CN's Signals and Communications Employees Ratify New Contract With Innovative Pension Plan Changes.

MONTREAL--(BUSINESS WIRE)--April 20, 1998--Canadian National's (TSE;ME:CNR)(NYSE:CNI) signals and communications employees have ratified an innovative collective agreement providing for ground-breaking pension plan improvements, better benefits and wage increases.

This agreement marks the second time in the company's current round of national bargaining that a CN union has approved a settlement including significant pension reforms.

The three-year agreement, ratified by the 845-member International Brotherhood of Electrical Workers, includes a range of pension plan changes: an innovative method of sharing future investment earnings; progressive plan governance; increases in individual pension benefits of up to $1,200, and improved pension indexation.

CN President and Chief Executive Officer Paul M. Tellier said: "The pension plan changes are ground-breaking. The method of sharing future pension plan investment gains arising from improved fund performance is an innovative one that few large corporate pension plans have."

Tellier said the pension plan improvements negotiated by the company and the IBEW were also negotiated by CN and the Canadian Council of Railway Operating Unions and included in a settlement ratified by CCROU members last week. The CCROU represents 5,820 operating employees at CN.

The governance provisions of both the IBEW and CCROU agreements provide for the replacement of the existing CN pension board with a pension committee having broader powers, including the authority to improve pension benefits during the life of collective agreements for pensioners and current employees.

Michael Beswick, chairman of the Association of Canadian Pension Management and senior vice-president, pensions, of the Ontario Municipal Employees Retirement Board, commended the pension changes negotiated by the company and unions, saying CN, its employees and pensioners "are once again blazing new trails in Canada."

"It is a credit to both sides to come to terms with pension surplus even before one exists and in such a creative manner," said Beswick.

Beswick said the new CN pension committee will have considerable governance responsibilities in dealing with pension improvements. "Forging a partnership with all stakeholders represented on this committee will be the key to success and this will take a great deal of courage and commitment on the part of all stakeholders. I am certain there will be armchair critics along the way, but I sense the pension community will be watching this with a great deal of interest."

The IBEW agreement, retroactive to Jan. 1, 1998, includes wage increases of two per cent annually and improvements to benefit, dental and extended health care plans.

The company and the IBEW will also jointly develop and implement "gain-sharing" programs. Gain-sharing is a variable pay system under which the company will share with employees financial gains resulting in improved corporate performance in areas such as costs or productivity. IBEW members will also be able to participate in CN's Employee Share Investment Plan, which permits employees to buy CN shares through payroll deductions of up to six per cent of base salary.

Tentative agreements covering about 4,300 employees represented by the Brotherhood of Maintenance of Way Employees and the Rail Canada Traffic Controllers remain subject to ratification.

CN is in conciliation with the Canadian Auto workers union, which represents about 6,400 clerical, shopcraft and independent contractors.

CN expects to conclude negotiations soon with the Canadian National Railways Police Association. The CNRPA has about 70 members.

Canadian National Railway Company serves all of Canada, including the key ports of Vancouver, Montreal and Halifax, and the gateways of Chicago and Detroit, with connections to all points in North America.

CONTACT: Canadian National Railway Company, Montreal

Mark Hallman, 416/ 217-6390

http://www.cn.ca