance date	Oct. 29, 2015
Note amount		$ 400,000,000
Interest rate on note		4.375%
Maturity date on new borrowing	Nov. 15, 2065

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Debt (Schedule Of Debt Exchange) (Details) - USD ($) $ in Millions		12 Months Ended
	Aug. 21, 2013	Dec. 31, 2015
Debt Conversion [Line Items]
Original debt	$ 1,170
3.646% Debt Due 2024 [Member] | 7.000% Debentures Due 2016 [Member]
Debt Conversion [Line Items]
Original debt	$ 8
Original rate	7.00%
Original due date, year		2016
3.646% Debt Due 2024 [Member] | 5.650% Notes Due 2017 [Member]
Debt Conversion [Line Items]
Original debt	$ 38
Original rate	5.65%
Original due date, year		2017
3.646% Debt Due 2024 [Member] | 5.750% Notes Due 2017 [Member]
Debt Conversion [Line Items]
Original debt	$ 70
Original rate	5.75%
Original due date, year		2017
3.646% Debt Due 2024 [Member] | 5.700% Notes Due 2018 [Member]
Debt Conversion [Line Items]
Original debt	$ 103
Original rate	5.70%
Original due date, year		2018
3.646% Debt Due 2024 [Member] | 7.875% Notes Due 2019 [Member]
Debt Conversion [Line Items]
Original debt	$ 20
Original rate	7.875%
Original due date, year		2019
3.646% Debt Due 2024 [Member] | 6.125% Notes Due 2020 [Member]
Debt Conversion [Line Items]
Original debt	$ 238
Original rate	6.125%
Original due date, year		2020
4.821% Debt Due 2044 [Member] | 7.125% Debentures Due 2028 [Member]
Debt Conversion [Line Items]
Original debt	$ 73
Original rate	7.125%
Original due date, year		2028
4.821% Debt Due 2044 [Member] | 6.625% Debentures Due 2029 [Member]
Debt Conversion [Line Items]
Original debt	$ 177
Original rate	6.625%
Original due date, year		2029
4.821% Debt Due 2044 [Member] | 6.250% Debentures Due 2034 [Member]
Debt Conversion [Line Items]
Original debt	$ 19
Original rate	6.25%
Original due date, year		2034
4.821% Debt Due 2044 [Member] | 6.150% Debentures Due 2037 [Member]
Debt Conversion [Line Items]
Original debt	$ 138
Original rate	6.15%
Original due date, year		2037
4.821% Debt Due 2044 [Member] | 5.780% Notes Due 2040 [Member]
Debt Conversion [Line Items]
Original debt	$ 286
Original rate	5.78%
Original due date, year		2040

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Variable Interest Entities (Details) $ in Millions	Dec. 31, 2015 USD ($)
Future minimum lease payments	$ 3,430
Variable Interest Entity (VIEs) [Member]
Future minimum lease payments	$ 2,600

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Leases (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Future Minimum Lease Payments For Capital Leases [Abstract]
Properties held under capital leases	$ 2,273	$ 2,454
Properties held under capital leases - accumulated depreciation	$ 1,189	1,210
Lease payments related to locomotives	95.00%
Future Minimum Lease Payments For Operating Leases [Abstract]
Rent expense for operating leases with terms exceeding one month	$ 590	$ 593	$ 618

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Leases (Future Minimum Lease Payments For Operating And Capital Leases) (Details) $ in Millions	Dec. 31, 2015 USD ($)
Future Minimum Lease Payments For Capital Leases [Abstract]
Minimum capital lease payments - 2016	$ 217
Minimum capital lease payments - 2017	220
Minimum capital lease payments - 2018	198
Minimum capital lease payments - 2019	184
Minimum capital lease payments - 2020	193
Minimum capital lease payments - later years	575
Total minimum capital lease payments	1,587
Capital lease payments - amount representing interest	(319)
Capital lease payments - present value of minimum lease payments	1,268
Future Minimum Lease Payments For Operating Leases [Abstract]
Minimum operating lease payments - 2016	491
Minimum operating lease payments - 2017	446
Minimum operating lease payments - 2018	371
Minimum operating lease payments - 2019	339
Minimum operating lease payments - 2020	282
Minimum operating lease payments - later years	1,501
Total minimum operating lease payments	$ 3,430

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Commitments And Contingencies (Narrative) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($) site	Dec. 31, 2014 USD ($)
Commitments and Contingencies [Line Items]
Sites identified which we are or may be liable for remediation costs | site	290
Sites subject of actions taken by the U.S. government | site	31
Sites on the Superfund National Priorities List | site	19
Personal Injury [Member]
Commitments and Contingencies [Line Items]
Percent of liability recorded related to asserted claims	94.00%
Percent of liability recorded related to unasserted claims	6.00%
Reasonably possible outcome of related claims, range minimum	$ 318.0
Reasonably possible outcome of related claims, range maximum	$ 345.0
Asbestos [Member]
Commitments and Contingencies [Line Items]
Percent of liability recorded related to asserted claims	22.00%
Percent of liability recorded related to unasserted claims	78.00%
Reasonably possible outcome of related claims, range minimum	$ 120.0
Reasonably possible outcome of related claims, range maximum	129.0
Guarantees [Member]
Commitments and Contingencies [Line Items]
Maximum potential amount of guarantee payments	53.0	$ 82.0
Recorded liability for fair value of guarantees	$ 0.0	$ 0.3
Expiration year of final guarantee	The final guarantee expires in 2022.

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Commitments And Contingencies (Commitments And Contingencies Activity) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Commitments and Contingencies [Line Items]
Current portion, ending balance at December 31	$ 181	$ 249
Environmental [Abstract]
Beginning balance.	182	171	$ 170
Accruals	61	56	58
Payments	(53)	(45)	(57)
Ending balance at December 31	190	182	171
Current portion, ending balance at December 31	52	60	53
Personal Injury [Member]
Commitments and Contingencies [Line Items]
Beginning balance	335	294	334
Current year accruals	89	96	87
Changes in estimates for prior years	(3)	9	(38)
Payments	(103)	(64)	(89)
Ending balance at December 31	318	335	294
Current portion, ending balance at December 31	63	111	82
Asbestos [Member]
Commitments and Contingencies [Line Items]
Beginning balance	$ 126	131	139
Current year accruals		1	2
Payments	$ (6)	(6)	(10)
Ending balance at December 31	120	126	131
Current portion, ending balance at December 31	$ 6	$ 8	$ 9

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Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended								12 Months Ended			108 Months Ended
	Feb. 04, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015	Jan. 01, 2014
Share Repurchase Program [Line Items]
BOD authorized														120,000,000
Stock repurchase program expiration date										Dec. 31, 2017
Aggregate cost										$ 3,465	$ 3,225	$ 2,218	$ 16,000
Shares repurchased		6,646,899	13,800,700	7,975,100	6,881,455	7,736,400	8,347,000	8,320,000	7,640,000	35,304,154	32,043,400
Average purchase price		$ 88.19	$ 89.65	$ 104.62	$ 117.28	$ 113.77	$ 102.54	$ 96.84	$ 89.43	$ 98.14	$ 100.65
Remaining number of shares that may be repurchased under current authority		52,652,446								52,652,446			52,652,446
Subsequent Event [Member]
Share Repurchase Program [Line Items]
Aggregate cost	$ 268
Shares repurchased	3,700,000

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Related Parties (Details) - TTX Company [Member] - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Equity Method Investment, Ownership Percentage	36.79%
Equity Method Investments	$ 830	$ 795
Related Party Transaction, Expenses from Transactions with Related Party	376	350	$ 326
Accounts Payable, Related Parties, Current	$ 61	$ 53

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Selected Quarterly Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Selected Quarterly Data (Unaudited) [Abstract]
Operating revenues	$ 5,208	$ 5,562	$ 5,429	$ 5,614	$ 6,153	$ 6,182	$ 6,015	$ 5,638	$ 21,813	$ 23,988	$ 21,963
Operating income	1,918	2,208	1,949	1,977	2,373	2,330	2,196	1,854	8,052	8,753	7,446
Net income	$ 1,117	$ 1,300	$ 1,204	$ 1,151	$ 1,431	$ 1,370	$ 1,291	$ 1,088	$ 4,772	$ 5,180	$ 4,388
Net income per share:
Earnings per share – basic	$ 1.31	$ 1.51	$ 1.38	$ 1.31	$ 1.62	$ 1.53	$ 1.43	$ 1.20	$ 5.51	$ 5.77	$ 4.74
Earnings per share – diluted	$ 1.31	$ 1.50	$ 1.38	$ 1.30	$ 1.61	$ 1.53	$ 1.43	$ 1.19	$ 5.49	$ 5.75	$ 4.71

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Schedule Of Valuation And Qualifying Accounts (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Presented in Consolidated Statements of Financial Position [Abstract]
Allowance for doubtful accounts - current	$ 5	$ 5
Allowance for doubtful accounts - long-term	11	16
Accrued casualty costs, current	181	249
Allowance For Doubtful Accounts [Member]
Schedule Of Valuation And Qualifying Accounts [Line Items]
Balance, beginning of period	21	23	$ 37
Reduction to expense		5	(4)
Charges to expense	1
Net recoveries/(write-offs), cash payments and other reductions	(6)	(7)	(10)
Balance, end of period	16	21	23
Presented in Consolidated Statements of Financial Position [Abstract]
Allowance for doubtful accounts - current	5	5	1
Allowance for doubtful accounts - long-term	11	16	22
Accrued Casualty Costs [Member]
Schedule Of Valuation And Qualifying Accounts [Line Items]
Balance, beginning of period	757	702	734
Charges to expense	227	256	188
Net recoveries/(write-offs), cash payments and other reductions	(248)	(201)	(220)
Balance, end of period	736	757	702
Presented in Consolidated Statements of Financial Position [Abstract]
Accrued casualty costs, current	181	249	207
Accrued casualty costs, long-term	$ 555	$ 508	$ 495