Notice of Annual Meeting of Shareholders And

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

April 22, 2008

AND MANAGEMENT INFORMATION CIRCULAR

CCN_Proxy_2008_Eng_Mar08_v17.inddN_Proxy_2008_Eng_Mar08_v17.indd 1 33/8/08/8/08 5:40:245:40:24 PMPM

CCN_Proxy_2008_Eng_Mar08_v17.indd 1 N _ P r o x y _ 2 0 E. Hunter Harrison David G.A. McLean DavidG.A. President andChiefExecutiveOffi E. HunterHarrison Sincerely, We lookforwardtoseeingyouatthemeeting. A livewebcastofthemeetingwillbeavailableonCompany’swebsiteatwww.cn.ca. on pages5and6oftheInformationCircularwithrespecttohowvoteyourshares. If yoursharesarenotregisteredinnamebutheldtheofanominee,youmaywishtoconsultinformation over theInternet. the meeting,youmayfi it ispossibleforyoutovoteovertheInternetbyfollowinginstructionsonenclosedproxyform.Evenifplan complete andreturntheenclosedproxyforminenvelopeprovidedforthispurposesothatyourviewscanberepresented. Al Your participationintheaffairsofCompanyisimportanttous.Ifyouareunableattendperson,weencourage our plansforthefuture.You willhavetheopportunitytomeetyourdirectorsandsenioroffi compensation andCN’sgovernancepractices.Inadditiontotheseitems,wewilldiscusshighlightsofour2007performance This InformationCirculardescribesthebusinesstobeconductedatmeetingandprovidesinformationonexecutive 4th Floor, 108EastSuperiorStreet,Chicago,Illinois(USA),onTuesday, April22,2008,at10:00a.m.(Centraltime). invite youtoattendtheannualmeetingofshareholdersthatwillbeheldthisyearatThePeninsula Chicago,GrandBallroom, On behalfoftheBoardDirectorsandManagementCanadianNationalRailwayCompany(the“Company”),wecordially Dear Shareholder: March 4,2008 0 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d nd it convenient to express your views in advance by completing and returning the proxy form or by voting nditconvenienttoexpressyourviewsinadvancebycompletingandreturningtheproxyformorvoting 1 cr ChairmanoftheBoard cer cersoftheCompany. attend attend so, so, 33/8/08 5:40:26 PM / 8 / 0 8 1

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: 2 6 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 2 N _ P r 2 o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 0 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 2 on Tuesday, April22,2008,at10:00a.m.(Centraltime)for: CHICAGO, ILLINOIS(USA) 108 EASTSUPERIORSTREET 4TH FLOOR GRAND BALLROOM THE PENINSULACHICAGO held at Our annualmeetingofholderscommonshareswillbe SHAREHOLDERS MEETING OF NOTICE OFANNUAL Montréal, Québec March 4,2008 CHIEF LEGALOFFICERANDCORPORATE SECRETARY SENIOR VICE-PRESIDENTPUBLICAFFAIRS, 1. Sean Finn By orderoftheboarddirectors to receivenoticeoftheMeeting. for thedeterminationofholderscommonsharesentitled The directorshaveﬁ 5. 4. 3. 2. receiving theconsolidatedﬁ reports thereon; the yearendedDecember31,2007andauditors’ postponement thereof. brought beforetheMeetingoranyadjournment transacting suchotherbusinessasmayproperlybe Schedule “A” totheInformationCircular;and consideration oftheshareholderproposalsetoutin appointing theauditors; electing thedirectors; xed March 14, 2008, as the record date xedMarch14,2008,astherecorddate nancial statements for nancialstatementsfor 33/8/08 5:40:27 PM / 8 / 0 8 5 : 4

: 2 7 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 3 N _ P r o x y _ 2 0 Information Circular. vote ifIamanon-registeredshareholder?”onpage5ofthis shareholder, referenceismadetothesectionentitled“Howdo I adjourned orpostponedmeeting.Ifyouareanon-registered (Eastern time)onthebusinessdaypriortofi Meeting isadjournedorpostponed,bynolaterthan5:00p.m. than 5:00p.m.(Easterntime)onApril21,2008,or, ifthe enclosed envelope,orbyvotingovertheInternetnolater Circular)) toComputershareTrust CompanyofCanadainthe of EmployeeShares(assuchtermisdefi enclosed formofproxy(thevotinginstructioninthecase please exerciseyourrighttovotebysigningandreturningthe IMPORTANT March 4,2008,exceptasindicatedotherwise. of Meeting. time) forthepurposessetforthinforegoingNotice (USA), onTuesday, April22,2008,at10:00a.m.(Central Ballroom, 4thfl The MeetingwillbeheldatPeninsula Chicago,Grand “us”, “our”referto,CanadianNationalRailwayCompany. the shareholdersof, and“CN”,the“Company”or“we”, “Meeting”). Inthisdocument“you”and“your”referto or atanyadjournmentpostponementthereof(the Company foruseattheannualmeetingofitsshareholders of proxiesbymanagementCanadianNationalRailway Circular”) isprovidedinconnectionwiththesolicitation This managementinformationcircular(the“Information INFORMATION CIRCULAR 0 8 _ E n g _ M a r 0 8 _ The information contained herein is given as at Theinformationcontainedhereinisgivenasat – If you are not able to attend the Meeting, –IfyouarenotabletoattendtheMeeting, v 1 7 oor, 108EastSuperiorStreet,Chicago,Illinois . i n d d 3 ned in this Information nedinthisInformation xed for the xedforthe 7 Financial 7 Statements Businessofthe Meeting 7 QuestionsandAnswers – 4 What’s Inside 0 Independence ofDirectors 20 StatementofCorporate 19 DescriptionofNominees 8 Nominees 8 for Election Shareholder 7 Proposal AppointmentofAuditors 7 ElectionofDirectors 7 5 Audit CommitteeDisclosure 25 Director Orientationand 24 23 Director Selection 23 Board Performance BoardandCommittee 22 CommitteesoftheBoard 21 ElectionofDirectors 21 NoOtherCommon 21 20 Position Descriptions IndependentChairmanof 20 CodeofBusinessConduct 19 19 General BoardandCommittee 18 17 Additional Disclosure 16 Share Ownership BoardofDirectors 14 Voting andProxies Continuing Education Assessment Meetings Directorships the Board Governance Practices Attendance Relating toDirectors Compensation to theBoard 29 Statement of Executive StatementofExecutive 29 51 SCHEDULE “B” – 49 SCHEDULE “A” – 9 ReportonExecutive 29 48 Approval AvailabilityofDocuments 48 48 Shareholder Proposals Directors’andOffi 48 InterestofInformedPersons 48 SharesOwnedorControlled 48 IndebtednessofDirectors 48 47 Performance Graph 38 Offi 48 Other Information Resources andCompensation Compensation bytheHuman Compensation Mandate oftheBoard Shareholder Proposal Insurance Transactions and OthersinMaterial by SeniorManagement and ExecutiveOffi Committee cers’Remuneration cers cers’ 33/8/08 5:40:27 PM / 8 / 0 8 3

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: 2 7 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 4 N _ P r 4 o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 at [email protected]. at 1-800-564-6253,byfax1-866-249-7775 orbyemail 9th Floor, NorthTower, Toronto, OntarioM5J2Y1,bytelephone Computershare Trust CompanyofCanada,100UniversityAve, You cancontactthetransferagenteitherbymailat How canIcontactthetransferagent? at 1-866-851-2484. Services Inc.,theCompany’sproxysolicitationagent,toll-free your formofproxy, pleasecallKingsdaleShareholder this InformationCircularorrequireassistanceincompleting If youhavequestionsabouttheinformationcontainedin Who canIcallwithquestions? to out-of-pocket expenses. estimated tobeCAD$40,000plusadditionalcostsrelating proxies inCanadaandtheUnitedStates,atanaggregatecost of KingsdaleShareholderServicesInc.forthesolicitation cost totheCompany. TheCompanyhasretainedtheservices offi solicitation isbeingmadeprimarilybymail,butourdirectors, Management oftheCompanyissolicitingyourproxy. The Who issolicitingmyproxy? will constituteapprovalofthesematters. A simplemajorityofthevotescast,inpersonorbyproxy, How willthesemattersbedecidedattheMeeting? item (iii). items (i)and(ii),AGAINSTtheproposalreferredtoin management arerecommendingthatshareholdersvoteFOR this InformationCircular. Ourboardofdirectorsandour (iii) ontheshareholderproposalsetoutinSchedule“A” to (ii) toappointKPMGLLPasauditorsoftheCompany, and Shareholders willbevoting(i)toelectdirectorsoftheCompany, What willIbevotingon? common sharecarriestherighttoonevote. value. Subjecttothevotingrestrictionsdescribedbelow, each had outstanding481,408,151commonshareswithoutpar As oftheclosebusinessonFebruary 29,2008,theCompany either inpersonorbyproxy. the Meetingoratanyadjournmentpostponementthereof, March 14,2008(the“ Shareholders whoareregisteredasatthecloseofbusinesson Who canvote? to voteyourshares. The followingquestionsandanswersprovideguidanceonhow Voting andProxies QUESTIONS ANDANSWERS 0 8 _ cers or employees may also solicit proxies at a nominal cersoremployeesmayalsosolicitproxiesatanominal E n g _ M a r 0 8 _ v 1 7 . i n d d record date 4 ”), will be entitled to vote at ”), willbeentitledtovoteat the votes attached to all our voting shares that may ordinarily the votesattachedtoallourvotingsharesthatmayordinarily to whichareattachedmorethan15%intheaggregateof benefi no person,togetherwithhisorherassociates,shallhold, Our articlesofincorporation,asamended,providethat What arethevotingrestrictions? registered shareholder?”. see theinstructionsbelowunder“HowdoIvoteifamanon- common sharesareheldinthenameofanominee,please person attheMeetingorbyproxy, asexplainedbelow. Ifyour registered inyourname,youcanvotecommonshares If youareeligibletovoteandyourcommonshares How doIvote? How doIvoteifamaregisteredshareholder? her associates. controlled, directlyorindirectly, bysuchpersonorhis attached tothevotingsharesheld,benefi person shall,inorbyproxy, exercisethevotingrights with hisorherassociatesexceedssuch15%maximum,no controlled, directlyorindirectly, byanyonepersontogether the totalnumberofvotingsharesheld,benefi be casttoelectdirectorsoftheCompany. Inaddition,where . VOTINGBY PROXY 1. • attends theMeeting. you appointisawarethatheorsheappointedand another properformofproxy. Makesurethattheperson space providedintheformofproxyorbycompleting writing thenameofsuchpersonorcompanyinblank your behalfattheMeeting.Thatrightmaybeexercisedby (who neednotbeashareholder)toattendandacton have therighttoappointanyotherpersonorcompany and ChiefExecutiveOffi in suchformofproxyaretheBoardchairandPresident the enclosedformofproxy. Thepersonsnamedasproxies someone elsetovoteforyouasyourproxyholderbyusing your sharecertifi You arearegisteredshareholderifyournameappearson ciallyownorcontrol,directlyindirectly, votingshares form ofproxy. vote overtheInternetbyfollowing theinstructionson Company ofCanada,intheenvelope provided,oryoucan the Company’scommonshares, ComputershareTrust form ofproxytothetransferagent andregistrarfor You caneitherreturnadulycompletedandexecuted How canIsendmyformofproxy? cate. If this is the case, you may appoint cate.Ifthisisthecase,youmayappoint ceroftheCompany. cially owned or ciallyownedor cially owned or ciallyownedor However, you 33/8/08 5:40:28 PM / 8 / 0 8 5 : 4

: 2 8 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 5 N _ P r o x y _ 2 0 0 8 _ E • • • n g Internet, bywayofasubsequentInternetvote. manner permittedbylaworinthecaseofavoteover adjournment orpostponementthereof, orinanyother the chairofMeetingondayorany adjournment orpostponementthereof, or(ii)fi business dayprecedingtheofMeetingorany up toandincluding5:00p.m.(Easterntime)onthelast West, Montréal,Québec,Canada,H3B2M9)atanytime offi Corporate SecretaryoftheCompanyatregistered authorized inwriting),and(i)depositedwiththe a laterdate)executedbyyou,oryourattorney(duly in writing(whichincludesanotherformofproxywith You mayrevokeyourproxyatanytimebyaninstrument If Ichangemymind,howcanrevokeproxy? brought beforetheMeeting. aware ofanyamendmentorotherbusinesslikelytobe unable toserveifelectedoffi that anyofthenomineesforelectionasdirectorswillbe may recommend.Managementhasnoreasontobelieve for suchotherpersonasmanagementoftheCompany management willvotefortheelectioninhisorherstead intended thatthepersonactingunderproxyinfavourof become unabletoacceptnominationforelection,itis any nomineenamedhereinforelectionasadirector may properlybebroughtbeforetheMeeting. of theforegoingmattersoronsuchotherbusinessas of theproxyholderinrespectamendmentstoany proposal setoutinSchedule“A” andatthediscretion KPMG LLPasauditors,AGAINSTtheshareholder nominees asdirectors,FORtheappointmentof Offi the BoardchairorPresidentandChiefExecutive common sharesrepresentedbyproxiesinfavourof on theproxy. Ifnoinstructionsareindicated,your voting inaccordancewithyourinstructionsindicated Your commonshareswillbevotedorwithheldfrom my proxy? How willmycommonsharesbevotedifIgive or postponedmeeting. the businessdaypriortofi postponed, bynolaterthan5:00p.m.(Easterntime)on on April21,2008,oriftheMeetingisadjourned or avoteovertheInternetis5:00p.m.(Easterntime) The deadlineforreceivingdulycompletedformsofproxy What isthedeadlineforreceivingformofproxy? _ M a ce of the Company (935 de La Gauchetière Street ceoftheCompany(935deLaGauchetièreStreet cer will be voted FOR the election of management’s cer willbevotedFORtheelectionofmanagement’s r 0 8 _ v 1 7 . i n d d 5 ce and management is not ceandmanagementisnot xed for the adjourned xedfortheadjourned led with ledwith Should Should ways, listedbelow, thatyou can voteyourcommonshares: client. Ifyouareanon-registeredshareholder, therearetwo nominees areprohibitedfromvotingsharesforthebroker’s specifi the nameofyourbrokeroranagentthatbroker. Without Such commonshareswillmorelikelyberegisteredunder shares will,inalllikelihood,notberegisteredyourname. statement providedtoyoubyyourbroker, thosecommon shareholder”. Ifyourcommonsharesarelistedinanaccount institution orsecuritiesbroker, youarea“non-registered are heldinthenameofanomineesuchastrustee,fi If yourcommonsharesarenotregisteredinnameand How doIvoteifamanon-registeredshareholder? . GIVINGYOUR VOTINGINSTRUCTIONS 1. VOTINGINPERSON 2. . VOTINGIN PERSON 2. Applicable securities laws require your nominee to seek Applicable securitieslawsrequireyournomineetoseek Meeting, donotcompleteorreturntheformofproxy. counted attheMeeting. Canada attheregistrationtable.Your votewillbetakenand to arepresentativeofComputershareTrust Companyof If youwishtovoteinperson,maypresentyourself you willbevotingattheMeeting. complete therequestforvotinginstructionssenttoyouas Computershare Trust CompanyofCanada.Do nototherwise present themselvesattheMeetingtoarepresentativeof shareholders whoappointthemselvesasproxyholdersshould and returninstructionsofyournominee.Non-registered appoint yourselfasproxyholderandfollowthesignature for votinginstructionsprovidedbyyournomineeto insert yourownnameinthespaceprovidedonrequest However, ifyouwishtovoteinpersonattheMeeting, are votedattheMeeting. registered shareholderstoensurethattheircommonshares instructions, whichshouldbecarefullyfollowedbynon- mailing proceduresandprovidesitsownsignaturereturn of commonsharesyouhold.Everynomineehasitsown your nomineearequestforvotinginstructionsthenumber Accordingly, youwillreceiveorhavealreadyreceivedfrom voting instructionsfromyouinadvanceoftheMeeting. c instructions, Canadian brokers and their agents or cinstructions,Canadianbrokersandtheiragentsor If you wish to vote in person at the If youwishtovoteinpersonatthe nancial nancial 33/8/08 5:40:28 PM / 8 / 0 8 5

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: 2 8 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 6 N _ P r 6 o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 Internet) willbevoted. employee hasgivenvotinginstructionsbytelephoneoroverthe form hasbeensignedandreturned(orinrespectofwhichthe Only EmployeeSharesinrespectofwhichavotinginstruction other businessasmayproperlybebroughtbeforetheMeeting. respect ofamendmentstomanagement’sproposalsoronsuch discretion ofthecustodianorsuchotherpersonindicated,in management’s recommendationsmentionedaboveandatthe an item,theEmployeeShareswillbevotedinaccordancewith Operations (the“ Plans anditsUnionManagementSavingsforU.S. under itsCanadianandU.S.EmployeeShareInvestment Common sharespurchasedbyemployeesoftheCompany How doIvoteifamanemployeeshareholder? directions ofthebenefi Internet. TheEmployeeShareswillbevotedpursuanttothe may alsogivesuchvotinginstructionsbytelephoneoroverthe be votedattheMeeting.Benefi a shareholder)astohowtheywishtheirEmployeeShares custodian oranyotherpersoncompany(whoneednotbe enclosed votinginstructionformthenecessarydirectionsto or theirattorneysauthorizedinwriting,byindicatingonthe in thenameofcustodiancanbeexercisedbyemployees, Voting rightsattachedtotheEmployeeSharesthatareregistered with theirprovisions. withdrawn theircommonsharesfromthePlansinaccordance custodian (the“ Employee SharesremainregisteredinthenameofPlans’ 0 8 _ E n g _ M a r 0 8 _ v 1 7 . custodian i Plans n d d cialowner. Ifnochoiceisspecifi ”), areknownas“ 6 ”), unless the employees have ”), unlesstheemployeeshave cial owners of Employee Shares cialownersofEmployeeShares Employee Shares ed for edfor ”. ”. including 5:00p.m.( of CNattheregisteredoffi intention torevokeis(i)depositedwiththeCorporateSecretary provided suchwritteninstrumentindicatingtheholder’s Shares, orbytheholder’sattorneydulyauthorizedinwriting, instrument inwritingexecutedbytheholderofEmployee as indicatedonavotinginstructionform,atanytimebyan A holderofEmployeeSharesmayrevokehisorherdirections, Employee Shares. shares. Noformofproxyistobecompletedwithrespect enclosed formofproxywithrespecttosuchadditionalcommon shares outsidethePlans,heorshemustalsocomplete Employee Shares.Intheeventthatanemployeeholdscommon The votinginstructionformmustbeusedonlywithrespectto way ofsubsequenttelephoneorInternetdirections. case ofdirectionsgivenbytelephoneorovertheInternet, thereof, or(iii)inanyothermannerpermittedbylaw, orinthe the dayofMeetingoranyadjournmentpostponement postponement thereof, (ii)fi preceding thedayofMeetingoranyadjournment Eastern ce of CN at any time up to and ceofCNatanytimeuptoand led with the chair of the Meeting on ledwiththechairofMeetingon time) on the last business day time) onthelastbusinessday 33/8/08 5:40:29 PM / 8 / 0 8 5 : 4

: 2 9 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 7 N _ P r o x y _ 2 0 and amaximumof21directors(hereinafterthe“ our boardofdirectorsshallconsistaminimumseven Our articlesofincorporation,asamended,providethat Election ofDirectors the Company. thereon, areincludedinthe2007AnnualReportof December 31,2007,togetherwiththeauditors’reports Our consolidatedfi Financial Statements BUSINESS OFTHEMEETING “ the directors. shares bewithheldfromvotingontheelectionofany proxy orvotinginstructionformhasdirectedthatthecommon at theirdiscretionunlesstheshareholderwhohasgivensuch instruction formreservetherighttovoteforanothernominee designated intheaccompanyingformofproxyorvoting that occurforanyreasonbeforetheMeeting,persons these nomineeswillbeunabletoserveasadirector, butshould of Directorsandmanagementdonotcontemplatethatany act asdirectorsoftheCompanyforensuingyear. TheBoard of theBoardDirectorsandmanagement,wellqualifi of thesenominees. or votinginstructionformintendtovoteFORtheelection the personsdesignatedinaccompanyingformofproxy as management’snominees.Unlessauthorityiswithheld, of Nominees”willbepresentedforelectionattheMeeting entitled “NomineesforElectiontotheBoard–Description the closeofMeeting. The termofoffi or appointed. of shareholdersoruntilsuchperson’ssuccessoriselected current year, eachtoholdoffi of Directors,14personsaretobeelectedasdirectorsforthe 0 Board ofDirectors 8 _ E n g _ M a r 0 8 _ v 1 7 ce of each of the present directors expires at ceofeachthepresentdirectorsexpiresat . i n nancial statements for the year ended nancialstatementsfortheyearended d d The persons nominated are, in the opinion Thepersonsnominatedare,intheopinion ”). Pursuant to a resolution of the Board ”). PursuanttoaresolutionoftheBoard 7 The persons named in the section The personsnamedinthesection ce until the next annual meeting ceuntilthenextannualmeeting Board ed to edto ” or ” or in the accompanying form of proxy or voting instruction in theaccompanyingformofproxyorvotinginstruction proxy orthevotinginstructionform,personsdesignated Unless contraryinstructionsareindicatedontheformof to voteAGAINSTsuchproposal. proposal. ManagementandtheBoardofDirectorsrecommend the responseofmanagementandBoardDirectorsto the supportingstatementofproposingshareholderand which hasbeensubmittedforconsiderationattheMeeting, Attached tothisInformationCircularisashareholderproposal Shareholder Proposal hold offi appointment ofKPMGLLPasauditorstheCompanyto of proxyorvotinginstructionformintendtovoteFORthe withheld, thepersonsdesignatedinaccompanyingform the nextannualmeetingofshareholders. that KPMGLLPbeappointedtoserveasourauditorsuntil The BoardofDirectorsandtheAuditCommitteerecommend Appointment ofAuditors form intendtovoteAGAINSTthisproposal. ce untilthenextannualmeetingofshareholders. Unless authority is Unless authorityis 33/8/08 5:40:29 PM / 8 / 0 8 7

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: 2 9 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 8 N _ P r 8 o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 as directors.AllnomineesarecurrentdirectorsoftheCompany. The followingtablesetsoutinformationasofFebruary 29,2008,unlessotherwiseindicated,regardingthenomineesforelecti Description ofNominees ELECTION TOTHEBOARD NOMINEES FOR 0 EBRO TEDNESECURITIESANDOPTIONSHELD 127,344 February 2008 100% 100% ATTENDANCE 100% Nil Nil February 2007 February 2008 Audit Committee 97,650 Finance Committee(Chair) SECURITIESANDOPTIONSHELD 102,150 Board February 2007 MEMBER OF February 2008 100% 100% 100% ATTENDANCE 100% Investment CommitteeofCN’sPension Trust Funds Finance Committee Audit Committee Strategic PlanningCommittee(Chair) Board MEMBER OF taei lnigCmite100% 117,514 February 2007 100% Strategic PlanningCommittee Human ResourcesandCompensationCommittee 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 8 Independent Director Since:April15,2003 Toronto, Ontario,Canada Age: 68 CHARLESBAILLIE,O.C.,A. LL.D. Independent Director Since:May7,1996 Fort Lee,NewJersey, U.S.A. Age: 68 MICHAEL R.ARMELLINO, CFA (1) (1) (2) 100% of Research. including seniortransportationanalystandPartner inCharge Prior to1991,hehadheldvariouspositionsatGoldman,Sachs&Co., chair andChiefExecutiveOffi The GoldmanSachsGroup,LP. From 1991to1994,Mr. Armellinowas Mr. Armellino,acharteredfi OR CONTROLLED COMMON SHARESOWNED is alsoadirectorofGeorgeWeston LimitedandTelus Corporation. and asChiefExecutiveOffi Mr. Baillieretired as chairofTheToronto-Dominion BankinApril2003, OR CONTROLLED COMMON SHARESOWNED (3) (3) cerofthebankinDecember2002.Mr. Baillie nancialanalyst,isaRetiredPartner, cer of Goldman Sachs Asset Management. cerofGoldmanSachsAssetManagement. (6) (5) OPTIONS HELD eray20 N/A N/A February 2007 February 2008 OPTIONS HELD (4) (4) on on 33/8/08 5:40:29 PM / 8 / 0 8 5 : 4

: 2 9 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 9 N _ P r o x y _ 2 0 0 EBRO TEDNESECURITIESANDOPTIONSHELD 32,656 100% February 2008 100% ATTENDANCE 100% Finance Committee Environment, SafetyandSecurityCommittee SECURITIESANDOPTIONSHELD Board MEMBER OF 100% ATTENDANCE 69,561 February 2008 100% 100% Corporate GovernanceandNominatingCommittee Environment, SafetyandSecurityCommittee(Chair) SECURITIESANDOPTIONSHELD Board MEMBER OF 100% 100% ATTENDANCE 32,270 February 2008 100% Corporate GovernanceandNominatingCommittee Audit Committee Board MEMBER OF taei lnigCmite100% 28,013 February 2007 100% Strategic PlanningCommittee Human ResourcesandCompensationCommittee 100% Strategic PlanningCommittee Investment CommitteeofCN’sPension Trust Funds 100% 27,949 February 2007 100% Strategic PlanningCommittee Human ResourcesandCompensationCommittee 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 9 Edmonton, Alberta,Canada Age: 69 HUGH J.BOLTON, FCA Independent Director Since:May1,2001 Atlanta, Georgia,U.S.A. Age: 58 GORDOND.GIFFIN AMBASSADOR Independent Director Since:March29,1995 Montréal, Québec,Canada Age: 74 J.V. RAYMOND CYR,O.C., LL.D. Independent Director Since:April15,2003 (1) (1) (1) (2) 0%Fbur 07 64,803 February 2007 100% Technologies Inc. is alsoadirectorofTranscontinental Inc.andARTAdvancedResearch Inc.from1989to1993.He from 1992to1996,andaschairofBCE Mr. Cyralsoserved aschairofBellCanadafrom1985to1989and Mr. CyrischairofPolyValor Inc.(UniversityResearchValorization Fund). Canada (nowPricewaterhouseCoopers). Mr. BoltonwaschairandChiefExecutivePartner ofCoopers&Lybrand Dominion BankandWestJet AirlinesLtd.From 1992to1998, Mr. BoltonisalsoadirectorofTeck ComincoLimited,TheToronto- board ofdirectorsMatrikonInc.(supplierindustrialITsolutions). (energy andenergy-related servicesprovider),andthechairmanof Mr. BoltonisthechairofboarddirectorsEPCORUtilitiesInc. Mr. Giffi AbitibiBowater IncorporatedandOntarioEnergySavingsCorp. Commerce, CanadianNaturalResourcesLimited,TransAlta Corporation, April 2001.Mr. Giffi he wasUnitedStatesAmbassadortoCanadafromAugust1997 OR CONTROLLED COMMON SHARESOWNED OR CONTROLLED COMMON SHARESOWNED OR CONTROLLED COMMON SHARESOWNED nisSeniorPartner, McKenna Long&Aldridge(lawfi (3) (3) (3) n is also a director of Canadian Imperial Bank of nisalsoadirectorofCanadianImperialBank (6) (5) (6) (5) (6) (5) eray20 N/A N/A February 2007 February 2008 OPTIONS HELD eray20 27,000 27,000 February 2007 February 2008 OPTIONS HELD 72,000 72,000 February 2007 February 2008 OPTIONS HELD (4) (4) (4) rm) and rm)and 33/8/08 5:40:35 PM / 8 / 0 8 9

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: 3 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 10 N _ 10 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 0 EBRO TEDNESECURITIESANDOPTIONSHELD 100% 100% ATTENDANCE 31,200 February 2008 100% Strategic PlanningCommittee 100% Environment, SafetyandSecurityCommittee SECURITIESANDOPTIONSHELD Corporate GovernanceandNominatingCommittee Board 100% MEMBER OF ATTENDANCE 100% Strategic PlanningCommittee Board SECURITIESANDOPTIONSHELD MEMBER OF 100% 100% ATTENDANCE 63,072 February 2008 100% Strategic PlanningCommittee 100% Environment, SafetyandSecurityCommittee Corporate GovernanceandNominatingCommittee Board MEMBER OF ua eore n opnainCmite10 eray20 2,0 eray20 27,000 February 2007 26,700 February 2007 100% Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee 57,889 February 2007 100% Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 1 0 Calgary, Alberta,Canada Age: 74 JAMES K.GRAY, O.C., A.O.E., LL.D. Independent Director Since:June1,2001 U.S.A. Washington, DistrictofColumbia, Age: 56 EDITH E.HOLIDAY Not Independent Director Since:December7,1999 Wellington, Florida,U.S.A. Age: 63 E. HUNTERHARRISON Independent Director Since:July4,1996 (1) (1) (1) (2) (2) 100% 100% 1998 toDecember2002.PriorjoiningCN,Mr. Harrisonhadbeen President andChiefOperatingOffi Company sinceJanuary1,2003.HehasservedasExecutiveVice- Mr. Harrisonhasbeen PresidentandChiefExecutiveOffi Inc., PhoenixTechnology IncomeFund andAtlantaGoldInc. company). Mr. GrayisalsoadirectorofBrookfi Executive Offi Mr. GrayisCorporateDirectorandFormer ChairmanandChief Mutual Funds. various investmentcompaniesoftheFranklin Templeton Groupof Mountains InsuranceGroup,Ltd.Sheisalsoadirectorortrusteein Company, HessCorporation,RTI InternationalMetals,Inc.andWhite Cabinet, TheWhiteHouse.Mrs.HolidayisadirectorofH.J.Heinz 3,360,000 Counsel, UnitedStatesTreasury DepartmentandSecretaryofthe 3,505,000 February 2007 Mrs. HolidayisaCorporateDirectorandTrustee andaformerGeneral February 2008 283,625 308,993 February 2007 February 2008 1993 to1998. Central CorporationandtheIllinoisRailroadCompanyfrom a directorandPresidentChiefExecutiveOffi OR CONTROLLED COMMON SHARESOWNED OR CONTROLLED COMMON SHARESOWNED OR CONTROLLED COMMON SHARESOWNED cer, CanadianHunterExplorationLtd.(naturalgas (3) (3) (3) (6) (5) (5) cer of the Company from March ceroftheCompanyfromMarch eray20 72,000 39,000 February 2007 February 2008 OPTIONS HELD eray20 27,000 February 2008 OPTIONS HELD OPTIONS HELD eld Asset Management eldAssetManagement cer of the Illinois ceroftheIllinois (4) (4) (4) cer of the cerofthe 33/8/08 5:40:43 PM / 8 / 0 8 5 : 4

: 4 3 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 11 N _ P r o x y _ 2 0 0 iac omte 0%Fbur 08 900Fbur 08 N/A February 2008 SECURITIESANDOPTIONSHELD 29,000 100% February 2008 100% 100% 100% ATTENDANCE Strategic PlanningCommittee Investment CommitteeofCN’sPension Trust Funds Finance Committee Audit Committee SECURITIESANDOPTIONSHELD 59,631 Board MEMBER OF 100% February 2008 100% ATTENDANCE 100% Finance Committee Environment, SafetyandSecurityCommittee Board MEMBER OF taei lnigCmite100% Strategic PlanningCommittee Investment CommitteeofCN’sPension Trust Funds 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 1 1 Age: 59 O.C., D.COMM.,LL.D. V. MAUREEN KEMPSTONDARKES, Independent Director Since:April21,2006 Vancouver, BritishColumbia,Canada Age: 74 ROBERT H.LEE,C.M.,O.B.C., LL.D. Not Independent Director Since:March29,1995 Miramar, Florida,U.S.A. (1) (1) (2) (2) 0%Fbur 07 35,469 February 2007 100% 0%Fbur 07 350Fbur 07 N/A February 2007 13,500 February 2007 100% is associatedwithFairmont ShippingHongKong Ltd.Heservedas and heservedformanyyearsasaTrustee ofBelmontTrust, which management businesses.HeisadirectorofWall FinancialCorporation, includes realestateinvestment,ﬁ Mr. LeeisChairmanoftheProsperoGroupCompanies,which The ThomsonCorporation. Motors Corporation.Mrs.Kempston Darkesisalsoadirectorof General MotorsofCanadaLimitedandVice-President From 1994to2001,shewasPresidentandGeneralManagerof America, AfricaandMiddleEast,GeneralMotorsCorporation. Mrs. Kempston DarkesisGroupVice-PresidentandPresidentLatin Properties Trust. years. In1987,hefoundedandstillservesasChairmanoftheUBC Foundation andasamemberofitsBoardGovernorsformany Chancellor oftheUniversityBritishColumbia,ChairmanUBC OR CONTROLLED COMMON SHARESOWNED OR CONTROLLED COMMON SHARESOWNED (3) (3) (6) (5) nancing, sales and property nancing,salesandproperty eray20 72,000 40,000 February 2007 February 2008 OPTIONS HELD OPTIONS HELD (4) (4) 33/8/08 5:40:50 PM / 8 / 0 8 11

5 CN MANAGEMENT INFORMATION CIRCULAR : 4

: 5 0 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 12 N _ 12 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 0 EBRO TEDNESECURITIESANDOPTIONSHELD 100% ATTENDANCE 54,186 February 2007 100% Environment, SafetyandSecurityCommittee Investment CommitteeofCN’sPension Trust SECURITIESANDOPTIONSHELD Board MEMBER OF 100% ATTENDANCE 100% 81,378 February 2008 100% Corporate GovernanceandNominatingCommittee Audit Committee(Chair) Board MEMBER OF iac omte 100% 100% 100% Strategic PlanningCommittee Human ResourcesandCompensationCommittee Finance Committee 100% Strategic PlanningCommittee Investment CommitteeofCN’sPension Trust Funds 8 _ E Funds (Chair) n g _ M a r 0 8 _ v 1 7 (2) . 10 February 100% 2008 51,000 i n d d 1 2 Moncton, NewBrunswick,Canada Age: 55 DENIS LOSIER, LL.D. Independent Director Since:July4,1996 South Lancaster, Ontario, Canada Age: 68 P.C., LL.D. THE HON.EDWARD C.LUMLEY, Independent Director Since:October25,1994 (1) (1) (2) 0%Fbur 07 66,979 February 2007 100% Government ofCanada.Mr. LumleyisalsoadirectorofBellCanada 1984, duringwhichtimeheheldvariouscabinetportfoliosinthe Group Inc.Mr. Lumley wasaMemberofParliament from1974to From 1986to1991,heservedaschairofNorandaManufacturing Mr. LumleyisVice-Chairman,BMOCapitalMarkets(investmentbank). Properties Ltd. Brunswick. HeisalsoadirectorofNAV CANADAandPlazacorpRetail cabinet levelpositionswiththegovernmentofProvinceNew insurance company).Between1989and1994,Mr. Losierheldvarious Mr. LosierisPresidentandChiefExecutiveOfﬁ and Dollar-Thrifty AutomotiveGroup,Inc. OR CONTROLLED COMMON SHARESOWNED eray20 80,985 February 2008 OR CONTROLLED COMMON SHARESOWNED (3) (3) (6) (5) (6) (5) eray20 60,000 51,000 February 2007 February 2008 OPTIONS HELD eray20 72,000 February 2007 OPTIONS HELD cer, AssumptionLife(life (4) (4) 33/8/08 5:40:55 PM / 8 / 0 8 5 : 4

: 5 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 13 N _ P r o x y _ 2 0 4 Theinformationregardingoptionscomprises onlytheoptionsgrantedunderManagementLong-Term IncentivePlan.Mr. Bai (4) Theinformationregardingcommonsharesbenefi (3) TheInvestmentCommitteeofCN’sPension Trust Funds isamixedcommitteecomposedofbothmemberstheBoardDirector (2) TheageofthedirectorsisprovidedasatdateMeeting(i.e.,onApril22,2008). (1) (5) Includes Directors Restricted Share Units in the following amounts: A. CharlesBaillie:32,744;HughJ.Bolton:29,770;J.V IncludesDirectorsRestrictedShareUnitsinthefollowing amounts:A. (5) (6) Includes Directors Restricted Share Units in the following amounts: A. CharlesBaillie:27,314;HughJ.Bolton:24,949;J.V IncludesDirectorsRestrictedShareUnitsinthe followingamounts:A. (6) 0 ui omte 0%Fbur 07 68,033 SECURITIESANDOPTIONSHELD February 2007 100% 100% 100% ATTENDANCE Strategic PlanningCommittee Audit Committee Human ResourcesandCompensation Board MEMBER OF SECURITIESANDOPTIONSHELD 100% 100% ATTENDANCE 150,224 February 2007 100% Strategic PlanningCommittee Environment, SafetyandSecurityCommittee Corporate GovernanceandNominating Board (Chair) MEMBER OF oprt oenneadNmntn omte 100% Investment CommitteeofCN’sPension Trust Funds Corporate GovernanceandNominatingCommittee 100% Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee 8 _ E omte Car 0%Fbur 08 51,000 February 2008 100% Nil February 2008 Committee (Chair) 100% Committee (Chair) granted ascompensationtodirectors,butdoesnotincludecommonsharesunderoptions. under suchplancouldnolongerbemadetonon-executivedirectors. when optionsweregranted.Nograntedtodirectorssince2002.OnMarch8, 2005, theManagementLong-Term Incentiv resignation ordeath. Robert Pace: 29,626.PursuanttothetermsofDirectors RestrictedShareUnits,directorsortheirestatescanonlyaccess James K.Gray:5,774;EdithE.Holiday:2,250;V. MaureenKempston Darkes:23,131;DenisLosier:28,518;TheHon.EdwardC.Lum James K.Gray:5,713;V. MaureenKempston M Darkes:22,869;DenisLosier:23,712;TheHon.EdwardC.Lumley:22,386;DavidG.A. n g _ M a r 0 8 _ v 1 7 . i n d d 1 3 Vancouver, BritishColumbia,Canada Age: 69 DAVID McLEAN,O.B.C., G.A. LL.D. Independent Director Since:October25,1994 Halifax, NovaScotia,Canada Age: 53 ROBERT PACE Independent Director Since:August31,1994 ciallyowned,controlledordirectedhasbeenfurnishedbytherespectivenomineesindividuallyandincludesDirectorsRestric (1) (1) (2) (2) 100% 100% Foods IncorporatedandHydroOneboardchairofOverland (private holdingcompany).Mr. Pace isalsoadirectorofHighLiner Mr. Pace isPresidentandChiefExecutiveOffi Executive Offi Mr. McLeanisboardchairoftheCompanyandChief Realty Limited. television facilities,communicationsandhelicoptercharters). eray20 164,885 February 2008 OR CONTROLLED COMMON SHARESOWNED eray20 88,500 February 2008 OR CONTROLLED COMMON SHARESOWNED cer, TheMcLeanGroup(realestateinvestment,fi (3) (3) . RaymondCyr:27,220;AmbassadorGordonD.Giffi . RaymondCyr:22,462;AmbassadorGordonD.Giffi their Directors Restricted Share Units upon retirement, their DirectorsRestrictedShareUnitsuponretirement, llie, Mr. BoltonandMr. Leewerenot membersoftheBoard s aswelloffi ley: 28,185; David G.A. McLean: 56,975; and McLean:56,975;and ley: 28,185;DavidG.A. cLean: 42,314;andRobertPace: 23,933. (6) (5) (6) (5) e Plan was amended to provide that option grants e Planwasamendedtoprovidethatoptiongrants eray20 24,000 February 2007 OPTIONS HELD eray20 72,000 February 2007 OPTIONS HELD cersoftheCompany. cer, ThePace Group (4) (4) n: 13,481; n:13,481; n: 12,213; n:12,213; ted Share Units ted ShareUnits lm and lmand 33/8/08 5:41:01 PM / 8 / 0 8 13

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: 0 1 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 14 N _ 14 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 committee chair cash retainers either in cash, common shares committee chaircashretainerseitherincash,commonshares or partoftheirdirector, committeemember, Boardchairand of theInformationCircular, directorsmayelecttoreceiveall the MinimumShareholdingRequirementasdefi of beinganeffectivedirector. To refl committees andtakesintoaccounttherisksresponsibilities retain themostqualifi The directors’compensationprogramisdesignedtoattractand DRSUs refl the Companypurchasedonopenmarket,plusadditional upon resignation,retirementordeath,onecommonshareof DRSUs. EachDRSUentitlesthebenefi They mayalsoelecttoreceivetheircommonshareretainersin of theCompanypurchasedonopenmarketorDRSUs. 2 Inadditiontothedirectorcashretainer, eachnon-executivedirector received4,500commonsharesorDRSUsaspartofthe (2) Certaindirectorsattendedmeetingsofcommittees ofwhichtheywerenotmembersandreceivedacommitteeattendancefeefo (1) The tablebelowrefl shares orDirectorsRestrictedShareUnits( non-executive directorsfor2007wasintheformofcommon approximately 81%ofthetotalannualremuneration have asubstantialinvestmentintheCompany. Inaddition, to theBoard–ShareOwnership”onpage16,directors shareholder value.Asindicatedunder“NomineesforElection The directorsoftheCompanyplayacentralroleinenhancing Board ofDirectorsCompensation 3 Inaddition totheBoardchaircashretainer, theBoardchairreceived 12,000commonsharesorDRSUsasBoardChairRetaine (3) 6 Mr. BailliewasappointedasChairofthe FinanceCommitteeasofApril24,2007. (6) Inaddition tothecommonsharesorDRSUsreceivedbydirectorsandBoardchairas describedinnotes(2)and(3), (5) IncludestravelfeeswhichamountedtoatotalofUS$85,000,inaggregate,foralldirectors. (4) 0 TOTAL CharlesBaillie A. Armellino Michael R. DIRECTOR Robert Pace McLean David G.A. C. Lumley The Hon.Edward Denis Losier Robert H.Lee 15,000 Kempston Darkes V. Maureen Edith E.Holiday 15,000 James K.Gray Gordon D.Giffi Ambassador J.V. RaymondCyr Hugh J.Bolton 8 _ E presented inthistable. than US$5,000,onanindividualbasis,insuchattendancefees.Mr. McLeanreceivedUS$2,000forhisparticipationinmeetings January 25,2007usingtheaverageclosingprice onsuchdatetheNewYork andToronto stockexchanges(US$44.91). The Hon.EdwardC.Lumley, David McLeanandRobertPace. Thepercentageoftotalfeesreceived incommonsharesand/orDRSUsre all orpartoftheircashretainersincommonshares orDRSUs.Thefollowingdirectorsmadesuchelection:MichaelR.Armellino using theaverageclosingpriceonsuchdate theNewYork andToronto stockexchanges(US$44.91). n g _ M (1) a r ectingdividendequivalents. 0 8 _ n1,0 40022053,0 6,9 77% 264,095 33,000 202,095 14,000 – 15,000 n v 1 (6) 7 . i RETAINER BOARDCHAIRCASH DIRECTOR AND n ects indetailthecompensationearned bynon-employeedirectorsinthe12-monthperiodendedDecember31,2007. d d ed people to serve on CN’s Board and edpeopletoserveonCN’sBoardand 1 4 2,0 3,2 700659085% 81% 695,920 3,987,060 37,000 456,000 538,920 2,964,060 – 182,000 85,000 – 300,000 120,000 5001,0 40022053,0 8,9 77% 280,095 34,000 202,095 14,000 15,000 15,000 500–1,0 0,9 300240577% 77% 74% 264,095 86% 261,095 273,595 33,000 273,595 76% 30,000 39,000 202,095 81% 39,000 202,095 267,095 202,095 14,000 202,095 14,000 277,095 36,000 17,500 – 17,500 36,000 – 202,095 – – 202,095 14,000 15,000 15,000 14,000 15,000 – 15,000 10,000 15,000 15,000 5001,0 75022054,0 9,9 86% 87% 290,595 72% 286,595 41,000 280,095 37,000 202,095 34,000 202,095 17,500 202,095 17,500 15,000 14,000 15,000 15,000 15,000 15,000 15,000 (US$) (US$) CASH CHAIRMAN RETAINER COMMITTEE ect the Company’s extensive ecttheCompany’sextensive ciary thereof to receive ciarythereoftoreceive “DRSUs” ned on page 16 nedonpage16 (US$) RETAINER MEMBER COMMITTEE CASH ). Subject to ). Subjectto 40022052,0 7,9 90% 273,095 27,000 202,095 14,000 DRSUs SHARES GRANTED VALUE OFCOMMON OR (US$) each directorwascompensatedasindicatedinthetablebelow: In considerationforservingontheBoardofDirectorsin2007, tends tobecomparablethatoflargeU.S.-basedcompanies. compensation ofthenon-executivedirectorsCompany director nomineesarefromtheUnitedStatesand operations intheUnitedStates,fourofnon-executive 3 Mr. Harrisondid not receiveanycompensationtoserveasdirectorbecauseheisanoffi (3) Thedirectorsmaychoosetoreceiveallorpartoftheircashretainerincommonshares (2) TheBoardchairreceivednoadditionalDirectorRetainernorCommitteeChairor (1) (4) The committee chairs (other than the Board chair) also received, as members of Thecommitteechairs(otherthantheBoardchair)alsoreceived,asmembersof (4) Travel Attendance Committee MeetingAttendance Board MeetingAttendance Committee MemberRetainer Committee ChairRetainer Director Retainer Board ChairRetainer TYPE OFFEE shares arepurchasedontheopenmarket. or DRSUsandtheircommonshareretainercanalsobereceivedinDRSUs.The Committee MemberRetainer. of theCompany. a committee,retainerofUS$3,500. 23 (4) (2,3) (3) TRAVEL ATTENDANCE AND COMMITTEE FEES BOARD AND (US$) e US$1,000 Fee (1) the directors and the Board chair may choose to receive the directorsandBoardchairmaychoose to receive DirectorRetainer. Thevalueofsuchgrantwascalculatedasat r. Thevalueofsuch grantwascalculatedasatJanuary25,2007 , A. CharlesBaillie,J.V., A. RaymondCyr, JamesK.Gray, (4) of the Company’s Donations Committee. These fees are not of theCompany’sDonationsCommittee.Thesefeesarenot r such attendance. These directors have received not more r suchattendance.Thesedirectorshavereceivednotmore e US$1,000 Fee fl ectssuchelections. e US$1,000 Fee (US$) FEESANDEQUITY GRANT TOTAL ANNUAL US$15,000 US$15,000 US$120,000 US$3,500 OF AND AMOUNT SHARES NUMBER (2) (2) and 12,000Shares AND/OR COMMON DRSUs SHARES RECEIVED TOTAL PERCENTAGE IN OF FEES and 4,500Shares cer cer 33/8/08 5:41:06 PM (2) (2) (2) (2) (5) / 8 / 0 8 5 : 4

: 0 6 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 15 N _ P r o x y _ 2 0 2 Duringthe12-monthperiodendedFebruary 29,2008,JamesK.Grayexercised33,000optionsforanaggregaterealizedvalue (2) Theexerciseprice,ifinCanadiandollars,was convertedusingtherateofexchangeasatFebruary 29,2008(1.0158). (1) While theyremainparticipantsinthePlanforpreviousgrants,lasttimenon-executivedirectorsreceivedoptionswas2 Term IncentivePlanwasamendedtoprovidethatoptiongrantsunderthecouldnolongerbemadenon-executivedirectors Plan asofFebruary 29,2008.Asofthedatehereof, alltheseoptionsareexercisable.OnMarch8,2005,theManagementLong- The tablebelowshowsinformationregardingoptionsheldbynon-executivedirectorsundertheManagementLong-Term Incentive 4 Mr. Baillie,Mr. BoltonandMr. LeewerenotmembersoftheBoardwhenoptionsgrantedunder theManagementLong-Term (4) Thevalueofunexercisedin-the-moneyoptionsatFebruary 29,2008isthedifferencebetweenaverageclosing priceons (3) 0 Robert H.Lee Robert P Kempston Darkes V. Maureen Edith E. David G.A. David G.A. James K. Edward C.Lumley The Hon. CharlesBaillie A. Gordon D.Gifﬁ Ambassador Armellino Michael R. DIRECTOR Denis Losier J.V. Raymond Hugh J.Bolton 8 _ E of exercise. (US$52.83) andtheexerciseprice.Thisvaluehas notbeenandmayneverberealized.Theactualgains,ifany, onexercisewil 21,000 optionsforanaggregaterealizedvalue ofUS$787,705. McLeanexercised 24,000optionsforanaggregatereali 21,000 optionsforanaggregaterealizedvalue ofUS$770,864;DavidG.A. 32,000 optionsforanaggregaterealizedvalueofUS$1,171,442;DenisLosierexercised9,000 optionsforanaggregaterealized n g _ M Holiday c 03/24/1998 ace a ry03/24/1998 Gray r 0 McLean 8 (4) _ y 03/24/1998 Cyr n (4) v 1 (4) 7 . i DATE OFGRANT (MM/DD/YY) n d d 01/25/2002 01/26/2001 01/25/2000 04/26/1999 01/25/2002 01/26/2001 01/25/2000 04/26/1999 03/24/1998 01/25/2002 01/26/2001 01/25/2000 04/26/1999 03/24/1998 01/25/2002 06/01/2001 01/25/2002 01/26/2001 01/25/2000 04/26/1999 01/25/2002 01/26/2001 01/25/2000 04/26/1999 03/24/1998 01/25/2002 05/01/2001 01/25/2002 01/26/2001 01/25/2000 04/26/1999 03/24/1998 01/25/2002 01/26/2001 01/25/2000 04/26/1999 03/24/1998 01/25/2002 01/26/2001 01/25/2000 04/26/1999 1 5 ––––––– ––––––– ––––––– (MM/DD/YY) EXPIRY DATE 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 04/26/2009 03/24/2008 01/25/2012 01/26/2011 01/25/2010 01/25/2012 06/01/2011 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 01/25/2012 05/01/2011 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 01/25/2012 01/26/2011 01/25/2010 04/26/2009 03/24/2008 EXERCISE (US$) 26.00 16.94 11.85 14.99 15.66 26.00 16.94 11.85 14.99 15.66 26.00 16.94 11.85 14.99 15.66 26.00 21.06 14.99 15.66 26.00 16.94 11.85 26.00 16.94 11.85 14.99 15.66 26.00 20.15 26.00 16.94 11.85 14.99 15.66 26.00 16.94 11.85 14.99 15.66 26.00 16.94 11.85 14.99 15.66 PRICE (1) AND OPTIONS GRANTED VESTED 12,000 15,000 12,000 12,000 21,000 12,000 15,000 12,000 12,000 21,000 24,000 24,000 21,000 21,000 30,000 12,000 15,000 12,000 21,000 12,000 15,000 12,000 12,000 15,000 12,000 12,000 21,000 12,000 15,000 12,000 15,000 12,000 12,000 21,000 12,000 15,000 12,000 12,000 21,000 12,000 15,000 12,000 12,000 21,000 (#) uch dateontheNewYork andToronto stockexchanges l depend on the value of the common shares on the date l dependonthevalueofcommonshares thedate of US$1,148,406;MaureenKempston Darkesexercised EXERCISED value of US$301,674; The Hon. Edward C. Lumley exercised value ofUS$301,674;TheHon.EdwardC.Lumleyexercised 21,000 11,000 21,000 24,000 24,000 21,000 21,000 30,000 12,000 21,000 21,000 12,000 15,000 12,000 12,000 21,000 21,000 Incentive Plan. zed valueofUS$699,758;andRobertPace exercised (#) OPTIONS ASAT FEBRUARY 29,2008 – – – – – – – – – – – – – – – – – – – – – – – – – – – (2) UNEXERCISED 12,000 15,000 12,000 12,000 12,000 15,000 12,000 12,000 15,000 12,000 15,000 12,000 12,000 15,000 12,000 12,000 12,000 15,000 12,000 15,000 12,000 12,000 12,000 15,000 12,000 12,000 21,000 1,000 (#) – – – – – – – – – – – – – – – – OPTIONS UNEXERCISED VALUE OF 321,960 538,350 491,760 454,080 321,960 538,350 491,760 321,960 476,550 321,960 538,350 491,760 321,960 538,350 491,760 454,080 321,960 490,200 321,960 538,350 491,760 454,080 321,960 538,350 491,760 454,080 780,570 002. 37,840 (US$) – – – – – – – – – – – – – – – – 33/8/08 5:41:06 PM (3) / . 8 / 0 8 15

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: 0 6 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 16 N _ 16 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 Shareholding Requirement,ifapplicable. directors, thevalueatriskasamultipleofeachdirector’sannualretainerandamountneededtomeetMinimum The followingtableprovidesinformationonthevalueofcommonsharesandDRSUsownedbyCompany’scurrent shares oftheCompanyonToronto andNewYork stockexchangesofUS$52.83). non-executive directorsisapproximatelyUS$3,911,989(basedontheFebruary 29,2008,averageclosingpriceofthecommon shares orDRSUsofCN.Asthedatehereof, theaveragevalueofcommonshares(includingDRSUs)Companyownedby Shareholding Requirementismet,directorsmayelecttoreceiveuponehundredpercent(100%)ofsuchretainersincommon such retainersincommonsharesorDRSUsofCNuntilhisherMinimumShareholdingRequirementismet.Oncethe committee chaircashretainersincommonsharesorDRSUsofCNandmayelecttoreceiveuponehundredpercent(100%) Each directorshallberequiredtoreceiveatleastfi related tohisorherholding. Requirement shallnotbetheobjectofspecifi a directorandthecommonshares,DRSUsorsimilarshareequivalentofCNheldtocomplywithMinimumShareholding (the “ for theBoardchair, theaggregateofBoardChairannualretainerincashandcommonshareorDRSUgrant) or (ii)three(3)timestheaggregateofannualDirectorretainerincashandcommonshareDRSUgrant(and Board, commonshares,DRSUsorsimilarshareequivalentsofCN,ifany, withavalueofatleastthehigherof:(i)CAD$250,000 The Boardhasadoptedaguidelinestatingthateachnon-executivedirectorshouldown,withinthree(3)yearsofjoiningthe Share Ownership 0 IETRYEAR Armellino Michael R. DIRECTOR ei oir2008 2008 Denis Losier Robert H.Lee 2008 Kempston Darkes V. Maureen 2008 Edith E.Holiday 2008 E. HunterHarrison James K.Gray 2008 Gordon D.Giffi Ambassador 2008 J.V. RaymondCyr 2008 Hugh J.Bolton CharlesBaillie A. 8 _ E n g Minimum ShareholdingRequirement _ M a r 0 8 _ n v 1 7 . i n d d Net change Net change Net change Net change Net change Net change Net change Net change Net change Net change Net change 1 6 2007 2008 2007 2007 2007 2007 2007 2007 2007 2008 2007 2007 2007 2008 (1) OR CONTROLLED OWNED, DIRECTED COMMON SHARES NUMBER OF 102,150 308,993 283,625 97,650 52,176 57,298 42,341 42,341 90,200 94,600 43,267 52,860 15,500 13,500 29,000 23,900 12,600 36,500 26,700 28,950 25,368 15,800 19,175 4,500 9,593 2,250 5,122 4,400 3,000 2,500 3,375 (500) c monetization procedures or other hedging procedures to reduce the exposure cmonetizationproceduresorotherhedgingtoreducetheexposure ”). Each director shall continue to hold such value throughout his or her tenure as ”). Eachdirectorshallcontinuetoholdsuchvaluethroughouthisorhertenureas – ftypercent(50%)ofhisorherannualDirector, committee,Boardchairand DRSUs NUMBER HELD OF 23,712 28,518 22,869 23,131 22,462 27,220 27,314 32,744 24,949 29,770 12,213 13,481 4,806 2,250 2,250 5,713 5,774 4,758 5,430 4,821 1,268 262 61 – – – – – – – – – – OF TOTAL COMMON NUMBER AND DIRECTED CONTROLLED DRSUs SHARES OR OWNED, 102,150 283,625 308,993 117,514 127,344 97,650 57,889 63,072 14,399 66,979 81,378 15,500 13,500 29,000 24,162 35,469 59,631 26,700 31,200 25,368 64,803 69,561 27,949 32,270 28,013 32,656 4,500 5,183 4,500 4,758 9,830 4,321 4,643 GUIDELINEMET( GUIDELINE REQUIREDTOMEET OR INVESTMENT (US$) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ) TOTAL VALUE (VALUE AT RISK) SHARESANDDRSUs OF COMMON 63410– 16,324,100 ,9,0 17 6 4,299,200 12 1,532,070 7 3,150,306 1,648,296 13 7 3,332,094 15 1,725,216 7 3,674,908 27 1,704,824 21 6,727,584 5,396,585 (US$) (2) ASMULTIPLE OF VALUE AT RISK ANNUAL RETAINER , 33/8/08 5:41:07 PM / 8 / 0 8 5 : 4

: 0 7 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 17 N _ P r o x y _ 2 0 (iii) (ii) (i) or compromisewithcreditorshadareceiver, receivermanager ortrusteeappointedtoholditsassets,exceptforthefollow a proposalunderanylegislationrelatingtobankruptcyorinsolvencywassubjectinstitutedproceedings,arrangem while suchpersonwasactinginthatcapacityorwithinayearofceasingtoactcapacity, becamebankrupt, to theBoardofDirectors,nosuchnomineeisorhasbeen,inlast10years,adirectorexecutiveoffi As ofthedatehereof, totheknowledgeofCompanyandbaseduponinformationprovideditbynomineesforelection Additional DisclosureRelatingtoDirectors ThetotalvalueisbasedontheFebruary 29,2008averageclosingpriceofthecommonsharesonToronto andNewYork st (2) ThenumberofcommonsharesandDRSUsheldbyeachdirectorfor2008isasatFebruary 29,2008andfor2007isasatFebru (1) 0 IETRYEAR Edward C.Lumley The Hon. DIRECTOR oetPc 2008 2008 Robert Pace McLean David G.A. 8 _ E arrangement inSeptember2004.Mr. Lumleyisnolongeradirector ofAirCanada. in April2003.AirCanadasuccessfullyemergedfromtheCCAAproceedingsandwasrestructuredpursuanttoaplanof Mr. Lumley, adirectoroftheCompany, wasadirectorofAirCanadawhenitvoluntarilyfi Superior CourtinMarch2004.Mr. Cyrisnolongeradirectorof AirCanadanorofCableSatisfactionInternationalInc.;and amended andrestatedplanofarrangementreorganizationwasapprovedbyitscreditorssanctionedtheQuébec and wasrestructuredpursuanttoaplanofarrangementinSeptember2004CableSatisfactionInternationalInc.’ssecond it voluntarilyfi Creditors Arrangement Act Arrangement Creditors Mr. Cyr, adirectoroftheCompany, wasadirectorof AirCanadawhenitvoluntarilyfi reorganization inFebruary 2008.Mr. Baillieisno longeradirectorofDanaCorporation; and MexicansubsidiariesarenotincludedintheChapter11fi under Chapter11ofthe Mr. Baillie,adirectoroftheCompany, wasadirectorofDanaCorporationwhichfi n g _ M a r 0 8 _ v 1 7 . i led for protection under the CCAA in July 2003. Air Canada successfully emerged from the CCAA proceedings ledforprotectionundertheCCAAinJuly2003.AirCanadasuccessfullyemergedfromproceedings n d d Net change Net change Net change 1 7 2007 2008 2007 2007 U.S. Bankruptcy Code Bankruptcy U.S. (Canada)(“ (1) CONTROLLED OWNED, COMMON SHARES NUMBER OF OR DIRECTED 107,910 107,910 21,000 31,800 52,800 14,774 44,100 58,874 CCAA – ”) in April 2003 and was a director of Cable Satisfaction International Inc. when ”) inApril2003andwasadirectorofCableSatisfactionInternationalInc.when DRSUs NUMBER HELD OF onMarch3,2006.Dana’sEuropean,SouthAmerican,Asian-Pacifi 22,386 28,185 23,933 29,626 14,661 42,314 56,975 5,799 5,693 ling. Dana Corporation successfully emerged from Chapter 11 ling.DanaCorporationsuccessfullyemergedfromChapter11 AND DIRECTED CONTROLLED DRSUs SHARES OR OF OWNED, TOTAL COMMON NUMBER 150,224 164,885 26,799 54,186 80,985 20,467 68,033 88,500 14,661 GUIDELINE REQUIREDTOMEET OR GUIDELINEMET( INVESTMENT led voluntary petitions for reorganization ledvoluntarypetitionsforreorganization ledforprotectionunderthe ock exchanges(US$52.83). ary 28,2007. led for protection under the CCAA ledforprotectionundertheCCAA (US$) ✓ ✓ ✓ ✓ ) (VALUE AT RISK) SHARESANDDRSUs OF TOTAL COMMON VALUE cer of any company that, cerofanycompanythat, ,7,5 18 12 4,675,455 17 8,710,875 4,278,438 (US$) (2) ASMULTIPLE OF VALUE AT RISK ANNUAL RETAINER c, Canadian c,Canadian Companies’ Companies’ ing: ing: made made ent ent 33/8/08 5:41:08 PM / 8 / 0 8 17

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: 0 8 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 18 N _ 18 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 (1) The following committee membership changes occurred on April 24, 2007: A. CharlesBaillielefttheCorporateGovernanceand ThefollowingcommitteemembershipchangesoccurredonApril24,2007:A. (1) Board andcommitteemeetingsin2007. of Boardandcommitteemeetingsheldduringthe12-monthperiodendedDecember31,2007.Alldirectorsattendedall The tablesbelowshowtherecordofattendancebydirectorsatmeetingsBoardanditscommittees,aswellnumber Board andCommitteeAttendance 0 taei lnigCmite 3 4 10 6 4 5 Strategic PlanningCommittee 4 Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee 5 Finance Committee Environment, SafetyandSecurityCommittee NUMBEROFMEETINGSHELD Corporate GovernanceandNominatingCommittee Audit Committee Board MEETINGS BOARD ANDCOMMITTEE Michael R. DIRECTOR Hugh J. Charles A. J.V. Raymond Gordon D.Gifﬁ Ambassador James K. E. Hunter Edith E. Kempston Darkes V. Maureen Denis Losier Robert H. Edward C.Lumley The Hon. David G.A. David G.A. Robert P 8 _ E Committee; RobertPace wasappointedchairoftheHumanResourcesandCompensationCommittee. Investment Committee;DenisLosierlefttheFinanceCommitteetobecomememberofCorporateGovernanceandNominatingCommi Finance Committee;J.V. RaymondCyrlefttheFinanceCommitteetobecomememberofCorporateGovernanceandNominatingComm n g _ M otn10/10 Bolton (1) oia 10/10 Holiday c 10/10 ace a ry10/10 Gray arsn10/10 Harrison r e 10/10 Lee ali 10/10 Baillie Armellino 0 cen10/10 McLean 8 _ y 10/10 Cyr n v 1 7 . i n d d 1 8 10)6622–3355–3/3 3/3 – 4/4 5/5 – 3/3 4/4 – – 2/2 – 6/6 6/6 (100%) (100%) 10)6655––55–3/3 – 5/5 – – 5/5 6/6 (100%) 10)–334411–443/3 4/4 – 1/1 4/4 3/3 – (100%) 10)––444455–3/3 – 5/5 4/4 4/4 – – (100%) 10)–5544–55443/3 4/4 5/5 – 4/4 5/5 – (100%) (100%) 10)–5544–55443/3 4/4 5/5 – 4/4 5/5 – (100%) 10)66––44–443/3 3/3 4/4 4/4 – – 4/4 4/4 – 4/4 – – 6/6 – (100%) (100%) 10)6633–11–443/3 4/4 – 1/1 – 3/3 6/6 (100%) 10)––444455443/3 4/4 5/5 4/4 4/4 – – (100%) 10)6655––55443/3 3/3 4/4 4/4 5/5 5/5 – – – 4/4 5/5 5/5 6/6 – (100%) (100%) 10/10 10/10 10/10 10/10 10/10 BOARD COMMITTEE AUDIT ––––––3/3 COMMITTEE NOMINATING AND GOVERNANCE CORPORATE COMMITTEE SECURITY SAFETY AND RONMENT, ENVI- NUMBER AND%OFMEETINGSATTENDED COMMITTEE FINANCE COMMITTEE PENSATION AND RESOURCES COM- HUMAN TRUST FUNDS PENSION OF COMMITTEE CN’S INVESTMENT Nominating Committee and was appointed chair of the NominatingCommitteeandwasappointedchairofthe ttee and was appointed chair of the Audit ttee andwasappointedchairoftheAudit ittee; James K. Gray became member of the ittee; JamesK.Graybecamememberofthe COMMITTEE PLANNING STRATEGIC (TOTAL) COMMITTEES (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) 19/19 17/17 19/19 15/15 16/16 21/21 21/21 17/17 15/15 17/17 20/20 23/23 21/21 3/3 ATTENDANCE OVERALL (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) 33/33 29/29 27/27 29/29 25/25 26/26 31/31 13/13 31/31 27/27 25/25 27/27 30/30 31/31 33/8/08 5:41:08 PM / 8 / 0 8 5 : 4

: 0 8 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 19 N _ P r o x y _ 2 0 of 2002 of 2 Form 58-101F1,section5;GovernancePolicy, sections3.8and3.9. (2) Form 58-101F1oftheDisclosureInstrument (“ (1) (the “ applicable, totheNYSECorporate GovernanceStandards Policy, whereappropriate.TheCompanyalso refers, where items oftheDisclosureInstrumentaswelltoGovernance Policy. Thetext and footnotessetforthhereunderrefertothe requirements oftheDisclosureInstrumentandGovernance its corporategovernancepracticesmeetandexceedthe their governancepractices.TheCompanybelievesthat requires issuerstomaketheprescribeddisclosureregarding practices toCanadianissuers,whiletheDisclosureInstrument The GovernancePolicy providesguidanceongovernance Corporate GovernanceGuidelines(the“ (the “ 58-101 –DisclosureofCorporateGovernancePractices adopted,inJune2005,NationalInstrument The CSA signifi comply withtheNYSEcorporategovernancerulesinall www.cn.ca/cngovernance, our governancepractices,however, requirements. Exceptassummarizedonourwebsiteat rules, providedthatwecomplywithCanadiangovernance complying withmanyoftheNYSEcorporategovernance giving effecttotheprovisionsofU.S. Administrators (the“ with applicablerulesadoptedbytheCanadianSecurities Exchange (NYSE),ourcorporategovernancepracticescomply the Toronto StockExchange(TSX)andtheNewYork Stock As aCanadianreportingissuerwithsecuritieslistedon Board ofDirectors. documentation giventoallpersonselectedorappointedthe needs. OurCorporateGovernanceManualformspartofthe with evolvingpractices,thechangingcircumstancesandour practices byassessingtheireffectivenessandcomparingthem revised regularlywithaviewtocontinuallyimprovingour available onourwebsiteatwww.cn.ca/cngovernance. Itis on March4,2008.OurCorporateGovernanceManualis the BoardofDirectorsonJanuary21,2003,andlastupdated Corporate GovernanceManualwhichwasformallyapprovedby Directors andofeachitscommitteesaresetforthinour role, specifi were designedinamannerconsistentwiththisobjective.The corporate governanceandourpractices We arecommittedtoadheringthehigheststandardsof General PRACTICES CORPORATE GOVERNANCE STATEMENT OF 0 8 _ E n g cantrespects. NYSE Standards Disclosure Instrument _ M (the“ a r 0 c mandate and functioning rules of the Board of cmandateandfunctioningrulesoftheBoard 8 _ v 1 Sarbanes-Oxley Act 7 . i n d d CSA ”). 1 9 ”) and applicable rules of the SEC ”) andapplicablerulesoftheSEC ”) andNationalPolicy 58-201– ”). We areexemptedfrom Form 58-101F1 Governance Policy Sarbanes-Oxley Act Act Sarbanes-Oxley ”), section2;Governance Policy, section3.4. ”). ”). Circular. of theBoardissetoutinSchedule“B”tothisInformation which istheenhancementofshareholdervalue.Themandate the Companyinachievingitsprincipalcorporateobjective, corporate governancepracticesarewelldesignedtoassist The BoardofDirectorsistheopinionthatCompany’s our CorporateSecretary. TheCodehasalsobeenfi in printtoanyshareholderwhorequestscopiesbycontacting is availableonourwebsiteatwww.cn.ca/cngovernance and director orexecutiveoffi or unethicalbehaviour. Nowaiverhaseverbeengrantedtoa fair dealing,compliancewithlawsandreportingofanyillegal and opportunities,confi of interests,protectionandproperusecorporateassets employees ofCN.Itaddressesseveralmatters,includingconfl Conduct. TheCodeisapplicabletodirectors,offi The BoardofDirectorshasadoptedaCodeBusiness Code ofBusinessConduct Nominating Committee. on therecommendationofCorporateGovernanceand of theCompany’sgovernancepracticesdescribedbelow, participate orvoteinanysuchdiscussiondecision. has aninterest,theBoardwouldrequestsuchdirectornotto to anorganization,businessorassociationinwhichadirector been disclosed.Shouldtherebeadiscussionordecisionrelating make surethatthedirectorisinnosuchconfl interest. Everyyear, aquestionnaireissenttoeachdirector or association,whichcouldplacethedirectorinaconfl or indirectinterestheshehasinanyorganization,business practice, theBoardrequestseverydirectortodiscloseanydirect with, orevenappeartoconfl must avoidsituationswherepersonalinterestscouldconfl The CodeofBusinessConductstatesthat“everyemployee constituting adeparturefromtheCode. fi material changereporthaseverbeenfi employees oftheCompanytoprovisionsCode.No within theorganizationandonanymaterialcontraventionby reports tosuchcommitteeontheimplementationofCode Company’s CodeofBusinessConduct.Eachyear, management Committee, reviews,monitorsandoverseesthedisclosureof The Board,throughitsCorporateGovernanceandNominating Canadian andU.S.securitiesregulatoryauthorities. ledpertainingtoanyconductofadirectororexecutiveoffi (1) The Board of Directors has approved the disclosure TheBoardofDirectorshasapprovedthedisclosure dentiality of corporate information, dentialityofcorporateinformation, cer in connection therewith. The Code cerinconnectiontherewith.TheCode ict with, the interests of CN”. In ictwith,theinterestsofCN”.In (2) led or required to be ledorrequiredtobe ict that has not ictthathasnot cers and cersand led with the ledwiththe ict of ictof ict ict cer cer ict ict 33/8/08 5:41:09 PM / 8 / 0 8 19

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: 0 9 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 20 N _ 20 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 3 Form 58-101F1,sections3(a)and(b);Governance Policy, section3.5. (3) Form 58-101F1,section1(f);GovernancePolicy, section3.2. (2) Form 58-101F1,sections1(a),(b)and(c); GovernancePolicy, section3.1. (1) of the14nominees,12areindependent: www.cn.ca/cngovernance. As showninthefollowingtable, Governance Manualwhichisavailableonourwebsiteat by theBoard.ThesestandardsaresetoutinCN’sCorporate York StockExchangeandtheadditionalstandardsadopted the CanadiansecuritiesregulatoryauthoritiesandNew the BoardofDirectorsappliesstandardsdevelopedby determining whetheradirectorisan“independent”director, for electiontotheBoardofDirectorsareindependent.In of ourshareholders,thesubstantialmajoritynominees To betteraligntheinterestsofBoardDirectorswiththose offi to theCorporateGovernanceandNominatingCommittee.The Business ConductisCN’sOmbudsman,whopresentsreports person intheimplementationofCompany’sCode in alldealingswithcustomers,suppliersandpartners.Akey their responsibilitiestotheCompanyandbefairimpartial may impairorappeartotheeffectiveperformanceof the employeesarealsorequiredtoavoidoutsideintereststhat Company. AspartoftheCompany’sCodeBusinessConduct, management inthecompetentandethicaloperationof states thattheBoardhasresponsibilityforoverseeing Board attachedasSchedule“B”tothisInformationCircular important partofitssuccess.Hence,themandate The Companybelievesthatethicalbusinessconductisan Independence ofDirectors submitted confi wrongdoing intermsofaccountingorauditingmattersmaybe that concernsofemployeesregardinganypotentialorreal website atwww.cn.ca/cngovernance. TheCodeprovides director sessions.Theseproceduresaredescribedonour with theChairman,whopresidesoverallnon-management complaints orconcernstousand(ii)communicatedirectly interested parties(i)tosubmitaccountingandauditing The BoardofDirectorsalsoadoptedproceduresallowing to concernsarisingwithintheCompany. informal avenuewhichfacilitatesfairandequitableresolutions 0 8 _ ceoftheOmbudsmanoffersaconfi E n g _ M a r 0 8 _ v 1 7 dentiallythroughCN’sAuditingHotLine. . i n d d 2 0 (1) dential, neutral and dential,neutraland Offi as apositiondescriptionforthePresidentandChiefExecutive for theBoardchairandcommitteechairs,aswell Our CorporateGovernanceManualincludespositiondescriptions Position Descriptions the responsibilitiesofBoardandthosemanagement. (iii) clearlyunderstandsandrespectstheboundariesbetween of management,(ii)carriesoutitsresponsibilitieseffectivelyand and proceduresinplacetoenableitfunctionindependently reasonable measurestoensurethattheBoard(i)hasstructures of theChairman.ThekeyroleBoardchairistotakeall Corporate GovernanceManualdescribestheresponsibilities the Companysince1994,isindependentBoardchair. The Board. Mr. McLean,whohasbeenadirectorof DavidG.A. must bean“independent”directorwhoisdesignatedbythe Corporate GovernanceManualprovidesthattheBoardchair Board tofunctionindependentlyofmanagement.Hence,our the positionsofCEOandChairmancontributestoallowing its privatisationin1995andwebelievethattheseparationof The Company’sBoardisledbyanon-executiveChairmansince Independent ChairmanoftheBoard The Hon. The Hon. Denis Losier Kempston Darkes V. Maureen E. HunterHarrison James K.Gray NOTINDEPENDENT Gordon D.Giffi Ambassador INDEPENDENT J.V. RaymondCyr Hugh J.Bolton CharlesBaillie A. Michael R.Armellino NAME Robert Pace McLean David G.A. Edward C.Lumley Robert H.Lee Edith E.Holiday ceroftheCompany. n (3) INDEPENDENCE STATUS ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ (2) ✓ ✓ STATUS INDEPENDENCE FOR NON- REASON the Company customer of of amajor Senior executive the Company Offi Chief Executive President and cer of cerof 33/8/08 5:41:09 PM / 8 / 0 8 5 : 4

: 0 9 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 21 N _ P r o x y _ 2 0 4 Form 58-101F1,section6(b);Governance Policy, section3.10.TheNYSEStandardsstate thataboardshouldappointnomina (4) Form 58-101F1, section 6(c);GovernancePolicy, section3.11. (3) Governance Policy, section3.13. (2) Form 58-101F1,section 8. (1) committee oftheBoardDirectors. The followingisabriefsummaryofthemandateeach to committees. delegations oftheBoardDirectors’decision-makingauthority subject tocertainlimitedexceptions,therearenostanding Company. AllcommitteesreporttotheBoardofDirectorsand, of memberstheBoardDirectorsaswelloffi CN’s Pension Trust Funds whichisamixedcommitteecomposed Board ofDirectorsalsoestablishedtheInvestmentCommittee of available aspartofCN’sCorporateGovernanceManual.The and theStrategicPlanningCommitteetheirchartersare Committee, theEnvironment,SafetyandSecurityCommittee Committee, theHumanResourcesandCompensation Committee, theCorporateGovernanceandNominating These committeesaretheAuditCommittee,Finance committees thathavecertainresponsibilitiesforsuchareas. its supervisionmandateintosixareasandhasestablished which wearesubject,theBoardofDirectorshassubdivided activities andthegreatnumberoflawsregulationsto Given oursize,thenatureandgeographicalscopeof Committees oftheBoard Board ofDirectors. nominees whoarenotpartofthecandidatessupportedby that noproxymaterialiscirculatedinsupportofoneormore same asthenumberofdirectorstobeelectedBoardand directors” meansthatthenumberofdirectornomineesis uncontested electionofdirectors.An“uncontested offer. Thispolicyonlyappliesincircumstancesinvolvingan Board ofDirectorsdeliberationspertainingtotheresignation his orherresignationshouldnotbepartofanycommittee meeting ofshareholders.Thedirectorwhoofferedtotender announce itinapressreleasewithin90daysfollowingthe it ornot.TheBoardofDirectorswillmakeitsdecisionand recommendation totheBoardofDirectorswhetheraccept Nominating Committeewillconsidersuchofferandmakea which thedirectoriselected.TheCorporateGovernanceand Chairman promptlyfollowingthemeetingofshareholdersat be expectedtooffertenderhisorherresignationthe with respecttotheelectionofdirectorsbyshareholders,will receives agreaternumberofvotes“withheld”than“for”, a nomineeforelectionasdirectoroftheCompanywho part ofourCorporateGovernanceManual,totheeffectthat The BoardofDirectorshasadoptedapolicy, whichisnow Election ofDirectors served togetherontheboardsofotherpubliccompanies. As ofFebruary 29,2008,nomembersofourBoardDirectors No OtherCommonDirectorships 0 8 _ E must becomposedsolely ofindependentdirectors. that suchcommitteeshould haveawrittencharter. Theboardhasadoptedawrittenmandate fortheCorporateGovernanceandNom n g _ M a r 0 8 _ v 1 7 . i n d d 2 1 (1) cers of the cersofthe recommendations to the Board thereon. This Committee recommendations totheBoardthereon.ThisCommittee or theengaginginotherformsoffi the borrowingofmoney, theissuingofdebtsecurities authority levelsestablishedbytheBoard,mayauthorize reviews fi opportunities andparametersfordebtorequityfi structure, cashfl Committee providesoversightwithrespecttoourcapital activities. Aspartoftheseresponsibilities,theFinance authorizing, approvingandrecommendingcertainfi separate Committees. the formerAudit,FinanceandRiskCommitteeintotwo was createdinApril2005asaresultofthedivision the Company’sfi The FinanceCommitteehastheresponsibilityofoverseeing FINANCE COMMITTEE at page25ofthisInformationCircular. Corporate GovernancePractices–AuditCommitteeDisclosure” are furtherdescribedinthesectionentitled“Statementof mandate oftheAuditCommitteeandits2007mainactivities internal controlsandexternalauditors.The Company’s fi The AuditCommitteehastheresponsibilityofoverseeing AUDIT COMMITTEE Committee are“independent”. members oftheCorporateGovernanceandNominating solely of“independent”directors.AsatMarch4,2008,all Committee providesthatsuchcommitteemustbecomposed The charteroftheCorporateGovernanceandNominating identifi Board ofDirectorsand,inconsultationwiththechair, required ordesiredcompetenciesandskillstoimprovethe reviews andmonitorscriteriaforselectingdirectors,including Corporate GovernanceandNominatingCommitteedevelops, governance matters.Aspartofitsresponsibilities,the of Directorsanditscommitteesoverseeingcorporate the responsibilityofmonitoringcompositionBoard The CorporateGovernanceandNominatingCommitteehas CORPORATE GOVERNANCEANDNOMINATING COMMITTEE in ourCorporateGovernanceManual. described inthecharterofsuchcommitteewhichisincluded Corporate GovernanceandNominatingCommitteearefurther practices. Theresponsibilities,powersandoperationofthe should bemadetheretoandmonitorsthedisclosureofits applicable totheCompany, recommendsanychangethat This Committeereviewsthecorporategovernanceguidelines escandidatesqualifi nancing documents and, within the scope of its nancingdocumentsand,withinthescopeofits nancial reporting, monitoring risk management, nancialreporting,monitoringriskmanagement, owsandkeyfi nancialpolicies,reviewingfi ting committee composed entirely of independent directors and ting committeecomposedentirelyofindependent directorsand inating Committee pursuant to which such committee inating Committeepursuant towhichsuchcommittee edtobecomeBoardmembers. nancial ratios, reviews the nancialratios,reviewsthe (4) nancing, or makes nancing,ormakes (3) nancings and nancingsand nancing, nancing, nancial nancial (2) 33/8/08 5:41:09 PM / 8 / 0 8 21

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: 0 9 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 22 N _ 22 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 2 Form 58-101F1, sections 7(a),(b)and(c)GovernancePolicy, sections 3.15,3.16and3.17(regardingoffi (2) Form 58-101F1,section 7(a)andGovernancePolicy, section3.17(b) (regardingdirectors). (1) budget priortotheirformalapprovalbytheBoardofDirectors. executive offi the PresidentandChiefExecutiveOffi underlying theCompany’sbusinessplan.Italsoreviews,with strategic issues,includingthereviewofkeyassumptions The StrategicPlanningCommitteefocusesonfi STRATEGIC PLANNING COMMITTEE are adequatelytakenintoconsideration. ascertain whetherenvironmental,safetyandsecurityissues practices, andreviewingtheCompany’sbusinessplanto security policies,assessingenvironmental,safetyand development andimplementationofenvironmental,safety responsibility, amongstotherthings,ofoverseeingthe The Environment,SafetyandSecurityCommitteehasthe ENVIRONMENT, SAFETYANDSECURITYCOMMITTEE compensation consultants. Information Circularfordisclosureinrespectofexecutive Executive CompensationConsultants”atpage38ofthis by theHumanResourcesandCompensationCommittee– of ExecutiveCompensation–Reporton Reference isalsomadetothesubsectionentitled“Statement Compensation Committeeare“independent”. As atMarch4,2008,allmembersoftheHumanResourcesand Committee mustbecomposedsolelyofindependentdirectors. Governance Manual.TheHumanResourcesandCompensation charter ofsuchcommitteewhichisincludedinourCorporate Committee” atpage29ofthisInformationCircularandinthe Compensation bytheHumanResourcesand “Statement ofExecutiveCompensation–Reporton main activitiesarefurtherdescribedinthesectionentitled Human ResourcesandCompensationCommitteeits2007 required tomeetitsbusinessobjectives.Themandateofthe can attract,motivateandretainthequalityofpersonnel human resourcessystemsareinplacesothattheCompany practices byensuring,amongstotherthings,thatappropriate Committee alsohasthemandatetoreviewhumanresources performance assessmentandsuccessionplanning.This the responsibilityofmonitoringexecutivemanagement’s The HumanResourcesandCompensationCommitteehas HUMAN RESOURCESANDCOMPENSATION COMMITTEE compensation receivedbydirectorsin2007. of thisInformationCircularforadditionalinformationon for ElectiontotheBoard–ofDirectorsCompensation” non-executive directors.Seethesectionentitled“Nominees to theBoardonadequacyandformofcompensationfor reviews withtheBoardchairandmakesrecommendations The CorporateGovernanceandNominatingCommitteeannually 5 Form 58-101F1,section1(e);Governance Policy, section3.3. (5) Form 58-101F1,section1(g). (4) Form 58-101F1,section7(d). (3) 0 8 _ E must becomposedsolelyofindependentdirectors. that suchcommitteeshouldhaveawrittencharter. TheboardhasadoptedawrittenmandatefortheHuman ResourcesandCompensa determined bytheCompany’sindependentdirectors only. TheNYSEStandardsstatethataboardshouldappointcompensation com determined bythecorporation’scompensation committeeorbyallindependentdirectorsofthecorporation.OurCorporateGovern n g _ M a r 0 8 _ cers, the Company’s business plan and capital cers,theCompany’sbusinessplanandcapital v 1 7 . i n d d 2 2 (3) cer and other appropriate cerandotherappropriate (1) (2) nancial and nancialand meetings are called. The total number of meetings and the meetings arecalled.Thetotalnumberofandthe require Boardorcommitteeactionconsideration,additional ahead. Ifduringthecourseofyeareventsorcircumstances sessions anddiscussionswhileallowingmanagementtoplan in-depth presentationsconducivetomeaningfulinformation that proceedinginthismannerhelpsthepreparationof establishes committeeworkingplansfortheyear. We believe the committeechairsandappropriateexecutiveoffi such process,theCorporateSecretary, incollaborationwith meetings oftheBoardDirectorsanditscommittees.During has theresponsibilityofestablishingaschedulefor The Boardchair, incollaborationwiththeCorporateSecretary, PROCESS Board andCommitteeMeetings certain oftheinvestmentsmadebyCN’sPension Trust Funds. investment ofassetsCN’sPension Trust Funds andapproving of theInvestmentDivision,advisingDivisionon responsibility, amongstotherthings,ofreviewingtheactivities a mixedcommitteecomposedofdirectorsandoffi The InvestmentCommitteeofCN’sPension Trust Funds, whichis OFCN’SPENSIONTRUSTFUNDS INVESTMENT COMMITTEE every in-personmeetingoftheBoardDirectorsin The non-managementBoardmembersmeetbeforeorafter IN CAMERAMEETINGS committees havingspecialsupervisoryresponsibilities. are transmittedtothosemembersoftheBoardDirectorsor information concerningtheaffairsandprogressofCompany This opencommunicationensuresthatallmeaningful of particularcommitteesandthechairssuchcommittees. having responsibilitiesformattersplacedunderthesupervision Offi and thePresidentChiefExecutiveOffi Communication regularlytakesplacebetweentheBoardchair and CommitteeAttendance”ofthisInformationCircular. section entitled“NomineesforElectiontotheBoard– meetings heldduringthecourseof2007aresetoutin attendance recordforeachdirectorallboardandcommittee one sessionthatwasattendedonlybyindependentdirectors. During thefi only “independent”directorsisalsoheldatleastonceayear. chairmanship oftheBoardchair. An sessions, withoutthepresenceofmanagementandunder ceoftheCorporateSecretary, betweenexecutiveoffi cers). The NYSE Standards state that the CEO’s compensation should be cers).TheNYSEStandardsstatethattheCEO’s compensationshouldbe nancial year ended December 31, 2007, there was nancialyearendedDecember31,2007,therewas ance Manual provides that the CEO’s compensation is ance ManualprovidesthattheCEO’scompensation is mittee composed entirely of independent directors and mittee composedentirelyofindependentdirectors and tion Committee pursuant to which such committee tion Committeepursuanttowhichsuchcommittee in camera in cer and, through the cerand,throughthe session including sessionincluding cers, has the cers,hasthe in camera in cers, cers, cers cers (4) (5) 33/8/08 5:41:10 PM / 8 / 0 8 5 : 4

: 1 0 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 23 N _ P r o x y _ 2 0 2 Form 58-101F1,section6(a);GovernancePolicy, sections3.12,3.13and3.14. (2) Form 58-101F1,section9;Governance Policy, section3.18. (1) Board andcommitteechairsindividualdirectors. performance oftheBoardDirectors,committees, assist theBoardofDirectorsinindependentlyassessing from timetotime,hireanindependentadvisorassessor In additiontotheabove-mentionedprocess,Boardmay, INDEPENDENT ADVISOR • • • • following steps: Committee andtheBoardchairiscomprisedof supervision oftheCorporateGovernanceandNominating chairs andindividualdirectors.Thisprocessisunderthe effectiveness ofitscommittees,theBoardchair, thecommittee time totime,aprocessannuallyassessitseffectiveness,the The BoardofDirectorshasimplemented,andreviews,from Board Performance Assessment 0 8 individual directorsinrespectoftheirpersonalperformance. committees, Boardandcommitteechairsseparatelyto to improvetheeffectivenessofBoardDirectors, Committee chairstotheBoardofDirectors,withsuggestions Committee andHumanResourcesCompensation Reports arethenmadebytheBoardchairandAudit evaluation questionnaires. Corporate GovernanceandNominatingCommitteechair his orherresponsesandcommentsontheBoardchair Committee chairsalsodiscussesindividuallywitheachdirector Audit CommitteeorHumanResourcesandCompensation to reviewtheself-evaluation ofeachdirector. Oneofthe to thequestionnaireswhichdirectormayhaveand from andinrespectofsuchdirectoranycomments chair contactseverydirectortodiscusstheanswersreceived Following receiptofthecompletedquestionnaires,Board Compensation Committee. chairs oftheAuditCommitteeandHumanResources questionnaires, whichareforwardeddirectlytoeachofthe Governance andNominatingCommitteechairevaluation except fortheresponsestoBoardchairandCorporate complete setoftheresponsesisforwardedtoBoardchair, Each questionnaireisthensenttoeverydirectoranda • • • years andinputfromtheBoardofDirectors: taking intoaccountcurrentissues,thefi Governance andNominatingCommitteetheBoardchair, of theCorporateSecretaryandapprovedby The followingquestionnairesarepreparedbytheOffi _ E committee chairevaluationquestionnaires. a Boardchairevaluationquestionnaire;and individual directors; questionnaires, includingaself-assessment by Board andcommitteeperformanceevaluation n g _ M a r 0 8 _ v 1 7 . i n d d 2 3 (1) ndings of previous ndingsofprevious ce ce law, thevalidityofcredentials underlyingeachnomination, of Directors.Itconsiderstheirqualifi nominees forelectionorre-electionasmembersoftheBoard and NominatingCommitteeannuallyreviewsthecredentialsof In consultationwiththeBoardchair, theCorporateGovernance REVIEW OFCREDENTIALS Director Selection website atwww.cn.ca/cngovernance. in CN’sCorporateGovernanceManualwhichisavailableonour The Boardperformanceassessmentprocessisfurtherdescribed chair totheBoardofDirectors. well astotheBoardchair, andareportwasmadebytheBoard report anddistributedbytheadvisordirectlytoeachdirector, as Responses werethenconsolidatedinanindividualdirector director andforwardeddirectlyconfi assessment questionnaireswhichwerecompletedbyeach as itwasdonein2004.In2007,theprocessinvolvedpeer peer assessmentwiththeassistanceofanindependentadvisor, Committee andtheBoardcarriedoutanindividualdirector At theendof2007,CorporateGovernanceandNominating PEER ASSESSMENT Nominating Committee. obtaining theapprovalofCorporateGovernanceand on whichadirectorofCNalreadysitswithoutpreviously shall notaccepttheinvitationtojoinanoutsideboard the Boardhasadoptedapolicypursuanttowhichdirector aviewtofurther strengthendirectors’independence, With COMMON DIRECTORSHIPS and isupdatedasmayberequired. reviewed regularlybytheBoardchairwithmembers, the directornominationprocess.Thiscompetencymatrixis representation andidentifi on knowledgeareas,typesofexpertiseandgeographical Nominating Committee,developsacompetencymatrixbased chair, inconsultationwiththeCorporateGovernanceand www.cn.ca/cngovernance. As partoftheprocess,Board Governance Manual,whichispostedonourwebsiteat Directors isguidedbytheprocessdescribedinourCorporate In proposingthelistofBoardnominees, COMPETENCY MATRIX at Boardandcommitteemeetings. members oftheBoardDirectors,includingtheirattendance an evaluationoftheireffectivenessandperformanceas and, fornomineeswhoarealreadydirectorsoftheCompany, (2) es any gaps to be addressed in esanygapstobeaddressedin cations under applicable cationsunderapplicable dentiallytotheadvisor. 33/8/08 5:41:10 PM / 8 / 0 8 23

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: 1 0 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 24 N _ 24 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 2 Form 58-101F1,sections4(a)and(b);Governance Policy, sections3.6and3.7. (2) Form 58-101F1,section1(d). (1) updates fromtimetotime. Board chair, alistofpotentialBoardcandidates,whichit Nominating Committeehasconstituted,togetherwiththe to becomedirectorsofCN,theCorporateGovernanceand Committee andtheBoardchairinrecommendingcandidates In ordertoassisttheCorporateGovernanceandNominating EVERGREEN LIST considering candidatestobecomedirectorsofCN: of CN,theBoardwillapplyfollowingguidelineswhen to makethecommitmentoftimenecessarybeadirector taking reasonablestepstoensuretheabilityofeachcandidate aviewto an individualcanserveisnecessarilylimited.With dedication oftime.Asaresult,thenumberboardsonwhich CN recognizesthatBoardmembershiprequiresasignifi NUMBER OFDIRECTORSHIPS a director. identify theotherreportingissuersofwhicheachnomineeis The biographiesonpages8to13ofthisInformationCircular for anotherterm. responsibilities, priortorecommendingdirectorsforre-election Board andavailabilitytodevotesuffi selection criteria,includingdirectors’pastcontributionstothe Committee andtheBoardchairwillapplynominee Committee. TheCorporateGovernanceandNominating continue toserveasamemberoftheBoardor to determinewhetheritisappropriateforsuchdirector that theyhavebeenaskedtojoinsoasallowtheBoard information astoallboardsofdirectorsthattheysitonor Directors areexpectedtoprovidetheBoardchairwith • • • 0 8 for candidatesthatarechiefexecutiveoffi membership on the board of the corporation at which membership ontheboardofcorporationatwhich directorships (excludingCN’sBoard)inadditionto individuals whoholdnomorethantwo(2)publiccorporation executives ofpubliccorporations,theBoardwillprefer (excluding CN’sBoard). hold nomorethanfi for othercandidates,theBoardwillpreferindividualswho which anindividualisemployed. addition tomembershipontheboardofcorporationat public corporationdirectorships(excludingCN’sBoard)in Board willpreferindividualswhoholdnomorethanfour(4) offi employees ofpubliccorporations(otherthanchiefexecutive non-public corporationsorotherentitiesandforfull-time for candidatesthathaveafull-timeemploymentwith an individualisemployed. _ E n cers or senior executives of such public corporations), the cersorseniorexecutivesofsuchpubliccorporations),the g _ M a r (1) 0 8 _ v 1 7 . i n d d ve (5) public corporation directorships ve(5)publiccorporationdirectorships 2 4 cienttimetofulfi cers or other senior cersorothersenior ll their lltheir cant cant structure and the nature and operation of its business, a structure andthenatureoperationofitsbusiness,a by theCompany’soffi operations. Ourorientationprogramsincludepresentations familiarize themselveswiththeCompany, itsorganizationand containing corporateandotherinformationrequiredto New directorsareprovidedwithaDirectors’handbook ORIENTATION Director OrientationandContinuingEducation may serveontheBoard. appropriate ornecessarytolimitthenumberoftermsadirector a Boardcommittee.TheofDirectorshasnotdeemedit of suchdirector’scontinuanceasamembertheBoardor Board willhavetheopportunitytodecideappropriateness any majorchangeintheirprincipaloccupationsothatthe addition, directorsareexpectedtoinformtheBoardchairof shareholders followinghisorherseventy-fi be nominatedforre-electionattheannualmeetingof unless otherwisedeterminedbytheBoard,initsdiscretion, retirement agefordirectorswherebyadirectorwouldnot, The Boardhasalsoadoptedapolicyonthemandatory RETIREMENT FROMTHEBOARD CN’s overalloperations. appreciation ofsuchstrategicprojects andtolearnmoreabout opportunity tointeractwithCN offi command center. DuringsucheventstheBoardhad of CN’smainyards,aswellourInformationTechnology Johnston Yard inMemphis.Theyhavealsovisitedcertain in PrinceGeorgeandatthePort ofPrinceRupertandCN’s signifi opportunities tovisitcertainsitesinwhichCNismaking Moreover, thedirectorshavebeenprovidedwithfi the materialsprovidedtoBoardinadvanceofmeetings. on corporategovernanceandothertopicsarealsoincludedin the qualityofsuchprograms.Educationalreadingmaterials educational programsandtoreportbacktheBoardon encouragedirectorstoattendseminarsandother We of educationalprogramsprovidedbyleadinginstitutions. chair. TheCompanyalsomakesavailable,atitscost,ahost and othermaterialasdeemedappropriatebytheBoard that mayberelevanttotheCompany’sbusinessstrategy successful boards,briefi to Boardeffectivenessandthebestpracticesassociatedwith to educationandinformationonanongoingbasispertaining The Boardchairarrangesformemberstohaveaccess CONTINUING EDUCATION as required. and accesstoappropriateinformationoroutsideresources the contributionindividualdirectorsareexpectedtomake the rolesofBoardanditscommittees,adiscussionon review withtheBoardchairofmethodsoperationand cant investments, such as the intermodal terminals cantinvestments,suchastheintermodalterminals cers on the Company’s organizational cersontheCompany’sorganizational ngs on factors or emerging trends ngsonfactorsoremergingtrends cers to gain a full cerstogainafull fthbirthday. In rst hand rsthand (2) 33/8/08 5:41:10 PM / 8 / 0 8 5 : 4

: 1 0 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 25 N _ P r o x y _ 2 0 charter ofourAuditCommittee. on ourwebsiteatwww.cn.ca/cngovernance withregardstothe Information Form availableonSEDARatwww.sedar.com and hereinafter, andwereferyoutoSchedule“A” ofourAnnual regarding compositionandresponsibilities,assummarized annual informationform.We complywiththerequirements committees, aswellallfeespaidtoexternalauditorsintheir education andexperienceofthememberstheiraudit and discloseinformationwithrespecttothecomposition, requires issuerstoincludethecharterofitsAuditCommittee (“ 5 MI52-110,section2.3,subsection 2. (5) MI52-110,section2.3, subsection7. (4) MI52-110,section2.3, subsections(5)and(6). (3) MI52-110, section3.1,subsections(1),(2)and(3).TheNYSEStandardstheapplicable rulesoftheSECrequirethati (2) MI52-110,section2.3,subsection1. (1) requiring Boardapproval. form andotherreportsordocuments,fi fi The AuditCommitteeisalsoresponsibleforreviewingthe adequacy ofthoseprocedures. the Company’sfi disclosure offi the proceduresinplaceforreviewofCompany’s The mandatealsoprovidesthatthecommitteeshouldreview press releases,priortotheirrelease,fi including theCompany’sMD&Adisclosureandearnings statements oftheCompanyandaccompanyinginformation, and theexternalauditors,annualquarterlyfi committee isresponsibleforreviewing,withmanagement The mandateoftheAuditCommitteeprovidesthat Overseeing FinancialReporting They includethefollowing: • • • • four categories: The Committee’sresponsibilitiescanbedividedin MANDATE OFTHEAUDIT COMMITTEE person oftheCompany, oranysubsidiaryoftheCompany. Company oranysubsidiaryoftheCompany, norisanaffi a Boardcommittee,directlyorindirectly, anyfeefromthe other thaninhisorhercapacityasadirectormemberof and RobertPace. NomemberoftheAuditCommitteereceives, CharlesBaillie,HughJ.Bolton,RobertH.Lee R. Armellino,A. directors, namely, DenisLosier, chairoftheCommittee,Michael The AuditCommitteeiscomposedofsix“independent” COMPOSITION OFTHEAUDIT COMMITTEE Multilateral Instrument52-110– Audit CommitteeDisclosure 0 nancial information contained in the annual information nancialinformationcontainedintheannual 8 MI 52-110 monitoring externalauditors. monitoring internalauditors; monitoring riskmanagementandinternalcontrols; overseeing fi _ E Committee areindependentpursuanttosuch defi or othercompensatoryfeefromtheCompany oranysubsidiaryoftheCompanynorbeanaffi Committee shouldnot,otherthaninhisorher capacityasadirectorormemberofboardcommitteeandinotherlimitedcircu n g _ M a r 0 8 _ ”) of the Canadian securities regulatory authorities ”) oftheCanadiansecuritiesregulatoryauthorities v nancialreporting; nancial information extracted or derived from nancialinformationextractedorderivedfrom 1 7 . nancial statements and periodically assess the nancialstatementsandperiodicallyassessthe i n d d 2 5 (3) (1) Audit Committees Audit ling and distribution. linganddistribution. nition. nancial or otherwise, nancialorotherwise, nancial nancial liated liated (2) liatedpersonoftheCompanyoranysubsidiary oftheCompany. AllmembersoftheAudit regarding accounting, internal accounting controls or auditing regarding accounting,internalaccountingcontrolsorauditing retention andtreatmentofcomplaintsreceivedbytheCompany that thecommitteemustestablishproceduresforreceipt, In addition,themandateofAuditCommitteeprovides regulatory requirements. with theoversightofCN’scomplianceapplicablelegaland The AuditCommitteeisalsoresponsibleforassistingtheBoard and riskmanagementpolicies. provides thatthecommitteemustreviewCN’sriskassessment internal control.ThemandateoftheAuditCommitteealso of CN’sdisclosurecontrolsandproceduressystems management’s reportassessingtheadequacyandeffectiveness The AuditCommitteeisresponsibleforreceivingperiodically Monitoring RiskManagementandInternalControls recommendations containedtherein. Letter issuedbytheexternalauditorsandanysignifi response and/oractionplanrelatedtoanyManagement encountered inperformingtheaudit,andmanagement’s the resultsofexternalaudit,anysignifi Furthermore, theAuditCommitteeisinchargeofreviewing for moredetailsontheseprocedures. Governance sectionofourwebsiteatwww.cn.ca/cn.governance adopted suchprocedures.PleaserefertotheCorporate matters, whileinsuringconfi matters oremployeeconcernsregardingaccountingauditing non-audit servicesbytheexternalauditors. and pre-approvingoverseeingthedisclosureofpermitted services theexternalauditorsareprohibitedfromproviding, provided bytheexternalauditors,determiningwhichnon-audit overseeing thedisclosureofallaudit,reviewandattestservices The AuditCommitteeisalsoinchargeofapprovingand performance andindependence. and remuneratingthem,monitoringtheirqualifi if appropriate,theremovalofexternalauditors,evaluating committee isresponsibleforrecommendingtheretentionand, The mandateoftheAuditCommitteestatesthat Monitoring ExternalAuditors Audit Committee. and ensuresthattheinternalauditorsareaccountableto its members.Itfurtherannuallyreviewstheinternalauditplan its responsibilities,staffi regularly monitoringtheinternalauditfunction’sperformance, internal auditorreportsdirectlytotheAuditCommittee,andfor The AuditCommitteeisresponsibleforensuringthatthechief Monitoring InternalAuditors n order to be considered independent, a member of the Audit n ordertobeconsideredindependent,amember oftheAudit mstances, accept directly or indirectly any consulting, advisory mstances, acceptdirectlyorindirectlyanyconsulting, advisory ng, budget and the compensation of ng,budgetandthecompensationof dentialityandanonymity. CNhas (5) (4) cant problems cantproblems cant cant cations, cations, 33/8/08 5:41:11 PM / 8 / 0 8 25

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: 1 1 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 26 N _ 26 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 3 MI52-110,section4.1. (3) MI52-110,section2.3,subsection 8. (2) MI52-110,section2.3, subsection3. (1) The AuditCommitteemetsixtimesin2007andheld frequently asrequired. Committee, withoutmanagement,twiceayear, andmore and externalauditorsmustmeetseparatelywiththeAudit to discussandreviewspecifi communication channelswiththeinternalandexternalauditors by it.Pursuantitscharter, theAuditCommitteealsohasdirect for paymentoftheexternalauditorsandanyadvisorsretained committee makesarrangementsfortheappropriatefunding and retentionterms,subjecttoadvisingtheBoardchair. The carry outitsresponsibilities,includingfi the AuditCommitteemayretainindependentadvisorstohelpit Furthermore, themandateofAuditCommitteestatesthat external auditors. employees orformeroftheCompany’sfi committee isresponsibleforreviewinghiringpolicies The mandateoftheAuditCommitteealsoprovidesthat their independence. relationships theexternalauditorshavewithCNandconfi formal writtenstatementfromtheexternalauditorsstatingall The AuditCommitteealsoreviewsatleastannually, the its mandate. its mandate. reviewed bythecommitteeduringyear, incompliancewith sessions. Thefollowingtableoutlinesthemajorsubjectareas management andtheresolutionthereof). and theexternalauditors(includingadisagreement,ifany, with any materialwrittencommunicationsbetweentheCompany acceptability oftheCompany’saccountingprinciples,including auditors anddiscussingwiththemthequalitynotjust The AuditCommitteeisresponsibleforoverseeingtheexternal Committee andtotheBoard. that theexternalauditorsareaccountabletoAudit In addition,theAuditCommitteeisresponsibleforensuring 0 8 _ E n g _ M a r 0 8 _ v 1 7 . i (2) n d d (3) 2 6 c issues as appropriate. The internal cissuesasappropriate.Theinternal xing such advisors’ fees xingsuchadvisors’fees (1) rm of rmof in camera in rming rming B. OVERSEEINGFINANCIALREPORTING A. Main CommitteeActivities–2007 . MONITORINGEXTERNALAUDITORS D. MONITORINGINTERNALAUDITORS C. ------INTERNAL CONTROLS MONITORING RISKMANAGEMENTAND management policies, including the Company’s insurance management policies,includingtheCompany’sinsurance Reviewed theCompany’sriskassessmentand principles methods of theeffectalternativegenerallyacceptedaccounting preparation ofthefi Reviewed judgmentsmadeinconnectionwiththe changes thereto assumptions andreportingpractices,anyproposed Company’s accountingprinciplesandpolicies,underlying the quality, appropriatenessanddisclosureofthe Reviewed, withtheexternalauditorsandmanagement, consolidated fi Reviewed theexternalauditors’quarterlyreporton fi Reviewed thecomplianceofmanagementcertifi Board approval and fi Reviewed andapprovedtheannualquarterlyresults Company’s fi hiring policiesforemployeesorformerofthe auditors confi Reviewed theformalstatementfromexternal the Company permitted non-auditservicesbytheexternalauditorsto auditors areprohibitedfromproviding,andpre-approved Determined whichnon-auditservicestheexternal services providedbytheexternalauditors Approved thedisclosureofallaudit,reviewandattest performance andindependenceoftheexternalauditors Evaluated, remuneratedandmonitoredthequalifi of engagementtheCompany’sexternalauditors Recommended totheBoardappointmentandterms Reviewed theresultsofexternalaudit its members responsibilities, staffi Monitored theinternalauditfunction’sperformance,its Reviewed theinternalauditplan and proceduressystemsofinternalcontrol and effectivenessoftheCompany’sdisclosurecontrols Received management’sreportassessingtheadequacy requirements compliance withapplicablelegalandregulatory Assisted theBoardwithoversightofCompany’s coverage anddelegationoffi nancialreportswithapplicablelegislation nancial information contained in all reports requiring nancialinformationcontainedinallreportsrequiring rmofexternalauditors rming their independence and reviewed rmingtheirindependenceandreviewed nancialstatementsoftheCompany nancial statements, including analyses nancialstatements,includinganalyses ng, budget and the compensation of ng,budgetandthecompensationof nancialauthority cation of cationof cations, cations, 33/8/08 5:41:11 PM / 8 / 0 8 5 : 4

: 1 1 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 27 N _ P r o x y _ 2 0 reporting, in accordance with the standards of the PCAOB. reporting, inaccordancewiththestandardsofPCAOB. audit oftheeffectivenessinternalcontroloverfi Public Accountants Statement on Auditing Standards No. 61 Public AccountantsStatementonAuditingStandardsNo.61 required tobediscussedbytheAmericanInstituteofCertifi The AuditCommitteehasdiscussedwithKPMGLLPthematters conformity withU.S.generallyacceptedaccountingprinciples. fi whether theconsolidatedfi opinionsaddressing These auditsserveasabasisforKPMGLLP’s 1 MI52-110,section3.1,subsection 4. (1) Responsibility Oversight Having Those With (Communications Committees) Audit With (Communication (“ standards ofthePublicCompanyAccountingOversightBoard Canadian generallyacceptedauditingstandardsandthe of ourconsolidatedfi KPMG LLP, areresponsibleforperforminganindependentaudit respect ofthe2007fi controls andproceduressystemsofinternalcontrolin assessing theadequacyandeffectivenessofourdisclosure The AuditCommitteereceivedperiodicallymanagement’sreport OVER FINANCIALREPORTING REPORTREGARDINGINTERNALCONTROL AUDIT COMMITTEE for the Financial Reporting Process) Reporting Financial the for fi report onForm 40-FfortheyearendedDecember 31,2007 securities regulatorsandincludedintheCompany’sannual consolidated fi recommended totheBoardthatCompany’saudited Based onthisreviewandthesediscussions,theCommittee Rule 3600TofthePCAOBwasalsoremittedtoCommittee. adopted bytheSECpursuanttoSarbanes-OxleyAct,and and regulationsthereunder, includingtheindependencerules within themeaningofU.S.federalsecuritieslawsandrules independent publicaccountantswithrespecttotheCompany Ethics ofthe“OrdredescomptablesagréésduQuébec”andare independent withinthemeaningofrulesCode Company includingawrittenconfi describing allrelationshipsbetweenKPMGLLPandthe independence fromtheCompany. Aformalwrittenstatement and theCommitteehasdiscussedwithKPMGLLPthatfi Institute of Chartered Accountants Handbook Section 5751 Institute ofCharteredAccountantsHandbookSection5751 No. 1 on aninterimbasisIndependenceStandardsBoardStandard the letterrequiredbyRule3600TofPCAOB,whichadopts KPMG LLPprovidedtheCommitteewithwrittendisclosuresand fi the assessmentofeffectivenessourinternalcontrolover to theconductofauditourfi 0 nancialposition,resultsofoperations,andcashfl ledwiththeSEC. nancialreportingundersection404oftheSarbanes-OxleyAct. 8 PCAOB _ E n g _ (Independence Discussions with Audit Committees) Audit with Discussions (Independence M a r ”) in the United States (U.S.), and an independent ”) intheUnitedStates(U.S.),andanindependent 0 8 _ v 1 nancialstatementsbefi 7 . i n d d nancial statements in accordance with nancialstatementsinaccordancewith scalyear. TheCompany’sexternalauditors, 2 7 nancial statements fairly present our nancialstatementsfairlypresentour rmation that KPMG LLP are rmationthatKPMGLLPare including matters relating includingmattersrelating nancial statements and nancialstatementsand led with Canadian ledwithCanadian and Canadian andCanadian nancial nancial ows in owsin rm’s rm’s , ed ed complexity of accounting issues that are generally comparable complexity ofaccountingissuesthataregenerallycomparable fi (c) experiencepreparing,auditing,analyzingorevaluating with theaccountingforestimates,accrualsandreserves; general applicationofsuchaccountingprinciplesinconnection principles andfi has: (a)anunderstandingofgenerallyacceptedaccounting expert”, theBoardconsidersifdirectorisapersonwho In determiningifadirectorisan“auditcommitteefi and experienceofeachcommitteemember. Board hasmadesuchdeterminationbasedontheeducation committee fi the committeemeetallcriteriatobedesignatedas“audit regulations as suchtermsaredefi all membersoftheAuditCommitteeare“fi experience. AsrequiredinthecharterofAuditCommittee, Audit Committeerefl The BoardofDirectorsbelievesthatthecomposition MEMBERS COMMITTEE EDUCATION ANDRELEVANT EXPERIENCEOFTHEAUDIT 25 yearsofexperienceasasecuritiesanalyst. of Business(NewYork University),NewYork andhasmorethan Mr. ArmellinoholdsanMBAinfi in ChargeofResearch.HeisaCharteredFinancialAnalyst. Co., includingthoseofseniortransportationanalystandPartner to 1991,hehadheldvariouspositionsatGoldman,Sachs& Executive Offi LP. From 1991to1994,Mr. Armellinowaschair andChief Mr. ArmellinoisaRetiredPartner, TheGoldmanSachsGroup, Western Ontario. Mr. LosierholdsaMastersofEconomicsfromtheUniversity Partnership, PlazacorpRetailPropertiesLtd.andNAV CANADA. 1994. HeisadirectorofEnbridgeGasNewBrunswickLimited government oftheProvinceNewBrunswick,from1989to Life. Mr. Losierheldvariouscabinetlevelpositionswiththe Mr. LosierisPresidentandChiefExecutiveOffi the committee: to theperformanceofhisresponsibilitiesasamember of eachmembertheAuditCommitteethatisrelevant The followingisadescriptionoftheeducationandexperience audit committeefunctions. procedures forfi in suchactivities;(d)anunderstandingofinternalcontrolsand or experienceactivelysupervisingonemorepersonsengaged expected toberaisedbytheCompany’sfi to thebreadthandcomplexityofissuesthatcanreasonablybe nancial statements that present a breadth and level of nancialstatementsthatpresentabreadthandlevelof (1) nancial expert” under the rules of the SEC. The nancialexpert”undertherulesofSEC.The and the NYSE Standards, and several members of andtheNYSEStandards,severalmembersof cer of Goldman Sachs Asset Management. Prior cerofGoldmanSachsAssetManagement.Prior nancial statements; (b) the ability to assess the nancialstatements;(b)theabilitytoassess nancial reporting; and (e) an understanding of nancialreporting;and(e)anunderstandingof ectsahighleveloffi ned under Canadian securities laws and nedunderCanadiansecuritieslawsand nance from the Stern School nancefromtheSternSchool nancial literacy and nancialliteracyand nancial statements, nancialstatements, nancially literate”, nanciallyliterate”, cer, Assumption nancial nancial 33/8/08 5:41:12 PM / 8 / 0 8 27

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: 1 2 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 28 N _ 28 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 1 MI52-110,section2.3, subsection4. (1) Fees roundedto the nearestthousand. (1) Company byKPMGLLPwerethefollowing: for audit,auditrelated,taxandotherservicesprovidedtothe For theyearsendedDecember31,2007and2006, thefees KPMG LLPhasservedastheCompany’sauditorssince1992. AUDITORS FEES 20 yearsofbusinessexperience. Dalhousie UniversityinHalifax,NovaScotia,andhasmorethan Limited. Mr. Pace holdsanMBAandLL.BLawDegreefrom Incorporated, HydroOneandisboardchairofOverlandRealty of MaritimeBroadcastingSystemsLimited,HighLinerFoods Group. Mr. Pace isalsoamemberoftheboarddirectors Mr. Pace isthePresidentandChiefExecutiveOffi commerce degreefromtheUniversityofBritishColumbia. PropertiesTrust.Chairman ofUBC Mr. Leeholdsabachelorof the auditcommitteeofWall FinancialCorporationandheis management businesses.Heisadirectorandmemberof includes realestateinvestment,fi Mr. LeeisChairmanoftheProsperoGroupCompanieswhich effectively serveontheAuditCommitteeofCompany. that suchserviceinnowayimpairedMr. Bolton’sabilityto public companiesincludingCN.TheBoardhasdetermined Alberta. Mr. Boltonisamemberoffourauditcommittees undergraduate degreeofeconomicsfromtheUniversity the AlbertaInstituteofCharteredAccountants.Heholdsan and auditorwiththatfi of Coopers&Lybrand for34yearsandapublicaccountant (now PricewaterhouseCoopers).Mr. Boltonwasapartner and ChiefExecutivePartner of Coopers&Lybrand Canada Airlines Ltd.From 1992to1998,Mr. Boltonwaschair director andmemberoftheauditcommitteeWestJet Limited andofTheToronto-Dominion Bank.Heisalsoa a directorandchairoftheauditcommitteeTeck Cominco Utilities Inc.andtheChairmanofMatrikonMr. Boltonis Mr. BoltonisthechairofboarddirectorsEPCOR Business School. George Weston Limited.Mr. BaillieholdsanMBAfromHarvard He isalsoadirectorandchairoftheauditcommittee December 2002.Mr. BaillieisadirectorofTelus Corporation. in April2003,andasChiefExecutiveOffi Mr. BaillieretiredaschairofTheToronto-Dominion Bank 0 te – 479,000 TOTAL FEES – Other Tax 603,000 Audit-Related Audit FEES 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d rm for 40 years. He is a fellow of rmfor40years.Heisafellowof 2 8 nancing, sales and property nancing,salesandproperty ,4,0 4,418,000 5,144,000 930,000 3,009,000 1,371,000 3,170,000 cer of the bank in cerofthebankin (CAD$) 2007 1 (1) (1) cer, ThePace (CAD$) 2006 statements for the Company’s pension plans, and for attestation statements fortheCompany’spensionplans,andattestation rendered bytheauditorsinrelationtoauditoffi Audit-related feeswereincurredforprofessionalservices AUDIT-RELATED FEES fi the auditrelatingtoCompany’sinternalcontrolover annual fi auditors inrelationtotheauditofCompany’sconsolidated Consist offeesincurredforprofessionalservicesrenderedbythe AUDIT FEES described below. The natureoftheservicesundereachcategoryis pre-approved. ended December31,2007and2006thatwererequiredtobe audit-related andnon-auditrelatedservicesfortheyears all theservicesperformedbyourindependentauditorsfor independent auditor. TheAuditCommitteepre-approved fees andtermsallnon-auditengagementswiththe approves allauditandaudit-relatedservices,engagement Pursuant tothetermsofitscharter, theAuditCommittee pre-approved bytheAuditCommittee. listed above,butonlyiftheserviceshavespecifi including taxservices,otherthantheprohibitedservices Company mayengageKPMGLLPtoprovidenon-auditservices, services unrelatedtotheaudit.Pursuantsuchresolutions, or investmentbankingservicesandlegalexpert human resourcesfunctions,brokerordealer, investmentadviser, internal auditoutsourcingservices,managementfunctionsor opinions, orcontributionin-kindreports,actuarialservices, and implementation,appraisalorvaluationservices,fairness or fi bookkeeping orotherservicesrelatedtotheaccountingrecords audit servicestotheCompanyanditssubsidiaries,including the CompanyfromengagingKPMGLLPtoprovidecertainnon- and theBoardofDirectorshaveadoptedresolutionsprohibiting auditors areprohibitedfromproviding.CN’sAuditCommittee Committee determineswhichnon-auditservicestheexternal The mandateoftheAuditCommitteeprovidesthat Nil OTHER FEES implications foremployeesandtaxcompliance. Consist offeesincurredforconsultationsoncross-bordertax TAX FEES comfort letters,inconnectionwiththeissuanceofsecurities. regulation andduediligenceotherservices,including services inconnectionwithreportsrequiredbystatuteor nancialreporting. nancialstatements,fi nancial statements and those of its subsidiaries, and nancialstatementsandthoseofitssubsidiaries, nancial information systems design nancialinformationsystemsdesign (1) cally been callybeen nancial nancial 33/8/08 5:41:12 PM / 8 / 0 8 5 : 4

: 1 2 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 29 N _ P r o x y _ 2 0 the Committeeduringyear. The followingtableoutlinesthemajorsubjectareasreviewedby times in2007andheld The HumanResourcesandCompensationCommitteemetﬁ Corporate GovernanceManualatwww.cn.ca/cngovernance. The Committee’sfullcharterisavailableaspartofCN’s • • • • The Committee’sresponsibilitiesinclude: Compensation Committee Mandate oftheHumanResourcesand Edith E.Holiday, McLean. EdwardC.LumleyandDavidG.A. Hugh J.Bolton,GordonD.Gifﬁ Robert Pace, CharlesBaillie, ChairoftheCommittee, A. is comprisedofeight“independent”directors,namely The HumanResourcesandCompensationCommittee Compensation Committee Composition oftheHumanResourcesand Compensation Committee by theHumanResourcesand Report onExecutiveCompensation COMPENSATION STATEMENT OFEXECUTIVE 0 8 business objectives. and retainthequalityofpersonnelrequiredtomeetits are inplacesothattheCompanycanattract,motivate other things,thatappropriatehumanresourcessystems reviewing humanresources’practicesbyensuring,amongst management’s compensation; recommending totheBoardofDirectorsexecutive and successionplanning; reviewing executivemanagement’sperformanceassessment the successionplanningforpositionofPresidentandCEO; ensuring thatappropriatemechanismsareinplaceregarding _ E n g _ M a r 0 8 _ v 1 7 . i n d d 2 in camera in 9 n,JamesK.Gray, sessions during each meeting. sessionsduringeachmeeting. ve ve Main CommitteeActivities–2007 . COMPENSATION C. EXECUTIVEPERFORMANCE B. CEOPERFORMANCE A. . OTHERS D. strategy inathoughtfulandeffectiveway. development programsaretightlyintegratedwiththebusiness development oftheCompany’stalentpool.Theleadership initiatives provideasolidplatformfortheassessmentand leadership developmentprograms.Theseprogramsand developing currentandfutureleadersthroughtheCompany’s In 2007,theCommitteereviewedprogressmadein Succession PlanningandLeadershipDevelopment ------incentive grantstoexecutives Reviewed andrecommendedforapprovallong-term payout for2007andapprovedcurrentyeargoals Reviewed andrecommendedforapprovalnobonus compensation adjustments Reviewed andrecommendedapprovalofannualexecutive Reviewed paypositionrelativetomarket of newexecutives Recommended appointmentandapprovedcompensation development programs Reviewed progressonCN’sleadership development plans Reviewed successionplanandindividual Reviewed andapprovedperformanceassessments CEO compensation Reviewed andrecommendedapprovalof Assessed CEOperformance Approved CEOobjectives management informationcircular Approved theCommittee’sreportforinclusionin compensation disclosurepractices Reviewed theCommittee’scorporategovernanceand Monitored labournegotiations design, valuation,amendmentsandmaterialrisks Reviewed andrecommendedforapprovalpensionplans Reviewed executivestockownership 33/8/08 5:41:12 PM / 8 / 0 8 29

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: 1 2 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 30 N _ 30 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 for positionswithequivalentresponsibilitiesandscope. at thefi Company’s executives,whenaggressivelysetgoalsareachieved, Board ofDirectorsseektopositiontotalcompensationforthe the HumanResourcesandCompensationCommittee outstanding leadershippositionwithintherailroadindustry, theCompany’s Resources andCompensationCommittee.With consultants retainedseparatelybytheCompanyandHuman This compensationinformationisprovidedbyexternal Norfolk SouthernCorporationandCanadianPacifi Burlington NorthernSantaFe Corporation, Corporation,CSX the mostseniorexecutivesandincludesUnionPacifi executive talent.ThecomparatorgroupisClass1Railroadsfor comparable insizeandwithwhomtheCompanycompetesfor compensation practicesofNorthAmericancompaniesthatare In determiningcompensation,theCompanyconsiders being appropriateforthelevelandnatureofpositions. by theHumanResourcesandCompensationCommitteeas groups, whichhavebeencarefullyreviewedandendorsed Executive compensationisbenchmarkedusingcomparator is weightedtowardspay-for-performance components. encourages broadshareownership.Thecompensationstrategy short- andlong-termbusinessperformance,iscompetitive The Companyiscommittedtoacompensationpolicythatdrives and competitiveenvironment. motivate outstandingexecutivetalentinanincreasinglyvisible shareholder value.Thisunderliestheneedtoattract,retainand fi compensation policyhasbeentotieremunerationthe The pivotalandcontinuingthemeoftheCompany’s The CompensationPolicy oftheCompany practice levels. leadership developmentapproachiseffectiveandachievesbest organization. TheCommitteeissatisfi and developmentofpeopleisfurtherembeddedinthe continues torefi leadership developmentmomentum.Accordingly, theCompany The Companyiscommittedtotakefulladvantageofits several unionleadershaveparticipatedinthesesessions. business andoperatingprinciples.Over1,200managers for improvedperformanceandalignmentoftheCompany’s where heshareshispassion,commitmentandexpectations initiatives, Mr. Harrisonpersonallyruns“HunterCamp”sessions the Company’sleadershipdevelopmentstrategy. Amongstother modeling, makessignifi The PresidentandCEO, throughhisdirectinterventionsandrole 0 nancial performance of the Company and the enhancement of nancialperformanceoftheCompanyandenhancement 8 _ E n g _ M rst quartile (75th percentile) of that paid by competitors, rstquartile(75thpercentile)ofthatpaidbycompetitors, a r 0 8 _ v 1 7 ne its approach and ensure that the assessment neitsapproachandensurethattheassessment . i n d d cant commitments to successfully drive cantcommitmentstosuccessfullydrive 3 0 ed that the Company’s edthattheCompany’s cRailway. c Railroad, cRailroad, Under theAnnualIncentiveBonusPlan(“ Annual IncentiveBonusPlan salary ismadeinU.S.currencywheredeemedappropriate. (50th percentile)comparatorgrouppractice.Payment ofbase forth aboveandarebenchmarkedannuallyagainstmedian Base salariesareestablishedaccordingtothecriteriaset Base Salary account leadershipabilities,retentionriskandsuccessionplans. based oncorporateandindividualperformance,takinginto and desiredmarketpositioningmakesrecommendations Compensation Committeeannuallyreviewseachcomponent incentive andlong-termincentive.TheHumanResources components: basesalary, annualincentive,mid-term Compensation forexecutivesiscomprisedoffourmain 1. For 2007,theAIBPiscomprisedoffollowingcomponents: executives and,140%fortheCEO. a percentageofsalary, rangingbetween50%and70%for planned resultstobeachieved(“ the achievement of a balanced set of goals that contribute the achievementofabalancedsetgoalsthatcontribute Financial performance:70%ofthebonuswaslinkedto for comparativepurposes. page provides2007resultsandobjectives,2006 resulting innobonuspayout.Thetableonthefollowing approved thecorporateperformanceat“doesnotmeet”, results achieved,theCommitteeassessedandBoard its industry-leading position.Basedonthetargetsand Company didnotmeettargetsthatweresettorefl despite havingachievedimpressivefi range from0%to200%forexecutives.For theyear2007, an equalweight.Thecorporateperformancefactorcan on investedcapital(ROIC),witheachmeasurecarrying diluted earningspershare,freecashfl against establishedtargetsforrevenues,operatingincome, the BoardofDirectorsassessedCompany’sperformance targets setbytheBoardofDirectorsforyear. In2007, profi to theorganization’slong-termfi tability. Corporateperformanceismeasuredagainst Target Payouts nancial growth and nancialgrowthand nancial results, the nancialresults,the ow and return owandreturn AIBP ”), payouts for ”), payoutsfor ”) are set as ”) aresetas ect ect 33/8/08 5:41:13 PM / 8 / 0 8 5 : 4

: 1 3 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 31 N _ P r o x y _ 2 0 3. 2. stock priceofCAD$36.225and US$29.185. These awardsweremadeonJanuary28,2005attheclosing based awardofshareunitspayableincashJanuary2009. management employeestoreceiveaone-timeperformance- December 31,2008,entitlingdesignatedexecutivesandsenior the Vision2008ShareUnitsPlan,withafour-year termto superior performance,theBoardofDirectorsapprovedin2005 To furtherstrengthenthelinkbetweencompensation and Vision 2008ShareUnitsPlan team, includingthePresidentandCEOallotherexecutives. objectives, therewasnobonuspayoutforthemanagement In 2007,astheCompanydidnotachieveplannedcorporate Seepage87ofthe2007Annualreportforadiscussionandreconciliationthese (4) 2006actualrevenueswereadjustedtobeconsistentwiththenewpresentationof (3) 2007objectiveswereadjustedtorefl (2) (1) CORPORATE FINANCIALPERFORMANCE–2007 0 euno netdCptl1.%1.%14.7% 15.0% 14.0% Return onInvestedCapital Free CashFlow eeus7,897 Diluted EarningsperShare Operating Income Revenues IN MILLIONSEXCEPT PERSHAREDATA Annual Salary Annual Salary 8 _ E in EnglishWelsh andScottishRailwayofCAD$114million. sales oftheCentralStationComplexCAD$351millionandCompany’sinvestment non-GAAP measures.The2007Free CashFlowfi income taxrecoveryofCAD$277millionorCAD$0.51perdilutedshare. non-rail transportationservices.2006resultswerealsoadjustedtoexcludeadeferred presentation ofnon-railtransportationservices. budget assumptions.Therevenuesobjectivewasadjustedtobeconsistentwiththenew investment inEnglishWelsh andScottishRailway. diluted sharerelatedtothesalesofCentralStationComplexandCompany’s or CAD$0.64perdilutedshareandtheafter-tax gainofCAD$105millionorCAD$0.21per 2007 resultswereadjustedtoexcludeanetdeferredincometaxrecoveryofCAD$328million following formula: factors and,iscalculatedinaccordancewiththe December 31,thecorporateandindividualperformance The resultingbonuspayoutisbasedonthesalary declared underthecorporatecomponent. individual componentisconditionaluponapayoutbeing from 0%to200%forexecutives.Anypayoutunderthe and leadership.Theindividualperformancefactorcanrange to fi the achievementofpersonalbusiness-orientedgoalslinked Individual performance:30%ofthebonuswasbasedon n g _ nancialandoperatingresults,safety, customerservice M a r 0 8 _ v (4) 1 7 . ؋ ؋ i n d d Target Payout Target Payout (4) 3 1 ect an actual exchange rate of 0.935 vs. 0.90 as per ectanactualexchangerateof0.935vs.0.90asper + RESULTS ,7 ,2 3,030 3,124 2,876 (CAD$) .036 3.40 3.64 3.40 2007 6 0 1,343 800 363 ؋ ؋ gure excludes the net proceeds from the gureexcludesthenetproceedsfrom 1 2 (3) (2) (1) 30% 70% OBJECTIVES ,4 7,929 8,047 (CAD$) ؋ ؋ 2007 Performance Performance Corporate Corporate Individual Individual Factor Factor RESULTS (CAD$) 2006 2004 didnotcarryanyacceleration provision. was madeeffectiveDecember31, 2005.TheRSUsgrantedafter accelerated atsuchtime.Thesetargetshavingbeenmet,payout ending onorafterDecember31,2005,payoutwouldbe 20-day averagesharepricewereattainedduringanyperiod 2004 carriedaprovisionthat,ifspecifi January 31,followingtheplanperiod.TheRSUsgrantedin RSU payoutisbasedona20-dayaverageshareprice during thelastthreemonthsofperiod.Thevalue capital overthePlanPeriod andtotheCompany’sshareprice upon theattainmentoftargetsrelatingtoreturnoninvested for payoutincashafterthreeyears(“ The RSUsgrantedbytheCompanyaregenerallyscheduled Incentive Plan. awarded tooneindividualundertheManagementLong-Term 20% limitationonthenumberofstockoptionsthatcanbe smaller relativeweightinstockoptionvalue,becauseofthe award fortheCEOcombinesstockoptionsandRSUswitha employees, exceptfortheCEO. Thelong-termincentive equal value,todesignatedexecutiveandseniormanagement Long-Term Incentive employment untiltheendofplanperiod. encourages retentionaspayoutisconditionaluponcontinued capital of10%overthetermplan.Finally, theplan December 31,2008andaminimumaveragereturnoninvested Company meetingaminimum20-dayaveragesharepriceon the four-year term.Theawardpayoutisalsoconditionalonthe correspond tothesharepricehavingeffectivelydoubledover between thosestatedobjectives.Afullpayoutscenariowould the correspondingstockexchanges.Prorationwillbeappliedin price reachesatleastCAD$72.50andUS$59.50on award ofshareunitsbecomespayableonlyiftheaveragestock US$41.00 ontheNewYork StockExchange(NYSE).Thefull reach CAD$50.00ontheToronto StockExchange(TSX)and be madeundertheplanifaveragestockpricedoesnot effect oftheexchangerateonplanpayout.Nopayoutwill half ontheU.S.stockpriceperformance,toneutralize based ontheCanadianstockpriceperformanceandother the lastsixmonthsofplanwithhalfvestingbeing determined usingthehighest20-dayaveragestockpriceover Under theawardagreement,performancevestingis options andrestrictedshareunits(“ Board ofDirectorshaselectedtograntacombinationstock of differentlong-termincentivevehicles.Since2005,the retention risk,aswellthetaximpactanddilution ownership positionagainststockoptionholdings,executive value creationandshareholderwealthprotection,executive under considerationincludethebalancebetweenlong-term assess theCompany’slong-termincentivestrategy. Factors The BoardofDirectorsconsidersanumberfactorsto RSUs Plan Period ed targets related to the edtargetsrelatedtothe ”) of approximately ”) ofapproximately ”) and vest ”) andvest 33/8/08 5:41:13 PM / 8 / 0 8 31

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: 1 3 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 32 N _ 32 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 following requirements: following requirements: 175 executivesandseniormanagement employeeswiththe guidelines wasbroadenedtoinclude atotalofapproximately over afi shares ofCN,setasapercentagesalary, tobeachieved that requireaminimumlevelofownershipcommon through theintroductionofshareownershipguidelines Stock ownershipbyexecutiveshasbeenfurtherencouraged Stock Ownership special circumstances. discretion islefttotheBoardofDirectorstakeintoaccount participant. Theseprovisionswillonlyaffectfuturegrantsand substitute totheoriginaloptionsorunitsisgranted state thataccelerationofvestingwouldnotoccurifaproper cause orresignsforgoodreasons.Theseprovisionsfurther of theCompanyunlessparticipantisterminatedwithout in thoseplanswouldnotaccelerateuponachangeofcontrol provisions, thevestingofoptionsorunitsheldbyaparticipant to includea“doubletriggerprovision”.Pursuantsuch the The ManagementLong-Term IncentivePlan,theRSUPlanand Change ofControlProvision the commonsharesonTSXorNYSEgrantdate. The exercisepriceofstockoptionsissetattheclosing following thepublicationofCompany’sfi opened fortradingundertheCompany’sInsiderTrading Policy, the BoardofDirectors.Theireffectivegrantdateisfi employees isreviewedandapprovedattheJanuarymeetingof The annualgrantofRSUsandstockoptionstoeligible recipient’s salary. a termof10years.Grantsweremadeinthecurrency which vestoverfouryears,25%ateachanniversary, andhave are met.Since2005,grantshavebeenofconventionaloptions, which vestingmaybeacceleratedifcertainfi fi performance optionswhichvestupontheattainmentof conventional options,whichvestoveraperiodoftime, Stock optionsgrantedbytheCompanyinpastinclude The 2007RSUawardissubjecttothefollowingvestingtable: US$45.06 forthethreemonthsendingonDecember31,2009. upon anaveragesharepriceofatleastCAD$52.08or term valuegenerationtoitsshareholders.Payout isconditional objective, whichtheCompanyviewsasakeymeasureoflong- The 2007RSUawardissubjecttomeetingaspecifi 0 nancial targets, and performance-accelerated options for nancialtargets,andperformance-acceleratedoptionsfor 45 100% 50% 150% 0% 16.5% andabove 14.5% 13.5% <13.5% (3-YEAR AVERAGE) RETURN ONINVESTEDCAPITAL 8 _ E Vision 2008 Plan were amended effective March 4, 2008 Vision 2008PlanwereamendedeffectiveMarch4, n g _ M ve-year period. In 2002, the application of the ve-yearperiod.In2002,theapplication ofthe a r 0 8 _ v 1 7 . i n d d 3 2 VESTING FACTOR PERFORMANCE nancial targets nancialtargets nancial results. nancialresults. c ROIC cROIC rst day rstday Company’s common shares. The amount deferred is converted Company’s commonshares.Theamountdeferredisconverted deferred shareunits,whencashdividendsarepaidonthe earns notionaldividends,whicharere-investedintoadditional unit isequivalenttoacommonshareoftheCompanyand retirement orterminationofemployment.Adeferredshare incentive planintodeferredshareunitspayableincashupon their annualbonusandotheramountspaidunderaneligible management employeestoelectdeferup100%of Deferral Plan.Thisplanallowsexecutivesandsenior The Companyintroducedin2002itsVoluntary Incentive Incentive DeferralPlans hedging activitiesonCNsecurities. Trading Policy, nodirectors,offi were ontracktoachievetheirguidelines.UnderCN’sInsider As ofDecember31,2007,allexecutiveshadeithermetor Company’s acquisitionofIllinois Centralin1999. This planwasclosedtonewparticipants followingthe Upon eligibleretirement,thecredited rateisupgradedby20%. (based onlong-terminterestrates onU.S.Treasury Notes). termination, theyarecreditedwithanotionalinterestrate payable uponterminationorretirement.When of salaryandupto100%bonus.Amountsdeferredare Compensation Plan,whichpermitsthedeferralofupto50% employees alsoparticipateintheSeniorManagementDeferred under thisplan. Bonus SharePlan. accordance withpastawardsmadeundertheSeniorExecutive retirement orterminationdate,whichvestedinJanuary2001 in Certain executivesholddeferredshareunits,payableupontheir the deferralperiod. deferred shareunitsaswellaccruednotionaldividendsover termination dateandincludesthevestedcompany-matched on the20-dayaverageclosingsharepriceatretirementor The payoutofthedeferredshareunitsisestablishedbased period offouryears(25%peryear). units. Thesecompany-matched deferredshareunitsvestovera company matchequalto25%ofthenumberdeferredshare To encouragestockownership,theCompanyalsocreditsa ownership guidelines. share unitaccountissuffi participant whenthevalueofparticipant’svesteddeferred incentive paymentsindeferredshareunitsisnotavailabletoa average closingshareprice.Theelectiontoreceiveeligible into anumberofunitsatthedeferraldate,using20-day iePeiet 1.5to2timessalary Onetimessalary 4timessalary 3timessalary Senior Management Vice-Presidents Executive andSeniorVice-Presidents President andCEO A limited number of U.S. senior management AlimitednumberofU.S.seniormanagement No additional awards may be made No additionalawardsmaybemade cient to meet the Company’s stock cienttomeettheCompany’sstock cers or employees can engage in cersoremployeescanengagein GUIDELINES 33/8/08 5:41:14 PM / 8 / 0 8 5 : 4

: 1 4 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 33 N _ P r o x y _ 2 0 compensation for executives, based on the above-stated compensation policy and the achievement of target performance. compensation forexecutives,basedontheabove-statedpolicyandachievementoftargetperformance. The followingtableprovidestheestimatedweightofvariouscompensationelementsin2007,asapercentagetotal Compensation Mix COMPENSATION COMPONENTS The followingtableprovidesasummaryoftheCompany’smaincompensationcomponents. 0 iePeiet 45% Vice-Presidents eirVc-rsdns3%22% 17% 33% BASESALARY 13% 25% Senior Vice-Presidents Executive Vice-Presidents President andCEO LEVEL Awardsareestablishedtopositiontotaldirectcompensation(salary+annualincentivetargetpayoutlong Long-Term Incentive Rewardsuperiorstockpriceperformanceandprovideretentionofkeytalent Target Payout isestablishedtopositiontheCompany’stotalcashcompensation(salary+Target Payout) between Vision 2008ShareUnitsPlan Salariesarebenchmarkedannuallytothemedian(50thpercentile)ofcomparatorgroup DESCRIPTION Annual Incentive Base Salary COMPONENTS 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 3 3 • • • • • • • • • • • • • • • Share Units(RestrictedUnitPlan) • • Stock Options(ManagementLong-Term IncentivePlan) • • • • average sharepriceonDecember31,2008 Also subjecttoaminimumaveragereturnoninvestedcapitaloverthefour-year periodof10%andaminimum20-day to 19%(fullpayout)overthefour-year period Strenuous stockpricevestingcriteriacorrespondingtoacompoundedannualgrowthrateof9%(minimumpayoutlevel) Payout effectiveDecember31,2008(four-year term) Award ofperformance-basedshareunitsgrantedinJanuary2005 The maximumpayoutisequaltotwicetheTarget Payout Target Payouts rangefrom50%to70%ofsalaryforexecutives(140%theCEO) and profi Corporate performancelinkedtotheachievementofabalancedsetgoalsthatcontributeorganization’sgrowth Payout linkedtotheachievementofcorporateobjectives(70%)andpersonal(30%) and 75thpercentileofthecomparatorgroup Individual salaryrecommendationsarebasedoncompetitiveassessmentandindividualperformance share priceduringthelastthreemonthsofperiod Performance vestingsubjecttoattainmentof targets relatedtoreturnoninvestedcapitaloverthePlanPeriod andtothe Payout incashafterthreeyears Award ofperformance-basedshareunits Granted inthecurrencyofrecipient’ssalary 10-year term;25%peryearvestingoverthefi Combination ofRSUsandstockoptionsapproximatelyequalvalue,exceptfortheCEO Signifi Align managementinterestwithshareholders’valuegrowthandprovideretentionofkeytalent award) atapproximately75thpercentileofcomparatorgroup,whenaggressivelysetgoalsareachieved cantrecognitionofindividualcontributionandpotential tability ANNUAL INCENTIVE 4 1 0%55% 100% 31% 24% 8 9 0%87% 100% 69% 18% rstfouryears N IIN20 OA TOTAL AT RISK TOTAL ANDVISION2008 LONG-TERM INCENTIVE 5 0%67% 75% 100% 100% 45% 58% -term incentive -term incentive 50th 50th 33/8/08 5:41:14 PM / 8 / 0 8 33

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: 1 4 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 34 N _ 34 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 lower hadthefi incentive compensationpayment receivedwouldhavebeen partially causedtheneedfor restatement,andc)the negligence, intentionalmisconduct orfraudthatcaused fi affected byarestatementofallorportiontheCompany’s fi based upon,orcontingenton,theachievementofcertain a) theamountofincentivecompensationwascalculated an executiveorformeroffi may seekreimbursementoffullorpartialcompensationfrom incentive compensationreceivedbyanexecutive.TheBoard circumstances ofalloraportionannualandlong-term best interesttodoso,requirereimbursementundercertain law andtotheextentitdeterminesthatisinCompany’s in itssolediscretion,tothefullextentpermittedbygoverning Under thispolicy, whichappliestoallexecutives,theBoardmay, under theCompany’sannualandlong-termincentiveplans. compensation clawbackpolicyconcerningfutureawardsmade In March2008,theBoardofDirectorsadoptedanexecutive Executive CompensationClawback units andstockoptionsoftheCompany. compensation isstillbeingheldbyexecutivesinshares,share the sameperiod.Asignifi US$15 billionaggregatemarketcapitalizationincreaseover executives, representedapproximately4%oftheapproximate payouts, aswellstockoptiongains)paidtoorearnedbyall compensation (includingbasepay, bonusandotherincentive period endingonDecember31,2007,itwasshownthatthe group ofpastandpresentexecutivesoverthefi In anotheranalysisofthecompensationcostsbroader Percentage calculationsarebasedonconvertednetincomeusingaverageratesof (4) AsreportedintheCompany’sFinancialStatements. (3) 2006netincomewasadjustedtoexcludeadeferredtaxrecoveryof (2) 2007netincomewasadjustedtoexcludetheimpactofadeferredtax (1) for thefi The followingtabledisplaysthetotalaggregatecompensation compensation costsastheyrelatetoCompanyperformance. The HumanResourcesandCompensationCommitteemonitors Cost ofCompensationandCompanyPerformance Value tablesinthisandprioryears’InformationCirculars. compensation valueasreportedundertheTotal Compensation total aggregatecompensationisthesumofannual a percentageofnetincome,overthelastthreeyears.The 0 nancialstatements,b)theexecutiveoffi nancialresultsthatweresubsequentlythesubjectofor e noe(A$mlin ,2 ,1 1,556 18.6 1,810 1,725 As percentageofNetIncome Net income(CAD$million) (US$ million) value awardedtoNEO Total aggregatecompensation 8 _ E exchange of1.0748,1.1341,1.2116,respectively, fortheyears2007,2006,and2005. CAD$277 million.Seepage87ofthe2007Annualreport. and ScottishRailway. Seepage87ofthe2007Annualreport. to thesalesofCentralStationComplexandCompany’sinvestmentinEnglishWelsh recovery ofCAD$328millionandtoexcludetheafter-tax gainofCAD$105millionrelated n g _ M veNamedExecutiveOffi a r 0 8 _ v 1 7 nancialresultsbeenproperlyreported. . i n d d 3 (4) 4 cant amount forming part of such cantamountformingpartofsuch cers(“ 0720 2005 2006 2007 . . 1.9 1.7 1.2 cer in situations where cerinsituationswhere 1 2 (3) (2) (1) NEO cer engaged in gross cerengagedingross ”) expressed as ”) expressedas 6424.7 26.4 ve-year ve-year and Compensation Committee rates the performance of and CompensationCommitteeratestheperformanceof Based onareviewoftheforegoing,HumanResources public andgovernmentrelations(15%). operations (10%);humanresourcesmanagementand (35%); safety(20%);marketing(10%);customerserviceand performance inthefollowingareas:fi and theManagementLong-Term IncentivePlan. the Vision2008ShareUnitsPlan,RestrictedUnitPlan December 31,2007undertheVoluntary IncentiveDeferralPlan, aggregate holdingsinshareunitsandstockoptionsheldasof the twoprecedingyears.Italsoprovidesasummaryof Resources andCompensationCommittee,for2007 value forMr. Harrison,asestablishedbytheHuman following tableprovidesasummaryofthetotalcompensation value providedbyeachawardatthetimeofgrant.The Company’s compensationpolicy, onthebasisofexpected Executive Offi establishes thecompensationofPresidentandChief The HumanResourcesandCompensationCommittee compensation policy. was establishedwithintheCompany’slong-termincentive long-term incentiveawardstoexecutives,thevalueofwhich share unitsand145,000stockoptions,aspartoftheannual In 2007,Mr. Harrisonreceivedagrantof139,000restricted payout undertheAnnualIncentiveBonusPlan. achieve itscorporateobjectives,Mr. Harrisonreceivednobonus Company’s performance.For 2007,astheCompanydidnot Board ofDirectorshiscompensationbasedonandthe performance reviewandrecommendsfortheapprovalof the PresidentandChiefExecutiveOffi include bothfi Committee. Thegoalssetatthebeginningofyear approved annuallybytheHumanResourcesandCompensation Offi The individualperformanceofthePresidentandChiefExecutive compensation philosophy. payout of280%basesalary, inlinewiththeCompany’s target payoutsetat140%ofbasesalarywithamaximum US$1,600,000 for2007andhisAnnualIncentiveBonusPlan agreement, Mr. Harrison’sbasesalarywasestablishedat members oftheBoardDirectors.Pursuanttohisemployment Compensation Committeeandapprovedbyindependent compensation isrecommendedbytheHumanResourcesand The PresidentandChiefExecutiveOffi Chief ExecutiveOffi cer is measured against the goals, objectives and standards cerismeasuredagainstthegoals,objectivesandstandards cer and other executives in line with the cerandotherexecutivesinlinewiththe nancialandnon-fi cer Compensation nancial elements, covering nancialelements,covering cer as part of his ceraspartofhis nancial performance nancialperformance cer’s annual cer’sannual 33/8/08 5:41:15 PM / 8 / 0 8 5 : 4

: 1 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 35 N _ P r o x y _ 2 0 7 Holdingsandvaluesasat2007fi (7) Theestimatedvalueistheservicecostofbenefi (6) (5) To refl Long-Term IncentivePlan–AwardsintheLast FinancialYear”). made in2008carrysimilarconditionstothe2007awards(see“StatementofExecutiveCompensation–Offi 126,000 unitsundertheRestrictedShareUnitPlanand145,000optionsManagementLong-Term IncentivePlan.Awards Incentive BonusPlanweremaintainedat140%and280%respectively. OnJanuary24,2008,Mr. Harrisonreceived awardsof In 2008,Mr. Harrison’sbasesalarywasincreasedtoUS$1,680,000 andhistargetmaximumpayoutsundertheAnnual (4) To refl Representstheexpectedvalue,attimeofgrant,stockoptionsgranted.See“StatementExecutiveCompensation–O (3) Representstheexpectedvalue,attimeofgrant,restrictedshareunitsgranted.See“StatementExecutiveCompens (2) Detailedinformationontheseamountsispresentedinthe“SummaryCompensationTable”. (1) TOTAL COMPENSATION VALUE TABLE 0 TOTAL UNEXERCISABLE UNVESTED / TOTAL COMPENSATION Other annualcompensation Bonus Base salary which isanchoredonfi Under thestrongleadershipofMr. Harrison,theCompanyremainsatforefrontofrailindustrythrough disciplined E. HUNTERHARRISON,PRESIDENTANDCHIEFEXECUTIVEOFFICER Value ofbenefi Value ofdefi Value ofdefi Employment Agreementineachof2005,2006and2007 Value of81,000restrictedshareunitspursuanttothe 2004CEO Value ofVision2008grantallocatedto2005,2006and2007 Value ofstockoptionsundertheannualgrant Value ofrestrictedshareunitsundertheannualgrant VESTED /EXERCISABLE 8 _ E Offi criteria havebeenmetandavestingbasedontheaverageclosingpriceofcommonsharesDecember31,2007.For details December 31,2007,ontheNYSEandTSX(US$47.00),assumeperformancefactorshavebeenmetforrestrictedshareun footnote (8)of“SummaryCompensationTable”. Executive Offi in theLastFinancialYear” fordetailsofthe2007grants. n g cers’Remuneration–AggregateOptionExercisesDuringtheLastFinancialYear andFinancialYear-End OptionValue”. _ M ectthePlanperiod,amountrepresentsone-fi ectthePlanperiod,amountrepresentsone-fourthofexpectedvalue,attimegrant,Vision2008shareun a r 0 nedbenefi nedcontributionpensionplansaccrued 8 _ cersDuringtheLastFinancialYear” fordetailsofthe2007grants. ts accrued on amounts deferred – – – – – – tsaccruedonamountsdeferred v 1 7 . i n d tpensionplansaccrued veprinciples:providingqualityservice,controllingcosts,focusingonassetutilization,committingtosafety, anddevelopi d (1) 3 5 nancialyear-end. Thevaluesdisplayedhavenotbeen,andmayneverbe,realized.Values arebasedontheaverageclosingpric i i i i i i ,4,0 1923471,932,304 71,932,304 2,947,500 Nil 94,149,423 22,217,119 74,792,717 2,860,413 3,360,000 Nil 412,500 17,954,000 382,000 17,954,000 382,000 Nil 1,402,706 1,402,706 184,000 184,000 Nil Nil Nil Nil Nil Nil Nil S S S S US$ US$ # US$ # US$ # US$ # SsVSO 08RU PIN TOTAL VALUE OPTIONS RSUs VISION2008 DSUs (3) tsaccruedduringthecalendaryear. Theseamountsexcludetheemployee’scontributions. (6) fthofthe405,000restrictedshareunitsgrantedtoCEOin2004basedonestimatedexpectedvalueUS$7,045,000.Se (1) (2) (5) AGGREGATE EQUITYHOLDINGSINCOMPANY PLANS (4) (US$) 2007 186321,4,4 13,379,624 16,345,845 11,826,322 ,0,0 ,0,0 1,375,000 1,500,000 1,600,000 ,3,0 ,3,0 1,057,000 875,168 1,409,000 1,763,000 1,134,000 891,570 2,313,000 1,409,000 1,963,000 1,338,000 4,367,000 1,052,209 1,409,000 1,619,000 3,725,000 0,0 0,0 201,000 536,456 201,000 680,275 201,000 882,113 i ,0,0 3,850,000 4,200,000 Nil (US$) 2006 (7) ation –Offi ffi cers’ Remuneration – Stock Options Granted to Named cers’Remuneration–StockOptionsGrantedtoNamed on options, see “Statement of Executive Compensation – on options,see“StatementofExecutiveCompensation– its grantedin2005. cers’Remuneration–Long-Term IncentivePlan–Awards its. Values fortheVision2008shareunitsassumepayout execution of its business model, execution ofitsbusinessmodel, (US$) 2005 cers’ Remuneration – cers’Remuneration– e of the common shares on e ofthecommonshareson ng people. e 33/8/08 5:41:15 PM / 8 / 0 8 35

5 CN MANAGEMENT INFORMATION CIRCULAR : 4

: 1 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 36 N _ 36 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 Named ExecutiveOffi The followingtablesprovideasummaryofthetotalcompensationvaluefor2007andtwoprecedingyearsremaini Total CompensationforOtherNamedExecutiveOffi and theManagementLong-Term IncentivePlan.Footnotes forthetablesbelowcanbefoundonpage37. of December31,2007undertheVoluntary IncentiveDeferralPlan,theVision2008ShareUnitsRestricted UnitP page 38ofthisInformationCircular. Italsoprovidesasummaryoftheaggregateholdingsinshareunitsandstockoptionshel TOTAL COMPENSATION VALUE TABLE TOTAL COMPENSATION VALUE TABLE 0 VESTED /EXERCISABLE UNEXERCISABLE UNVESTED / TOTAL TOTAL COMPENSATION Other annualcompensation Bonus Base salary JAMES M.FOOTE,EXECUTIVEVICE-PRESIDENT, SALESANDMARKETING TOTAL UNEXERCISABLE UNVESTED / TOTAL COMPENSATION Other annualcompensation Bonus Base salary MONGEAU,CLAUDE EXECUTIVEVICE-PRESIDENTANDCHIEFFINANCIALOFFICER Value ofbenefi Value ofdefi Value ofdefi Value ofVision2008grantallocatedto2005,2006and2007 Value ofstockoptionsundertheannualgrant restricted shareunitsundertheannual grant Value of Value ofbenefi Value ofdefi Value ofdefi Value ofVision2008grantallocatedto2005,2006 and2007 Value ofstockoptionsundertheannualgrant Value ofrestrictedshareunitsundertheannualgrant VESTED /EXERCISABLE 8 _ E n g _ M a r 0 ned contribution pension plans accrued – – – – – – nedbenefi nedcontributionpensionplansaccrued nedbenefi nedcontributionpensionplansaccrued 8 _ tsaccruedonamountsdeferred tsaccruedonamountsdeferred v 1 7 . i n d tpensionplansaccrued tpensionplansaccrued d cersasdefi 4,6 17838NlNlNlNl49009079520,786,293 9,037,985 449,000 25,539,404 9,951,140 Nil 580,000 2,491,000 Nil 53,000 350,676 Nil 46,000 Nil 12,746,588 271,204 11,748,308 249,964 20,164,524 12,246,340 564,000 24,567,156 13,159,495 Nil 695,000 2,491,000 Nil 53,000 350,676 Nil 46,000 Nil 8,565,985 182,255 7,918,184 168,472 (1) (1) 37367814,0 5,7 30024100110093154,402,632 913,155 131,000 2,491,000 53,000 350,676 46,000 647,801 13,783 12098204,0 5,7 30024100110093154,753,111 913,155 131,000 2,491,000 53,000 350,676 46,000 998,280 21,240 3 6 S S S S US$ US$ # US$ # US$ # US$ # S S S S US$ US$ # US$ # US$ # US$ # SsVSO 08RU PIN TOTAL VALUE OPTIONS RSUs VISION2008 DSUs TOTAL VALUE OPTIONS RSUs VISION2008 DSUs nedunderthesubsection“StatementofExecutiveCompensation–Offi (3) (3) (5) (5) (6) (6) (1) (2) (2) AGGREGATE EQUITYHOLDINGSINCOMPANY PLANS AGGREGATE EQUITYHOLDINGSINCOMPANY PLANS (4) (4) (US$) 2007 (US$) 2007 cers ,1,9 ,4,3 3,389,688 2,946,036 2,014,992 ,1,3 ,0,4 3,974,809 3,008,042 2,110,730 1,0 0,0 489,000 504,000 519,000 1,0 0,0 489,000 504,000 519,000 4,9 0,3 903,788 146,000 564,000 578,000 101,936 182,000 620,000 809,000 140,992 175,000 514,000 616,000 0,0 5,8 1,466,177 146,000 564,000 578,000 151,686 173,000 620,000 809,000 209,803 173,000 514,000 616,000 0005,0 50,000 50,000 50,000 0005,0 50,000 16,432 50,000 14,656 50,000 22,177 ,5 ,0 6,300 6,600 6,750 i 7,0 658,900 679,100 Nil i 7,0 658,900 679,100 Nil – – – – (US$) 2006 (US$) 2006 (7) (7) cers’ Remuneration” on cers’Remuneration”on (US$) 2005 (US$) 2005 d as d as lan lan ng ng 33/8/08 5:41:16 PM / 8 / 0 8 5 : 4

: 1 6 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 37 N _ P r o x y _ 2 0 (4) To refl Representstheexpectedvalue,attimeofgrant, the stockoptionsgranted.See“StatementofExecutiveCompensation–O (3) Representstheexpectedvalue,attimeofgrant, oftherestrictedshareunitsgranted.See“StatementExecutiveCompens (2) Detailedinformationontheseamountsispresented inthe“SummaryCompensationTable”. (1) 6 Includes dividendequivalentamountsearnedundertheVoluntary IncentiveDeferralPlanand SeniorExecutiveBonusSharePl (6) Theestimated valueistheservicecostofbenefi (5) 7 Holdingsandvaluesasat2007fi (7) TOTAL COMPENSATION VALUE TABLE TOTAL COMPENSATION VALUE TABLE 0 VESTED /EXERCISABLE TOTAL UNEXERCISABLE UNVESTED / TOTAL COMPENSATION Other annualcompensation Bonus Base salary SEAN FINN,SENIORVICE-PRESIDENTPUBLICAFFAIRS, CHIEFLEGALOFFICERANDCORPORATE SECRETARY TOTAL UNEXERCISABLE UNVESTED / TOTAL COMPENSATION Other annualcompensation Bonus Base salary KEITH E.CREEL,EXECUTIVEVICE-PRESIDENT, OPERATIONS Value ofbenefi Value ofdefi Value ofdefi Value ofVision2008grantallocatedto2005,2006and2007 Value ofstockoptionsundertheannualgrant Value ofrestrictedshareunitsundertheannualgrant Value ofbenefi Value ofdefi Value ofdefi Value ofVision2008grantsallocatedto2005,2006 and2007 Value ofstockoptionsundertheannualgrant Value ofrestrictedshareunitsundertheannualgrant VESTED /EXERCISABLE 8 _ E Executive Offi in theLastFinancialYear” fordetailsofthe2007grants. includes aportionofthevalueanadditionalawardreceiveduponhispromotion. Compensation –Offi assumes payoutcriteriahavebeenmetandavesting basedontheaverageclosingpriceofcommonsharesDecember31,200 on December31,2007,theNYSEand TSX (US$47.00),andassumingperformancefactorshavebeenmetfortherestrictedsha the Voluntary IncentiveDeferralPlan. n g _ M ectthePlanperiod,amountrepresentsone-fourthofexpectedvalue,attimegrant oftheVision2008shareunitsg a r 0 nedbenefi nedcontributionpensionplansaccrued ned contribution pension plans accrued – – – – – – nedbenefi nedcontributionpensionplansaccrued 8 _ cersDuringtheLastFinancialYear” fordetailsofthe2007grants. tsaccruedonamountsdeferred ts accrued on amounts deferred – – – – – – tsaccruedonamountsdeferred v 1 7 . i cers’Remuneration–AggregateOptionExercises DuringtheLastFinancialYear andFinancialYear-End OptionValue”. n d tpensionplansaccrued tpensionplansaccrued d (1) (1) 44735139NlNlNlNl4,0 3,2 4,135,283 633,924 41,000 7,005,456 1,082,084 Nil 127,000 1,833,000 Nil 39,000 236,325 Nil 31,000 Nil 3,854,047 82,001 3,501,359 74,497 3 ,0 5,8 10026353,0 ,3,0 60048102,870,173 448,160 86,000 1,833,000 39,000 236,325 31,000 352,688 7,504 7 nancialyear-end. Thevaluesdisplayedhavenotbeen,andmayneverbe,realized.Values arebasedontheaverage closingpric i i i i i i 2,0 ,3,0 2,635,602 2,635,602 4,093,157 1,457,555 121,000 2,997,136 361,534 Nil 171,800 50,800 958,800 Nil 958,800 20,400 20,400 137,221 Nil 137,221 18,000 18,000 Nil Nil Nil Nil Nil Nil Nil S S S S US$ US$ # US$ # US$ # US$ US$ US$ # # US$ # US$ # US$ # SsVSO 08RU PIN TOTAL VALUE OPTIONS RSUs VISION2008 DSUs TOTAL VALUE OPTIONS RSUs VISION2008 DSUs (3) (3) tsaccruedduringthecalendaryear. Theseamountsexcludetheemployee’scontributions. (5) (5) (6) (1) (2) (2) AGGREGATE EQUITYHOLDINGSINCOMPANY PLANS AGGREGATE EQUITYHOLDINGSINCOMPANY PLANS (4) (4) (US$) 2007 (US$) 2007 ,6,5 ,5,4 1,869,666 1,753,548 1,665,950 1,0 8,0 343,000 381,500 415,000 7,4 1,0 298,423 313,000 376,548 2,0 30023,000 254,000 260,000 23,000 413,000 539,000 121,000 446,000 534,000 8,0 ,7,0 1,328,100 99,000 226,000 1,575,500 231,000 128,000 248,000 985,000 323,000 137,000 188,000 225,000 3454,6 554,812 4,476 45,864 64,455 35,177 63,435 5,107 60,070 64,897 0002,0 20,000 20,000 20,000 i 7,0 409,100 475,000 Nil i 7,0 362,500 379,400 Nil 48,000 – – – – – – (US$) 2006 (US$) 2006 (7) (7) ation –Offi an. Also includes the Company match on deferrals made under an. AlsoincludestheCompanymatchondeferrals madeunder ffi cers’ Remuneration – Stock Options Granted to Named cers’Remuneration–StockOptionsGrantedtoNamed ranted in2005.For Mr. Creel,theamountfor2007also 7. For detailsonoptions,see“StatementofExecutive cers’Remuneration–Long-Term IncentivePlan–Awards re units.Value fortheVision2008shareunits (US$) 2005 (US$) 2005 e of the common shares e ofthecommonshares 33/8/08 5:41:18 PM / 8 / 0 8 37

5 CN MANAGEMENT INFORMATION CIRCULAR : 4

: 1 8 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 38 N _ 38 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 Hugh J. Bolton David G.A. McLean DavidG.A. EdwardC.Lumley EdithE.Holiday James K.Gray Gordon D.Giffi Hugh J.Bolton CharlesBaillie A. Robert Pace (Chair) Compensation CommitteeoftheBoardDirectors: Submitted onMarch4,2008,bytheHumanResourcesand Resources andCompensationCommittee. compensation-related servicesprovideddirectlytotheHuman During 2007,theonlyservicesprovidedbyHugessenwere compensation-related services. by theconsultantretainedCommitteetoperform all non-compensationservicesprovidedtotheCompany Resources andCompensationCommitteeshallpre-approve adopted apolicytotheeffectthatChairofHuman is objectiveandindependent.In2007,theBoardofDirectors Committee issatisfi fees paidtoHugessentotalledapproximatelyCAD$68,000.The particular focusonnamedexecutiveoffi compensation recommendationsandrelatedmatters,witha and provideadvicedirectlytotheCommittee,onexecutive (“ Committee retainedtheservicesofHugessenConsultingInc. that arepresentedforCommitteeapproval.In2007,the consultants toprovideadviceoncompensationproposals from timetotime,theservicesofexecutivecompensation and CompensationCommitteealsoindependentlyretains, to Watson Wyattfortheseservices.TheHumanResources approximately CAD$84,000toTowers Perrin andCAD$38,000 executive compensationproposals.In2007,theCompanypaid and trends,aswellexpertexternalopinionsonvarious and Watson Wyatttoprovidemarketinformation,surveys In 2007,theCompanyretainedservicesofTowers Perrin assist indeterminingcompensationfordirectorsandoffi The Companyretainsvariousexecutiveconsultingfi Executive CompensationConsultants 0 8 Hugessen _ E n g _ M a r 0 8 _ ”). The Committee mandated Hugessen to review ”). TheCommitteemandatedHugessentoreview v 1 n 7 . i n d ed that the advice received from Hugessen edthattheadvicereceivedfromHugessen d 3 8 cers. In aggregate, the cers.Inaggregate,the rms to rmsto cers. cers. preceding years. the yearendedDecember31,2007,andforeachoftwo the Company(together, the“ other threemosthighlycompensatedexecutiveoffi Vice-President andChiefFinancialOffi for thePresidentandChiefExecutiveOffi The followingtablesetsforththeannualcompensation the Company Compensation ofNamedExecutiveOffi under currentCanadianreportingrequirements. transparent. Thefollowingdisclosureisaprescribed of providingcompensationinformationthatisclear, conciseand and CompensationCommittee”ispresentedwiththeobjective Report onExecutiveCompensationbytheHumanResources the previoussection“StatementofExecutiveCompensation– The disclosureofexecutivecompensationasreportedunder Offi cers’Remuneration Named ExecutiveOffi cer and for each of the cerandforeachofthe cer, theExecutive cers of cers of cersof cers ”) for ”) for 33/8/08 5:41:20 PM / 8 / 0 8 5 : 4

: 2 0 P M CCN_Proxy_2008_Eng_Mar10_v18.indd 39 N _ P r o x y _ 2 0 7 Awardsofperformance-basedrestrictedshareunitsundertheannuallong-termincentivegrantsarereportedin“Stateme (7) Amountsfor2007includetaxprotectionanamountofUS$55,124.2005educationassistanceam (6) Amountsfor2007includepersonaluseoftheCompany’saircraftvaluedatUS$762,933,clubmembershipfeesanamount (5) Includesthevalueofperquisites,otherpersonalbenefi (4) AmountsshownintheBonusorLong-Term IncentivePlanPayouts columnsincludedeferralsmadeundertheVoluntary Incentive (3) Mr. Creelwasappointed ExecutiveVice-President,OperationseffectiveMay1,2007. (2) Payments madeinCanadiancurrencywereconvertedusingaverageratesofexchange1.0748,1.1341and 1.2116respectively (1) SUMMARY COMPENSATION TABLE 9 Performance-based restrictedshareunitswereawardedin2005undertheRestrictedShareUnitPlan.Thisawardwaspaidout (9) AmountsexcludepaymentsmadetoMr. Harrisonrelativetotheawardof405,000restrictedshareunitsgrantedonApril22, (8) 1) IncludesdividendequivalentamountsearnedundertheVoluntary IncentiveDeferralPlan andSeniorExecutiveBonusShareP (12) Performance-based restrictedshareunitswereawarded in2004undertheRestrictedShareUnitPlan.Thisawardpayoutwas (10) 1) IncludesIllinoisCentralCorporationcontributionstoa401(k)planandnon-registered defi (11) 0 Keith E.Creel Legal Offi Senior Vice-PresidentPublicAffairs,Chief Sean Finn Sales andMarketing Executive Vice-President, James M.Foote President andChiefExecutiveOffi E. HunterHarrison Executive Vice-President,Operations AEADPICPLPSTO YEAR NAME ANDPRINCIPAL POSITION Chief FinancialOffi Executive Vice-Presidentand Claude Mongeau 8 _ E of US$18,777. Company’s policytorequiretheCEOuseaircraftforpersonalaswellbusinessuse. Amounts for2005includepersonaluseofaircraftvaluedatUS$388,675,clubmembershipfeesanamountUS$40,790andtax Amounts for2006includepersonaluseoftheCompany’saircraftvaluedatUS$526,450,clubmembershipfeesanamountUS$ Offi have beenintheU.S.Aggregateperquisitesandotherpersonalbenefi Deferral Plans”).Thefollowingtabledisplaystheamountsdeferredandcorrespondingnumberofshareunitsunder Compensation –ReportonExecutivebytheHumanResourcesandCommitteesectionsAnnualIncentiveB of thelong-termincentiveplanpayoutisreceivedinformdeferredshareunitspayablecashuponretirementortermi share priceofUS$46.93. December 31,2007,Mr. Harrisonheld81,000restrictedshareunits(followingthepayoutofvestingonthatdate) as reportedinpreviouscirculars.Thisawardvestsandispaidoutto20%peryearstartingDecember31,2004notel Long-Term IncentivePlan–AwardsintheLastFinancialYear” table. the Voluntary IncentiveDeferralPlanasshowninthetablebelow. Pension Plans”). (120% ofthegrant). capital andtheCompany’ssharepricewereattainedduringperiodendingonDecember 31,2007.Payout wassettoitsmaximu the grant).AmountsshownincludedeferralsmadeunderVoluntary IncentiveDeferralPlan. Seedetailsofdeferralsunderno 20-day averagesharepricewereattainedduringtheperiodendingonDecember31,2005. Payout wassettoitsmaximumallowable n 2005 2005 Long-Term g cers,arenotincludedinthiscolumn. _ M a cerandCorporateSecretary r 1 0 (2) _ v 1 8 cer . i n Incentive d d 3 9 cer 2005 2006 2007 2005 2006 2007 2005 2006 2007 2005 2006 2007 2005 2006 2007 (1) tsandothercompensation(asapplicable),suchastaxgross-uporprotectionsothatnetincomeaftertaxesisnotlesst (US$) SALARY 1,375,000 1,500,000 1,600,000 343,000 381,500 415,000 489,000 504,000 519,000 298,423 313,000 376,548 489,000 504,000 519,000 ts that are less than CAD$50,000 and 10% of the total of the annual salary and bonus for any of the Named Executive tsthatarelessthanCAD$50,000and10%ofthetotalannualsalarybonusforanyNamedExecutive UNIT PRICE ANNUAL COMPENSATION 39.99 COMPANY MATCH ONAMOUNTSDEFERRED (US$) BONUS U$ LUEMNEUJMSM OT KEITHE.CREEL JAMESM.FOOTE MONGEAU CLAUDE (US$) 3,850,000 4,200,000 409,100 475,000 658,900 679,100 362,500 379,400 658,900 679,100 AMOUNTS DEFERRED nedcontributionplans(see“StatementofExecutiveCompensation–Offi Nil Nil Nil Nil Nil 3 4 7 (3,8) (7) (4) (3) 882,113 (US$) COMPENSATION OTHER ANNUAL 536,456 CLAUDE MONGEAUCLAUDE US$3,023,244 (75,600 units) 680,275 16,432 14,656 22,177 64,455 64,897 5,107 6,9 ,2,1 547,999 1,422,810 869,999 Nil Nil Nil Nil Nil Nil (6) (6) (5) (5) (5) (US$) (#) GRANTED OPTIONS UNDER SECURITIES 250,000 190,000 145,000 32,000 24,000 16,800 80,000 60,000 46,000 36,000 40,000 38,000 80,000 60,000 46,000 lan. Also includes the company match on deferrals made under lan. Alsoincludesthecompanymatchondeferralsmadeunder accelerated whenspecifi nt ofExecutiveCompensation–Offi 2004 pursuant to the terms of his employment agreement, 2004 pursuanttothetermsofhisemploymentagreement, igible to receive dividends or dividend equivalents. On igible toreceivedividendsordividendequivalents.On nation of employment (see “Statement of Executive nation ofemployment(see“StatementExecutive whenspecifi te (3). te (3). for a value of US$3,801,330 based on a December 31, 2007 for avalueofUS$3,801,330basedonDecember31,2007 Deferral Plan whereby all or a portion of the bonus and/or DeferralPlanwherebyalloraportionofthebonusand/or the Plan. , fortheyears2007,2006and2005. US$22,099 and tax gross-up for an amount of US$88,161. US$22,099andtaxgross-upforanamountofUS$88,161. ount of US$21,678, and tax protection for an amount ount ofUS$21,678,andtaxprotectionforanamount WRSPAYOUTS AWARDS LONG-TERM COMPENSATION m allowable amount in accordance with the plan rules m allowableamountinaccordancewiththeplanrules amount in accordance with the plan rules (120% of amountinaccordancewiththeplanrules(120%of gross-up for an amount of US$97,179. It is the gross-upforanamountofUS$97,179.Itisthe 26,626 and tax gross-up for an amount of US$117,568. 26,626 andtaxgross-upforanamountofUS$117,568. (US$) RESTRICTIONS TO UNITS SUBJECT RESALE SHARES OR (126,000 units) US$5,038,740 JAMES M.FOOTE onus Plan,Long-Term Incentiveand ed targets related to the average return on invested edtargetsrelatedtotheaveragereturnoninvested Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil (US$) ed targets related to the Company’s edtargetsrelatedtotheCompany’s (US$) PAYOUTS PLAN INCENTIVE LONG-TERM 17,275,680 1,727,568 5,038,740 2,215,200 2,015,496 5,038,740 2,215,200 8,860,800 886,080 996,840 cers’ Remuneration – cers’Remuneration– cers’ Remuneration – cers’Remuneration– Nil Nil Nil Nil Nil (10) (9) (10) (9) (10) (9) (10) (9) (10) (9) US$2,015,496 (50,400 units) ALL OTHER 1,472,477 1,052,209 KEITH E.CREEL 158,286 216,553 559,288 123,505 903,788 101,936 140,992 875,168 891,570 COMPEN- han it would han itwould 81,041 SATION (US$) Nil Nil Nil (US$) 33/10/08 10:34:33 AM (11,12) (11,12) (11,12) (11,12) (11,12) (11,12) (12) (12) (12) (11) (11) (11) / 1 0 / 0 8 39 1 CN MANAGEMENT INFORMATION CIRCULAR 0 : 3

: 3 3 A M CCN_Proxy_2008_Eng_Mar08_v17.indd 40 N _ 40 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 Incentive Plan” for a description of such plan. Incentive Plan”foradescriptionofsuchplan. year endedDecember31,2007.See“StatementofExecutiveCompensation–Offi 1 Theoptionsgrantedin2007vestoveraperiod offouryears,withaquartertheoptionsperyearvestingateachannive (1) The followingtableshowsinformationregardinggrantsofstockoptionsmadetoNamedExecutiveOffi Stock OptionsGrantedtoNamedExecutiveOffi ThisawardwasmadeundertheVision2008ShareUnitsPlan,onJune11,2007,ataclosingsharepriceofUS$53.01.Undert (3) ThisawardwasmadeundertheRestrictedShareUnitPlan,onJune11,2007,ataclosingsharepriceofUS$53.01.Theseuni (2) TheseawardsweremadeundertheRestrictedShareUnitPlan,onJanuary25,2007,ataclosingsharepriceofUS$44.67.Und (1) units vestedonDecember31,2008multipliedbytheCompany’s20-dayaveragesharepriceendingsuchdate. a minimumaveragereturnoninvestedcapitalforthefour-year termoftheplan.Theawardpayoutwillbeequaltonumbero The awardpayoutisalsoconditionalontheCompanymeetingaminimum20-dayaveragesharepriceDecember31,2008and 0% and100%isbasedonthehighest20-dayaveragesharepriceforperiodbetweenJuly1,2008December31,2008. Plan, entitledesignatedexecutivesandseniormanagementemployeestoreceiveacashpayoutinJanuary2009.Payout between Company’s sharepriceduringthethree-monthperiodendingDecember31,2009.TheawardsunderVision2008ShareUnits to theattainmentoftargetsrelatedreturnoninvestedcapital,betweenJanuary1,2007andDecember31,2009, January 31,2010basedonthevalueoftheseunitsusing20-dayaveragesharepriceendingsuchdate.Payout issubject the RestrictedShareUnitPlanentitlesdesignatedexecutivesandseniormanagementemployeestoreceivepayoutincashon Restricted ShareUnitPlanwasapprovedbytheBoardofDirectorsatitsmeetingheldonJanuary27,2004.The2007awardunder Restricted ShareUnitPlanandundertheVision2008Unitsduringfi The followingtableshowsinformationregardinggrantsofrestrictedshareunitsmadetoNamedExecutiveOffi Long-Term IncentivePlan–AwardsintheLastFinancialYear 0 Sean Finn 8,400 December 31, December 8,400 Sean Finn enFn 68020 44.67 2.0% 16,800 Sean Finn NAME ae .Foe4,0 5.3% 46,000 Keith E. James M.Foote Claude Mongeau E. HunterHarrison NAME Keith E. James M.Foote Claude Mongeau E. HunterHarrison 8 _ E between 0%and100%oftheawardwillbemadeifthresholdisexceededaveragereturnoninvestedcapital 50%, 100%and150%ofthegrantifreturnoninvestedcapitalreaches,respectively, threshold,targetandmaximumperformance. Offi n g cers’Remuneration–ManagementLong-Term IncentivePlan”. _ M re 28,000 Creel 14,000 Creel a r 0 8 _ v 1 7 . i n d d 4 0 SECURITIES, UNITS OR OTHERRIGHTS GRANTED UNDER GRANTED # OFSECURITIES 3,0 eebr3,20 9501900208,500 139,000 69,500 December31,2009 139,000 4,0 68 46 46 January25,2017 44.67 44.67 16.8% 145,000 OPTIONS 0004.4% 10,000 10,000 300Dcme 1 091,0 30034,500 34,500 23,000 23,000 11,500 11,500 December31,2009 December31,2009 23,000 23,000 60053 46 46 January25,2017 44.67 44.67 5.3% 46,000 5,000 cers DuringtheLastFinancialYear (#) (1) (1) (1) (1) (1) (1) (3) (2) OPTIONS GRANTED OPTIONS GRANTED TO EMPLOYEES IN FINANCIAL YEAR December 31,2009 December 31,2008 December 31,2009 % OFTOTAL UNTIL MATURATION PERFORMANCE OR OTHER PERIOD OR PAYOUT 0942084012,600 8,400 4,200 2009 EXERCISE PRICE (US$/SECURITY) cers’Remuneration–ManagementLong-Term nancial year ended December 31, 2007. The nancialyearendedDecember31,2007.The rsary of the award. See “Statement of Executive Compensation – rsary oftheaward.See“StatementExecutiveCompensation– 46 46 January25,2017 44.67 53.01 44.67 44.67 ts carrythesameconditionsasthoseawardedonJanuary25,2007. his Plan,thereisnopayoutifthethresholdsimplymet.Payout er this Plan, the number of restricted share units paid out will be er thisPlan,thenumberofrestrictedshareunitspaidoutwillbe THRESHOLD ismet. 7,000 2,500 OPTIONS ONDATE NON-SECURITIES PRICE-BASEDPLANS (#) ESTIMATED FUTUREPAYOUTS UNDER 0 MARKET VALUE U$SCRT)EXPIRYDATE (US$/SECURITY) OF SECURITIES UNDERLYING OF GRANT OF GRANT 53.01 44.67 46 January25,2017 44.67 cersduringthefi 14,000 TARGET 5,000 cers under the cersunderthe N/A (#) January 25,2017 June 11,2017 nancial nancial MAXIMUM 10,000 21,000 7,500 (#) f 33/8/08 5:41:23 PM / 8 / 0 8 5 : 4

: 2 3 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 41 N _ P r o x y _ 2 0 FOR GRANTONFEBRUARY 29,2008 OPTIONS OUTSTANDING ANDAVAILABLE The ManagementLong-Term IncentivePlan(the“ Management Long-Term IncentivePlan Value ofunexercisedin-the-moneyoptionsatfi (1) Compensation –Offi Management Long-Term IncentivePlanduringthefi The followingtableshowsinformationregardingexercisesofstockoptionsgrantedtoNamedExecutiveOffi Aggregate OptionExercisesDuringtheLastFinancialYear andFinancialYear-End OptionValue issuable underthePlan,asatFebruary 29,2008. the statusofreserveandnumbersharesissued is 60,000,000.Thefollowingtableprovidesinformationon number ofcommonsharesthatmaybeissuedunderthePlan executive directorsreceivedoptionswasin2002.Themaximum participants inthePlanforpreviousgrants,lasttimenon- executive BoarddirectorsunderthePlan.Whiletheyremainas March 8,2005,grantscannolongerbemadetonon- an amendmentapprovedbytheBoardofDirectorson as determinedbyourBoardofDirectors.Pursuantto Company oritsaffi Eligible participantsunderthePlanareemployeesof April 24,2007. and amendedonApril28,1998,21,2005 approved bytheCompanyShareholdersonMay7,1996 0 of options Shares issuedfollowingtheexercise Options issuableunderthe and outstanding Options alreadygranted 2,763,035 100,000 Nil Nil Nil Sean Finn Keith E.Creel James M.Foote Claude Mongeau E. HunterHarrison NAME 8 _ E on exercisewilldependthevalueofcommonsharesdateexercise. Toronto stockexchanges(US$47.00),andtheexerciseprice,convertedusingaveragerateof1.0748for 2007.Thisvaluehas n g _ M a r 0 8 _ v 1 7 . i n liates and non-executive Board directors, liatesandnon-executiveBoarddirectors, d d cers’Remuneration–ManagementLong-Term IncentivePlan”belowforadescriptionoftheplan. ln1,3,8 2.8 13,532,784 Plan 4 1 nancialyear-end isthedifferencebetweenaverageclosingpriceofcommonsharesonDecember31,2007,NewYor 469433.0 14,649,493 187736.6 31,817,723 # COMMON ACQUIRED ON SECURITIES SHARES 5,0 ,6,3 6,0 3,0 22630913,155 12,246,340 131,000 564,000 4,868,932 150,000 EXERCISE 750240964,0 6006394448,160 633,924 86,000 41,000 2,410,936 77,550 (#) % OFOUTSTANDING Plan COMMON SHARES nancial year ended December 31, 2007. See “Statement of Executive nancialyearendedDecember31,2007.See“StatementofExecutive VALUE REALIZED ”) was ”) was AGGREGATE (US$) i 4,0 3,0 ,3,8 913,155 9,037,985 131,000 449,000 Nil under any other plan which the Company has or may eventually under anyotherplanwhichtheCompanyhasormayeventually awards maybemadetoanyparticipantunderthePlanand aggregate numberofcommonshares,withregardtowhich particular yearis20%oftheawardsinthatyear. Themaximum and/or bethesubjectofagranttoanyoneparticipantin The maximumnumberofcommonsharesthatmaybeissued and which are not then exercisable will become exercisable in and whicharenotthenexercisable willbecomeexercisablein whose exerciseisnotdetermined byanyperformancecriteria the occurrenceofaMaterialEvent, alloutstandingoptions of theHumanResourcesandCompensation Committee.Upon twelve months.Theseconditionsaresubjecttothediscretion available optionsmaybeexercisedbytheestateforaperiodof the retirementdate.Ineventofaparticipant’sdeath,all the caseofretirement,optionsarecancelledthreeyearsafter participant’s employment(dependingonthedateofgrant).In be cancelled30daysorthreemonthsafterterminationofthe than forcause,allstockoptionsheldbysuchparticipantmay participant’s employmentisterminatedbytheCompanyother voluntarily terminatesemployment.Intheeventthata a participant’semploymentforcauseoriftheparticipant Stock optionsmaybecancelledupontheterminationof are establishedwithrespecttoeachgrant. which mayhavetobemetforoptionsbecomeexercisable, options becomeexercisable,andCompanyperformancetargets, including thedateordatesuponwhichallaportionof New York StockExchangeonthegrantdate.Vesting criteria, of thecommonsharesonToronto StockExchangeorthe The exercisepricemustbeatleastequaltotheclosing Stock optionshaveamaximumexerciseperiodof10years. upon thedeathofholdersuchoptions. Options arenon-transferableexcept,incertaincircumstances, the outstandingcommonsharesatbeginningofthatyear. awards maybemadeduringacalendaryearislimitedto1%of the maximumnumberofcommonshareswithregardtowhich outstanding. AlsopursuanttotheMarch8,2005amendment, have, shallnotexceed5%ofthecommonsharesissuedand XRIAL NXRIAL XRIAL UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE ,4,0 1,0 192342,860,413 71,932,304 412,500 2,947,500 2,0 08026562361,534 2,635,602 50,800 121,000 UNEXERCISED OPTIONSAT FY-END (#) notbeen,andmayneverbe,realized.Theactualgains,ifany, VALUE OFUNEXERCISEDIN-THE-MONEY cers under the cersunderthe OPTIONS AT FY-END (US$) (1) k and k and 33/8/08 5:41:23 PM / 8 / 0 8 41

5 CN MANAGEMENT INFORMATION CIRCULAR : 4

: 2 3 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 42 N _ 42 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 is takenbytheCompany(a“ that anyotheractionofasimilarnatureaffectingsuchshares consolidated, convertedorreclassifi for adjustmentsintheeventthatsuchsharesaresubdivided, number ofcommonsharesissuableunderthePlan,except shareholder approvalfor:(i)anyamendmenttothemaximum Option has been granted to a participant or any cancellation of Option hasbeengrantedtoaparticipant oranycancellationof (vi) anyreductionintheexercisepriceofanOptionafter shares whilenocashconsiderationisreceivedbytheCompany; other provisionswhichresultsinparticipantsreceivingcommon the Planofdeferredorrestrictedshareunitprovisionsany of underlyingsharesfromthePlanreserve;(v)additionin which doesnotprovideforafulldeductionofthenumber cashless exercisefeature,payableincashorcommonshares, to successionlaws(estatesettlements);(iv)theadditionofa be transferableorassignableotherthanbywillpursuant which wouldpermitanyOptiongrantedunderthePlanto eligible fornewawardsunderthePlan;(iii)anyamendment amendment whichwouldallownon-employeedirectorstobe (“ terms ofanythenoutstandingawardoptionsunderthePlan of thePlanorsuspendterminateamend legislation andregulations,mayamendanyoftheprovisions to aspecifi Compensation Committee,asprovidedinthePlanorpursuant state thattheBoardofDirectorsorHumanResourcesand amendment provisionstothePlan.Such approved anordinaryresolutionconfi At the2007annualmeetingofshareholders,shareholders on page32ofthisInformationCircular. as describedundertheheading“ChangeofControlProvision” conditions requiredforaccelerationuponachangeofcontrol, grants madeunderthePlanwillbesubjecttomorerestrictive of theCompany. EffectiveMarch4,2008,allfutureoption Company’s shareholdersofaplanliquidationordissolution during aperiodoftwoconsecutiveyears;or(iii)approvalbythe the boardofdirectorssurvivingorresultingcorporation fact, theseindividualscontinuetoconstituteatleast51%of the timeofsuchtransactionconstituteBoardandthat,in immediately afterthetransactionareindividualswhoat 51% ofthedirectorssurvivingorresultingcorporation defi of theCompanywithorintoanothercorporation,unless shareholders ofanamalgamation,mergerorconsolidation outstanding commonshares;(ii)approvalbytheCompany’s the term of an outstanding Option beyond the original expiry the termofanoutstandingOption beyondtheoriginalexpiry except inthecaseofaShareAdjustment; (vii)anyextensionto with areducedexercisepricegranted tothesameparticipant, an Optionandthesubstitution ofthatOptionbyanew Act event theownershiprestrictionsin limited circumstances,anyofthefollowingevents:(i)in full immediately. A“ 0 8 Options _ nitive agreement of such transaction provides that at least nitiveagreementofsuchtransactionprovidesthatatleast E are repealed, a formal bid for a majority of CN’s arerepealed,aformalbidformajorityofCN’s n g _ M a r 0 ”); provided,however, thattheCompanyshallobtain c delegation and in accordance with applicable cdelegationandinaccordancewithapplicable 8 _ v 1 7 . i n d d Material Event 4 2 Share Adjustment ed by the Company or edbytheCompanyor ” means, except in certain ” means,exceptincertain rming the addition of new rmingtheadditionofnew CN Commercialization Commercialization CN ”); (ii) any ”); (ii)any employment toDecember31,2008(the“ employment agreementandprovidedthetermsofhis agreement withMr. Harrisonwhichreplacedhisprevious April 22,2004,theCompanyenteredintoanemployment President andChiefExecutiveOffi Effective January1,2003,Mr. Harrisonwasappointed Employment Contracts/Arrangements the Plan. participants shallthenhaveterminatedinaccordancewith previously grantedunderthePlan,unlessrightsof concerned, affectthetermsandconditionsofOptions the writtenconsentordeemedofparticipants No amendment,suspensionorterminationshall,exceptwith to participants. to afi Plan ofanyformfi other plantoanyoneparticipant;and(ix)theadditionin during anycalendaryear;or(B)underthePlanand that maybeissued:(A)underthePlantoanyoneparticipant (viii) anyincreasetothemaximumnumberofcommonshares date, exceptincaseofanextensionduetoablackoutperiod; US$1,500,000 witha70%spousal survivalbenefi year oftheamendedAgreement, anannualpensionbenefi Mr. Harrisonisentitledtoreceive, uponcompletionofthelast December 31,2009.PursuanttotheamendedAgreement, to extendthetermofMr. Harrison’semploymentto On November30,2006,theAgreementwasamended year period,providedthathecomplieswiththerestrictions. which heisentitledtoreceiveUS$350,000peryearforatwo- termination ofhisemploymentforanyreason,inrespect non-solicitation restrictionsuponMr. Harrisonfollowingthe Pension Plans”).TheAgreementincludesnon-competitionand remains employedbytheCompany(see“Pension Plans–U.S. being increasedbyUS$100,000onJanuary1,2009ifhe benefi also entitledtoreceiveuponretirement,anannualpension 280% ofbasesalary. UndertheAgreement,Mr. Harrisonis payout of140%basesalaryandamaximum the Company’sAnnualIncentiveBonusPlan,withatarget is alsoeligibletoreceiveanannualincentivebonusunder Directors andsubjecttoaminimum5%increase.Mr. Harrison Mr. Harrison’sbasesalaryisreviewedannuallybytheBoardof share priceendingonsuchdate).PursuanttotheAgreement, December 31,2007,multipliedbyUS$48.4375(20-dayaverage of US$3,923,438basedon81,000unitsvesting As perthevestingschedule,Mr. Harrisonreceivedapayout paid outasto20%peryearstartingonDecember31,2004. units effectiveApril22,2004.Thisspecialawardvestsandis received aspecialone-timeawardof405,000restrictedshare a resultofmakingthislong-termcommitment,Mr. Harrison nancial assistance provision which is more favourable nancialassistanceprovisionwhichismorefavourable t of US$1,200,000 effective January 1, 2008, this amount tofUS$1,200,000effectiveJanuary1,2008,thisamount nancial assistance and any amendment nancialassistanceandanyamendment ceroftheCompany. On Agreement t. t. ”). As ”). As t of tof 33/8/08 5:41:25 PM / 8 / 0 8 5 : 4

: 2 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 43 N _ P r o x y _ 2 0 insurance benefi He isalsoentitledtopost-retirementmedicalbenefi exercise hisstockoptionswithinfi “Additional Pension Disclosure”below, Mr. Harrisonisentitledto In additiontotheretirementbenefi to thoseapplicableintheUnitedStates. compensate forhighertaxliabilitiesinCanada,ifany, compared equalization paymentsinrespectofMr. Harrison’ssalaryto The Agreementincludesspecialprovisionsrelatingtotax options andtheproratedvestingofshareunits. control, generallyprovidefortheacceleratedvestingofstock executives, haveprovisionswhichintheeventofachange compensation plansinwhichMr. Harrisonparticipate,likeother provisions inplace.However, acertainnumberofthe The Agreementdoesnothaveformalchangeofcontrol stock optionswouldcontinuetovestfollowinghistermination. and subjecttoperformancevestingasapplicable,RSUs in CompanyPlans”table.Also,exceptforterminationCause, Company, andreportedunderthe“Aggregate EquityHoldings and vestedequityholdingsdescribedunderplansofthe benefi payments whichhavealreadyvested,includingvestedpension Mr. Harrisonwouldalsobeentitledtoreceivebenefi Following terminationforanyofthereasonsstatedabove, pay himaprorataportionofhistargetbonus. is terminatedduetodeathordisability, theCompanyshallalso any accruedbutunusedvacationdays,and,ifhisemployment Cause, hewouldbeentitledtoreceivehisaccruedbasesalary, of death,resignationwithout“GoodReason”,disabilityorfor benefi to aseverancepaymentofUS$11,520,000andcontinuation Mr. Harrisonwouldhavebeenentitled,undertheAgreement, terminated underthesecircumstancesonDecember31,2007, pension benefi for threeyearsincludinganimmediatevestingofhismaximum will alsobeentitledtocontinuationofhisemployeebenefi his annualbasesalaryandtargetbonus.Mr. Harrison additional severancepaymentequaltothreetimesthesumof portion ofhisannualtargetbonus,Mr. Harrisonwillreceivean salary, anyaccruedbutunusedvacationdaysandaprorata in theAgreement),additiontoreceivinghisaccruedbase by Mr. Harrisonfor“GoodReason”(asthosetermsaredefi the termofAgreementbyCompanywithout“Cause”or If Mr. Harrison’semploymentisterminatedatanytimeduring conditions andpost-retirementcoverage,asdescribedbelow. plans asofferedtootherexecutives,terminationofemployment Mr. HarrisonisalsoeligibletoparticipateintheCompany’s 0 8 _ E n g tsdescribedunder“Additional Pension Disclosure”below ts.IfMr. Harrison’semploymentisterminatedintheevent _ M a r 0 8 _ v 1 t.IfMr. Harrison’semploymenthadbeen 7 tequaltoUS$1million. . i n d d 4 3 ve years following retirement. veyearsfollowingretirement. ts disclosed under tsdisclosedunder ts and a life tsandalife ts and tsand ts ts ned ned Pension Plans age 65. become payabletosuchsenior executivewhoretirespriorto both thepensionbenefi of serviceisatleast85,andsuchindividualage55orover, earned. Iftheaggregateofanygivenindividual’sageandyears bonuses relatingtotheyearforwhichsuchwere the AnnualIncentiveBonusPlanafter1995,uptotarget extended toincludethebonusespaidbyCompanyunder January 1996,thedefi pension planwasapproximatelyUS$109,165for2007.In Company’s principalpensionplanortheseniormanagement The recognizedmaximumaverageearningsunderthe (maximum 35years)ofthatindividual. pension plan,multipliedbythenumberofyearsservice Company’s principalpensionplanortheseniormanagement than themaximumaverageearningsrecognizedby individual’s portionofactualaverageearningsthatisgreater additional retirementincomeisasetpercentageofthat a letterofcredit.Theannualpensionanindividual’s additional retirementincomebenefi executive remainsinactiveserviceuntiltheageof55.Accrued retirement incomebenefi the SRSplanonorafterJuly1,2002,hisheradditional service for 2007. service for2007. of CAD$2,222.22(US$2,067.57)peryearpensionable subject toamaximumaggregateannualretirementbenefi pension planandseniormanagementare Retirement benefi (up totargetlevels)intheseniormanagementpensionplan. paid bytheCompanyunderAnnualIncentiveBonusPlan in theprincipalpensionplanandalsoincludebonuses greater. Pensionable earningsconsistofsalaryandovertime or thebestfi earnings duringthelast60monthsofcompensatedservice Highest averageearningsaretheannualpensionable of exchange1.0748for2007. in Canadiancurrencyandwereconvertedusingtheaveragerate highest averageearnings.Thepensionamountsarepayable providing pensionsbasedonpensionableyearsofserviceand (introduced January1,2004),whicharedefi principal pensionplanandseniormanagement Named ExecutiveOffi CANADIAN PENSIONPLANS Stipend (“ to operatingfunds.ThisplaniscalledtheSpecialRetirement clause, areeligibleforadditionalretirementincome,charged who executeanagreement,includinganon-competition Senior executiveswhohaveatleasttwoyearsofserviceand SRS ve consecutive calendar years, whichever is veconsecutivecalendaryears,whicheveris ”). If the senior executive became eligible for ”). Iftheseniorexecutivebecameeligiblefor ts payable under the Company’s principal tspayableundertheCompany’sprincipal cers participate in the Company’s cersparticipateintheCompany’s nition of “salary” under the SRS plan was nitionof“salary”undertheSRSplanwas ts and additional retirement income tsandadditionalretirementincome t will not vest unless such senior twillnotvestunlesssuchsenior ts are guaranteed through tsareguaranteedthrough nedbenefi t plans tplans t 33/8/08 5:41:25 PM / 8 / 0 8 43

5 CN MANAGEMENT INFORMATION CIRCULAR : 4

: 2 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 44 N _ 44 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 from thefollowingplans: in suchplan.Mr. Harrison’stotalretirementbenefi continued hisservicewithICRandparticipation Retirement PlanineffectpriortoMarch30,1998,hadhe Central RailroadCompany(“ the benefi total supplementalretirementbenefi upon histerminationofemploymentwiththeCompany, his The CompanyhadoriginallyguaranteedMr. Harrisonthat pension plan,seniormanagementplanandSRSplan. Mr. HarrisondoesnotparticipateintheCompany’sprincipal U.S. PENSIONPLANS new defi or afterJanuary1,2006asnon-unionizedautomaticallyjointhe plan andseniormanagementpensionplan.Employeeshiredon Mongeau electedtoremainintheCompany’sprincipalpension management employees)mentionedabove.Messrs.Finnand senior managementpensionplanforexecutivesand participation intheCompany’sprincipalpensionplan(and join thenewdefi Non-unionized employeeshadaone-timeopportunitytoeither non-unionized employeesinCanadaonJanuary1,2006. A defi and serviceclassifi retirement (age65)toseniorexecutivesinspecifi generating additionalretirementincomepayableupon management pensionplanandanyspecialagreement benefi The followingtablerefl SRS asatDecember31,2007. principal pensionplan,seniormanagementplanand 13 yearsand8monthsofcreditedserviceundertheCompany’s Messrs. FinnandMongeauhadrespectively14years HIGHEST AVERAGE 0 8 _ E n g ned contribution retirement plan was introduced for nedcontributionretirementplanwasintroducedfor ts under the Company’s principal pension plan, senior tsundertheCompany’sprincipalpensionplan,senior _ M nedcontributionretirementplan. 1,200,000 a r 950,000 700,000 450,000 200,000 ts that would have been provided under the Illinois tsthatwouldhavebeenprovidedundertheIllinois EARNINGS 0 8 _ (US$) v 1 7 . ned contribution retirement plan or maintain nedcontributionretirementplanormaintain ESTIMATED ANNUAL BENEFITPAYABLE UPONRETIREMENT i cations: cations: n d d 3,4 7,8 9,0 1,2 835,950 660,950 716,528 485,950 566,528 597,107 416,528 472,107 477,686 347,107 377,686 238,843 277,686 188,843 138,843 883176622172658310,950 135,950 266,528 116,528 222,107 97,107 177,686 77,686 88,843 38,843 ects an estimate of total annual ectsanestimateoftotalannual 4 02 53 35 30 25 20 10 4 ICR ”) Supplemental Executive ”) SupplementalExecutive PENSIONABLE SERVICE(YEARS) ts would not be less than tswouldnotbelessthan (US$) ed earnings edearnings ts come tscome invested invariousinvestmentfundsasselectedbyMr. Harrison. All contributionsarefullyvesteduponcontributionand (i.e., thematchingcontributionislimitedto3%ofhissalary). limited to50%ofthefi are partiallymatchedbytheICR.Thematchingcontributionis imposed bytheU.S.InternalRevenueCode.Thosecontributions “pre-tax” contributionstotheSavingsPlansubjectlimitations provisions asofJanuary1,2001. and, forMr. Harrison,replacedbyanewplanwiththesame the ICR401(k).ThisplanwasfrozenasofDecember31,2000 401(k) investmentreturn.Priorto2001,thisbenefi unfunded basisandinterestcreditsaregivenusingtheactual at theannual401(a)(17)limit).Amountsareaccruedonan accrual equivalentto2%ofMr. Harrison’sbasesalary(capped Supplemental Defi provisions asofJanuary1,2001. and, forMr. Harrison,replacedbyanewplanwiththesame with theplan.ThisplanwasfrozenasofDecember31,2000 was US$162,500.Accruedamountsearninterestinaccordance U.S. socialsecuritywagebase.For 2007,thewageoffsetfactor factor isadjustedannuallybythepercentageincreasein retirement orterminationofemployment.Thewageoffset be accruedannually(butnotfunded),andispayableupon Incentive BonusPlaninexcessofawageoffsetfactorto Mr. Harrison’scombinedsalaryandpayoutundertheAnnual Balance Planprovidesforasumequivalentto10%of Plan Management SavingsPlanforU.S.Operations(the“ to participateintheCanadianNationalRailwayCompany Non-Qualifi Plan Balance Account Executive Excess Benefi Excess Qualifi provisions asofJanuary1,2001. and, forMr. Harrison,replacedby anewplanwiththesame 401(a)(17) limit.Thisplanwas frozen asofDecember31,2000 Plan alsoprovidedasupplemental2%inexcessoftheannual up forthelimitsinpre-2001ICR401(k),ExcessBenefi on earnings(cappedattheannual401(a)(17)limit).To make match onthefi Prior to2001,theICR401(k)provided,inaddition50% or terminationofemployment. Code. Theamountsaccruedwillbedistributeduponretirement by thelimitsofSection402(g)U.S.InternalRevenue matching contributionundertheSavingsPlanwhichisrestricted provides fortheaccrualofasumequivalenttoemployer’s Mr. Harrison’scompensation.Currently, theExcessBenefi with respecttocertainbenefi the limitationsimposedbyU.S.InternalRevenueCode are accruedforMr. Harrisononanunfundedbasistooffset ”), whichisaqualifi ed Savings Plan (401(k)) Plan Savings ed ed Supplemental Defi Supplemental ed t Plan t rst6%ofpay, a2%Companypaidcontribution ned Contribution Plan provides for an annual nedContributionPlanprovidesforanannual –UnderICR’sExcessBenefi rst6%ofMr. Harrison’spre-taxsalary ed401(k)plan.Mr. Harrisonmaymake t plans as a result of the level of tplansasaresultofthelevel –Mr. Harrisoniseligible – ICR’s Executive Account –ICR’sExecutiveAccount ned Contribution Plan Contribution ned t Plan, amounts tPlan,amounts t was part of twaspartof Savings Savings – ICR’s –ICR’s t Plan tPlan t 33/8/08 5:41:25 PM / 8 / 0 8 5 : 4

: 2 5 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 45 N _ P r o x y _ 2 0 arrangement arepayablefrom the Company’soperatingfunds. pension plan.Thebenefi Company’s principalpensionplanandseniormanagement years and4.35months,lessthepensionpayableunder of yearsservicesinceAugust23,1995,beingtwicefi principal pensionplanandSRSfortwicethenumber entitled toifhehadbeenparticipatingintheCompany’s him, areequaltothepensionbenefi his specialpensionarrangement,whicharetotallyvestedto Canada totheUnitedStates.Mr. Foote’s pensionbenefi pension planuntilMarch31,2000,whenhetransferredfrom December 31,2000,heparticipatedintheCompany’sprincipal During Mr. Foote’s servicefromAugust23,1995 to 10 yearsofservicewiththeCompany. with twoyearsofserviceforeachyearhisfi is coveredbyaspecialpensionarrangement,whichcreditshim Mr. Foote joinedtheCompanyonAugust23,1995. Mr. Foote for thelastyearofhisAgreement. the CompanyuntilDecember31,2008andbyUS$200,000 will beincreasedbyUS$100,000ifheremainsemployed annual benefi Mr. HarrisoniscoveredbytheoldSERP. Mr. Harrison’sSERP Plan effectiveasofJanuary1,1994(the“ Illinois CentralCorporationSupplementalExecutiveRetirement Supplemental Executive Retirement Plan Retirement Executive Supplemental Code limit(US$225,000in2007),overthelastfi earnings arecappedattheaverageofInternalRevenue earnings consistofsalaryandovertime.However, pensionable last 120fullconsecutivemonthsofemployment.Pensionable earnings duringthebest60fullconsecutivemonthsin Highest averageearningsaretheannualpensionable Defi Mr. Harrison,inspecifi annual benefi U.S. subsidiaries,thefollowingtablerefl not membersofthe1989Pension PlanforEmployeesofCN January 1,2001.For non-unionizedemployeesofICRwhowere plan wasintroducedforICR’snon-unionizedemployeeson 0 8 _ E ned Benefi ned ,0,0 ,0 2861,0 5623,1 84844,821 44,821 38,418 44,821 38,418 32,015 38,418 32,015 25,612 32,015 25,612 19,209 25,612 19,209 12,806 19,209 12,806 6,403 12,806 6,403 1,800,000 6,403 1,450,000 1,100,000 EARNINGS n AVERAGE 5,0 ,0 2861,0 5623,1 84844,821 44,821 38,418 38,418 32,015 32,015 25,612 25,612 19,209 19,209 12,806 12,806 6,403 6,403 750,000 400,000 HIGHEST g _ M (US$) a r 0 8 _ v tshallbeUS$1,200,000annually. Thisamount ts payable under such plan to persons, such as tspayableundersuchplantopersons,as 1 t Plan t 7 . 5101520253035 i n d d AT NORMALRETIREMENTAGEFORYEARSOFCREDITEDSERVICE –Atax-qualifi DEFINED BENEFIT PLAN TABLEDEFINED BENEFITPLAN ESTIMATED ANNUAL BENEFIT edearningsandserviceclassifi 4 5 AFTER DECEMBER31,2000 AFTER ts under the special pension tsunderthespecialpension eddefi ts he would have been tshewouldhavebeen (US$) ects an estimate of total ectsanestimateoftotal – ICR established the –ICRestablishedthe nedbenefi old SERP veyears. ”). ”). t retirement tretirement cations: cations: ve ve ts under tsunder rst rst service classifi new SERPafterDecember31,2000,inspecifi described belowtopersons,suchasMr. Foote, whojoinedthe annual benefi inclusively. Thefollowingtablerefl service foreachyearofwithICRuntilAugust22,2005, which hewascredited,asmentionedabove,withtwoyearsof Supplemental RetirementPlan(“ mentioned above.Hehasalsobeenparticipatinginthenew participating intheSavingsPlanandDefi For Mr. Foote’s servicesinceDecember31,2000,hehasbeen a one-timeopportunitytoeitherjointhenew employees onJanuary1,2006.Non-unionizedhad contribution optionwasintroducedforU.S.non-unionized Mr. Foote’s SERPpensionobtainedfromtheabove tableis CN Retirement Contribution Option Contribution Retirement CN offset by(i)thequalifi selected bytheemployee. Contributions areinvestedinvarious investmentfundsas are vestedafterthreeyearsofservice withtheCompany. Company andemployercontributions madein2007orafter made in2006arevestedafterfi by theU.S.InternalRevenueCode.Employercontributions of basepaytotheSavingsPlan,subjectlimitationsimposed which providesforanadditionalemployercontributionof3.5% participate inthenew Benefi Contribution Option Contribution he hasbeenparticipatingintheDefi Mr. CreeljoinedICRonApril1,1996.SinceDecember31,2000, the newSERPasofDecember31,2007. Mr. Foote had11yearsand8monthsofcredited serviceunder available undertheSavingsPlan. that canbepurchasedwiththe3%employercontributions December 31,2000;(iii)theamountofsinglelifeannuity Retirement BoardTier2pensionforhisserviceafter his serviceafterDecember31,2000;(ii)theU.S.Railroad Defi mentioned above.Mr. Creelnolongeraccruesserviceinthe new SupplementalRetirementPlan(“ above. HehasalsobeenparticipatingintheSavingsPlanand following plans: following plans: COMPENSATION nedBenefi ,0,0 2,0 4,0 6,0 8,0 0,0 2,0 840,000 720,000 600,000 480,000 360,000 240,000 120,000 1,200,000 AVERAGE 5,0 50010002500300045005000665,000 570,000 490,000 475,000 315,000 420,000 140,000 380,000 270,000 350,000 120,000 285,000 225,000 280,000 100,000 190,000 180,000 210,000 80,000 95,000 135,000 140,000 60,000 90,000 70,000 950,000 40,000 45,000 700,000 20,000 450,000 200,000 tPension Planmentionedabove.Mr. Creelelectedto FINAL (US$) cation: cation: ts payable under such plan before the offset tspayableundersuchplanbeforetheoffset t Plan or new SERP but participates in the tPlanornewSERPbutparticipatesinthe TABLE ESTIMATED ANNUAL BENEFITAT NORMALRETIREMENT AGEFORYEARS 5101520253035 ormaintainparticipationintheDefi edDefi CN Retirement Contribution Option, Contribution Retirement CN OF CREDITED SERVICE AFTER DECEMBER31,2000 OF CREDITEDSERVICEAFTER SUPPLEMENTAL (NEWSERP) RETIREMENTPLAN nedBenefi ve years of service with the veyearsofservicewiththe new SERP ects an estimate of total ectsanestimateoftotal – A new employer –Anewemployer nedBenefi (US$) new SERP t Plan pension for tPlanpensionfor nedBenefi ”) of ICR under ”) ofICRunder ed earnings and edearningsand CN Retirement Retirement CN t Plan mentioned tPlanmentioned ”) of ICR ”) ofICR t Plan tPlan ned ned 33/8/08 5:41:26 PM / 8 / 0 8 45

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: 2 6 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 46 N _ 46 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 Bonus Plan (up to target level). Bonus Plan(uptotargetlevel). percentage ofbasepayandbonusundertheAnnualIncentive two yearsofservicewiththeCompany. Mr. Creelreceivesa the U.S.InternalRevenueCode.Contributionsarevestedafter compensation withoutregardtothelimitationsimposedby is astand-aloneplan,whichprovidescontributionsoneligible Retirement ContributionOptiondescribedabove.TheDCSERP December 31,2007.At2006,thebenefi non-registered supplementalpensionarrangements. respectively andincludethebenefi using thesameactuarialassumptionsasthoseusedinNote13 ofCN’s2007and2006AnnualConsolidatedFinancialStatements mainly duetotheincreaseinrateconvertCanadianliabilityofSRSU.S.dollars.Theseamountsweredetermi The totalbenefi Mr. Creelnolongeraccrues serviceintheDefi (6) DoesnotincludeformerICRnon-registeredcashplansdescribedonpage47. (5) Theprojectedpensionisbasedoncurrentcompensationlevelsandassumestheexecutivewillreceive80%oftargetbonu (4) (2) The Theservicecostistheestimatedvalueofbenefi benefi (1) Amounts showninthistableincludepensionbenefi based onassumptions,whichmayornotmaterialize. Note 13ofCN’s2007AnnualConsolidatedFinancialStatements.Theamountscalculatedinthistableareestimatesonlyand The followingServicecostandBenefi Additional Pension Disclosure Defi Program (“DC SERP”) (“DC Program 3 Thechangeinbenefi (3) 0 enFn 17001,710,000 137,000 Keith E.Creel Sean Finn James M.Foote Claude Mongeau E.Hunter Harrison NAME 8 _ E ned Contribution Supplemental Executive Retirement Retirement Executive Supplemental Contribution ned at whichtheexecutiveisentitledtoanunreducedpensionbenefi change inbenefi n g _ M a r 0 tobligationisthevalueofbenefi 8 (6) _ v 1 tobligationthatisattributabletotheactuarialassumptionsalsoincludesgainsandlossesotherthanincreaseine 7 (5) tobligationforCN’snon-registereddefi . i tobligationthatisattributabletoCompensationincludestheServiceCost,increaseinearningsexcessorbelowwhat n d d – The DC SERP complements the CN –TheDCSERPcomplementstheCN 4 6 2007 SERVICE ,3,0 27300 21800(,4,0)1,4,0 ,0,0 13100 64 1,311,000 1,209,000 13,441,000 (1,440,000) 2,148,000 12,733,000 1,338,000 tobligationofactive,deferredandretiredmembers. nedBenefi 7,0 ,1,0 4,0 3900 ,9,0 2,0 4000 60 59 440,000 436,000 321,000 204,000 3,992,000 2,280,000 (359,000) (300,000) 340,000 272,000 4,011,000 2,308,000 173,000 175,000 tsaccruedforallservicetothespecifi t Obligation have been calculated using the same actuarial assumptions as those used in tObligationhavebeencalculatedusingthesameactuarialassumptionsasthoseusedin tsaccruedduringthecalendaryear(January1,2007toDecember31,2007).Theseamountsexcludeemployee’scontributions COST 8,0 3,0 1700 8,0 800 0,0 57 100,000 68,000 888,000 (137,000) 238,000 787,000 0 tPlanornewSERPsincehestartedparticipatingintheCNRetirementContributionOptionandDConJanuary1,2006. (1) OBLIGATION AT DECEMBER 31, t or the end of 2008 if the date is already reached. tortheendof2008ifdateisalreadyreached. BENEFIT 2006 (US$) tsfromtheCompany’sdefi 2 3 3 2 (4) (2) (3) (3) (2) 3000(4,0)182001000 344,000 60 140,000 1,842,000 (248,000) 380,000 nedbenefi tobligationwasUS$157,900,000.Thechangeinbenefi COMPENSATION DECEMBER 31, RELATING TO OBLIGATION CHANGE IN JANUARY 1, eddate. 2007 TO BENEFIT FROM 2007 (US$) t plans (SRS, old SERP and new SERP) is US$179,700,000 at tplans(SRS,oldSERPandnewSERP)isUS$179,700,000at The percentagedependsontheageandserviceasfollows: bv 08% 7% in theCNRetirementContributionOptionandDCSERP. Mr. Creelhas9.75yearsofserviceinthenewSERPand2participation Above 60 5%ofeligiblecompensation 50–59 6% 40–49 Up to39 POINTS (SUMOFAGEANDSERVICE) ASSUMPTIONS DECEMBER 31, RELATING TO OBLIGATION CHANGE IN JANUARY 1, 2007 TO BENEFIT FROM 2007 (US$) nedbenefi OBLIGATION AT DECEMBER 31, BENEFIT s fortheyearsafter2007.Theserviceisaccruedtofi t registered pension plans and tregisteredpensionplansand 2007 (US$) DECEMBER 31, arnings. arnings. PENSION AT ACCRUED ANNUAL was assumed and the interest cost. The was assumedandtheinterestcost.The 2007 (US$) UNREDUCED PROJECTED t obligation is tobligationis PENSION AT FIRST ANNUAL DATE (US$) AGE AT FIRST UNREDUCED ned ned rst date rstdate , ifany. DATE 33/8/08 5:41:27 PM / (4) 8 / 0 8 5 : 4

: 2 7 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 47 N _ P r o x y _ 2 0 $100 $150 $200 $250 December 31,2002totheperiodending2007.Itassumesreinvestmentofalldividends. Common SharescomparedwiththecumulativetotalreturnofS&P/TSXandS&P500Indicesfromperiodbeginning The followingPerformance Graph illustratestheyearlycumulativetotalshareholderreturnonaCAD$100investmentinCN’s Performance Graph Pleaserefertotheplandescriptioninsubsection“StatementofExecutiveCompensation–Offi (1) from theCompany. plans ispaidentirelybytheCompanyandnowithdrawalsordistributionsarepermittedbeforefollowingexecutivestermina Amounts showninthistableincludeamountsfromtheCompany’snon-registereddefi Non-Registered Defi 0 $50 S&P 500 S&P/TSX CNR 70,685 Allowed Not 2,894 43,399 DCSERP Keith E.Creel NAME PLAN Harrison E. Hunter NAME 8 $0 _ 0220 0420 062007 2006 2005 2004 2003 2002 E n g _ M a CLOSING PRICEONDECEMBER31,2002=100 r 0 8 _ v 1 7 Contribution Plan Supplemental Defi Excess Benefi Balance Plan Executive Account . i n d E-2DC0 E-4DC0 E-6DEC-07 DEC-06 DEC-05 DEC-04 DEC-03 DEC-02 d ned ContributionPlansTable 10$2 10$4 19$178 $232 $169 $225 $211 $146 $238 $180 $140 $218 $145 $126 $170 $127 $100 $126 $100 $100 (1) 4 7 tPa 8709,1 o loe 1,126,358 Allowed Not 97,419 68,750 tPlan ned ned COMPANY CONTRIBUTIONS 6,5 0,7 o loe 4,187,059 NotAllowed 306,074 563,750 IN 2007 ,0 ,6 o loe 52,760 NotAllowed 4,866 4,600 (US$) cers’Remuneration–Pension Plans–U.S.Pension Plans”. INTEREST CREDITS S&P 500 S&P /TSX CNR IN 2007 (US$) ned contribution plans. The cost of these nedcontributionplans.Thecostofthese WITHDRAWALS/ WITHDRAWALS/ DISTRIBUTIONS AGGREGATE AGGREGATE AS BALANCE AT DECEMBER31,2007 (US$) te te 33/8/08 5:41:28 PM / 8 / 0 8 47

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: 2 8 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 48 N _ 48 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 also carriesexcessdirectorsand offi the 12monthsendingSeptember 30,2008.TheCompany December 31,2007wasapproximately CAD$2,614,222for capacity. Thepremiumpaidinthefi and itssubsidiariesagainstliabilityincurredbytheminsuch the protectionofdirectorsandoffi which variesfromCAD$1,000,000toCAD$2,500,000,for CAD$200,000,000, withadeductibletotheCompany liability insuranceintheannualaggregateamountof The Companyhaspurchased,atitsexpense,group Directors’ andOffi or anyofitsaffi has materiallyaffectedorwouldaffecttheCompany completed fi since thecommencementofCompany’smostrecently any informedpersonorproposeddirectorintransaction Company, anyproposeddirectororassociateaffi interest, directorindirect,ofanyinformedpersonthe The managementoftheCompanyisnotawareanymaterial Material Transactions Interest ofInformedPersons andOthersin of theCompany’soutstandingcommonshares. 10.3 millioncommonshares,representingapproximately2.1% over, orheldoptionstoexerciseanaggregateofapproximately owned, directlyorindirectly, orexercisedcontroldirection executive committeeoftheCompany, asagroup,benefi As atFebruary 29,2008,thedirectorsandmembersof Shares OwnedorControlledbySeniorManagement of theCompanyorotherwise. entered intoinconnectionwiththepurchaseofcommonshares employees oftheCompanyanditssubsidiaries,whether indebtedness ofcurrentandformerdirectors,offi As ofFebruary 29,2008,therewasnooutstanding Indebtedness ofDirectorsandExecutiveOffi Incentive Plan. The tablebelowindicates,asatDecember31,2007,certaininformationwithrespecttotheCompany’sManagementLong-Term Securities AuthorizedforIssuanceUnderEquityCompensationPlans OTHER INFORMATION 0 yscrthlesNlNlNil 14,405,394 25.02 Nil 14,163,768 Nil Total by securityholders Equity compensationplansnotapproved by securityholders Equity compensationplansapproved CATEGORY PLAN 8 _ E n g _ M a r 0 8 nancialyear, orinanyproposedtransaction,that _ v 1 7 liatesorsubsidiaries. . i n d d cers’ Insurance 4 8 cers of the Company cersoftheCompany cers liability insurance for cersliabilityinsurancefor nancial year ending nancialyearending cers and cersand cers NUMBER OFSECURITIESTOBE OF OUTSTANDING OPTIONS, WARRANTS ANDRIGHTS WARRANTS ISSUED UPONEXERCISE liate of liateof cially cially 413782.214,405,394 25.02 14,163,768 ending September30,2008.Thedirectorsandoffi 31, 2007wasapproximatelyCAD$295,000forthe12months liability insuranceinthefi in excessoftheabove.Thepremiumpaidforsuch non-indemnifi Sean Finn the shareholders. contents ofthisInformationCircularanditssendingto The BoardofDirectorstheCompanyhasapproved Approval Corporate SecretaryoftheCompany. www.sedar.com ormaybeobtainedonrequestfromthe relating totheCompanyisavailableonSEDARat most recentlycompletedfi statements andmanagement’sdiscussionanalysisforits Information isprovidedintheCompany’scomparativefi annual informationformandfi States andisrequiredtofi The CompanyisareportingissuerinCanadaandtheUnited Availability ofDocuments in theInformationCircularforsuchannualmeeting. the CompanynolaterthanDecember5,2008,tobeincluded meeting ofshareholdersmustbereceivedattheheadoffi Shareholder proposalstobeconsideredatthe2009annual Shareholder Proposals liability insuranceisnotsubjecttoanydeductible. March 4,2008 CHIEF LEGALOFFICERANDCORPORATE SECRETARY SENIOR VICE-PRESIDENTPUBLICAFFAIRS, PRICE OFOUTSTANDING OPTIONS, WEIGHTED-AVERAGE EXERCISE WEIGHTED-AVERAGE able claims in the amount of CAD$25,000,000 ableclaimsintheamountofCAD$25,000,000 WARRANTS ANDRIGHTS WARRANTS nancial year ending December nancialyearendingDecember le various documents, including an levariousdocuments,includingan nancialyear. Additionalinformation (CAD$) nancial statements. Financial nancialstatements.Financial REFLECTED INTHEFIRSTCOLUMN) EQUITY COMPENSATION PLANS REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER (EXCLUDING SECURITIES NUMBER OFSECURITIES cers excess cersexcess nancial nancial ce of ceof 33/8/08 5:41:31 PM / 8 / 0 8 5 : 4

: 3 1 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 49 N _ P r o x y _ 2 0 CN constructed an approximately 130 km main line through through line main km 130 approximately an constructed CN • • • • • • 1990’s mid the In 1800’s. late the in Park Provincial Algonquin park, provincial premier Ontario’s is Park Provincial Algonquin WHEREAS: Park Line Proposal: ReportonDecommissioningofAlgonquin italics below: The proposalanditssupportingstatementaresetoutin of theshareholderssubmittingit. proposal anditssupportingstatementrepresenttheviews oftheProvinceOntario.This Mrs. MarjorieM.Wilton consideration attheMeetingbyMr. and MichaelL.Wilton The followingshareholderproposalhasbeensubmittedfor SHAREHOLDER PROPOSAL SCHEDULE “A” – CN chose to cease operating the line and has subsequently subsequently has and line the operating cease to chose CN It destination. tourist primary a as reputation worldwide a with dismantled some of the infrastructure associated with the line. line. the with associated infrastructure the of some dismantled highest the including conditions, wilderness unrivalled boasts However, the decommissioning of the line has to date not been been not date to has line the of decommissioning the However, world. the in lakes trout brook self-sustaining of concentration completed in regards to addressing the historical and future future and historical the addressing to regards in completed Many pollutants and deteriorating infrastructure remain along along remain infrastructure deteriorating and pollutants Many right and infrastructure remaining the of impacts environmental said main line right-of-way, and continue to contaminate the the contaminate to continue and right-of-way, line main said environmental comprehensive CN’s to contrary is This way. of soil and water, from sources that include: that sources from water, and soil environmental assess “To commits CN which in policy, impacts before starting a new activity or project and before before and project or activity new a starting before impacts decommissioning a facility.” a decommissioning 0 8 Brent town-site. Brent fi outfl some upstream culverts, preventing concrete and perched, metal deteriorating heavy of levels high contains carcinogens that some waterways Basin metals, Sudbury adjacent the into from seeping slag greasers petroleum abandoned buildings, such as the abandoned staff-house at at staff-house abandoned the as such buildings, abandoned fl in abandoned timbers creosote-impregnated diesel fuel spills fuel diesel _ E n g _ M a r 0 8 _ v 1 7 . i n d d 4 9 sh migration sh owing waters owing ows ows CN has to date not shared with investors or other key key other or investors with shared not date to has CN affected negatively already has Basin Sudbury the from Slag stakeholders the fi the stakeholders and pollutants above-mentioned the unremediated, left If trout lake known one and creek nursery trout brook known one The reputation risks of the Algonquin Park contamination contamination Park Algonquin the of risks reputation The clarifi nor line, Park Algonquin the on commissioned and contaminate to continue will infrastructure deteriorating dam beaver one least At Lake. Cauchon Little in bed spawning are especially acute considering the recent high profi high recent the considering acute especially are line. the to regards in company our of liability and responsibility Ecosystem. Park Algonquin the impact negatively be may problems similar rehabilitated, was deposition latter the the While caused and fi and slag right-of-way of the out washed has Failure to properly remediate the contamination in Algonquin Algonquin in contamination the remediate properly to Failure confi been have effects These expected. environmental incidents experienced by our company, such as as such company, our by experienced incidents environmental Park may lead to reputation and legal risks that could negatively negatively could company. that our risks of legal value and the impact reputation to lead may Park documented. are and observation Wabamun spill of oils and chemicals. and oils of Cheakamus spill the into spill Wabamun hydroxide sodium and derailment the River, which resulted in large-scale death of fi of death large-scale in resulted which River, CN immediately release to shareholders the complete fi complete the shareholders to release immediately CN THAT: RESOLVED IT BE of all environmental studies CN has commissioned relating relating commissioned has CN studies environmental all of to the above-mentioned line through Algonquin Park, and and Park, Algonquin through line above-mentioned the to to report to shareholders as to how CN will deal with the the with deal will CN how to as shareholders to report to environmental concerns, including timelines for remediation. for timelines including concerns, environmental ll into a pristine lake trout lake, namely Mink Lake. Lake. Mink namely lake, trout lake pristine a into ll ndings of environmental studies studies environmental of ndings rmed by personal personal by rmed sh, and the Lake Lake the and sh, ed the the ed le le ndings ndings 33/8/08 5:41:32 PM / 8 / 0 8 49

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: 3 2 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 50 N _ 50 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 privileged information. these reportstobeprivatedocumentsthatmaycontain assist indiscussionswiththeMOE.TheCompanyconsiders have beenpreparedfortheCompany’sinternaluseandto or remediation.Anyassessmentsandreportshowever further workthatmayberequired,includingassessment The CompanycontinuestoworkwiththeMOEonany cooperation withtheMOE. investigations havealsobeencarriedoutinthelasttwoyears park todeterminetheexistenceofpotentialconcerns.Further Canada, performedseveralassessmentsofsiteswithinthe Subsequently, theCompanyandothers,includingEnvironment then negotiatingthetransferofitsrightwayinpark. Ministry oftheEnvironment,withwhichCompanywas the mid-1990’sinamanneragreeduponwithOntario The Company’sraillineinAlgonquinPark wasabandonedin serving industrieswithinthepark. in thepark.Theseoperationsconsistedtoagreatextent any potentialconcernsassociatedwithitshistoricaloperations the OntarioMinistryofEnvironment(“ line, theCompanyhasbeenandcontinuestoactivelyworkwith respecttothedecommissioningofAlgonquinParkWith on environmentalimpactsoftheCompany’sactivities. CN directors.ManagementreportsregularlytotheCommittee Safety andSecurityCommitteeoftheBoard,composed are subjecttooversightbytheCompany’sEnvironment, environmental managementprograms.Theseprograms activities. Ithasconsequentlyimplementedcomprehensive fundamental corporatesocialresponsibilitygoverningits The Companyconsidersprotectingtheenvironmenta that isconsistentwiththeprinciplesofsustainabledevelopment. activities inamannerthatprotectsthenaturalenvironmentand The Companyiscommittedtoconductingitsoperationsand FOR THEFOLLOWING REASONS: SHAREHOLDERS VOTEAGAINSTTHEPROPOSAL THE BOARDOFDIRECTORSRECOMMENDS 0 8 _ E n g _ M a r 0 8 _ v 1 7 . i n d d 5 0 MOE ”) to address ”) toaddress 33/8/08 5:41:32 PM / 8 / 0 8 5 : 4

: 3 2 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 51 N _ P r o x y _ 2 0 B. A. following responsibilities: management onsignifi As partofitsstewardshipresponsibility, theBoardadvises as necessary. Meetings oftheBoardareheldatleastninetimesayearand Delegation ofAuthority, asamendedfromtimetotime. matters tomanagementpursuantitsStandingResolutionson approval. TheBoardhasdelegatedtheapprovalofcertain committee recommendationsaregenerallysubjecttoBoard it isresponsiblefor, orasrequiredbyapplicablelaws.Board may assigntoBoardcommitteesthepriorreviewofanyissues applicable legislationandCN’sArticlesBy-laws. TheBoard the CanadaBusinessCorporationsAct(the“ The Boardapprovesallmattersexpresslyrequiredherein,under the day-to-day operationsinawaythatwillmeetthisobjective. increasing shareholdervalue.Management’sroleistoconduct management ofCN’sbusinessandaffairs,withtheobjective management. TheroleoftheBoardistosupervise The Boardhasclearlydelineateditsroleandtheof MANDATE OFTHEBOARD SCHEDULE “B”– 0 8 _ E executive management Assessing andoverseeingthesuccessionplanningof - - Approving CN’sstrategy n g choosing thePresidentandChiefExecutiveOffi by management. and monitoringtheimplementationofbusinessplan other things,theopportunitiesandrisksofbusiness, a strategicframeworkwhichtakeintoaccount,among reviewing, onatleastanannualbasis,abusinessplanand adopting astrategicplanningprocess,approvingand management compensation; approving annuallyPresidentandCEOexecutive President andCEO’scorporategoalsobjectives Board expectationsandfi management performancetakingintoconsideration and monitoringPresidentCEOexecutive “ _ President andCEO M a r 0 8 _ v 1 7 . i n d d cant business issues and has the cantbusinessissuesandhasthe 5 1 ”), appointing executive management ”), appointingexecutivemanagement xed objectives, approving the xedobjectives,approvingthe CBCA ”) and other ”) andother cer (the cer(the C. ------Monitoring CorporateGovernanceissues - - its PresidentandCEO, seniorfi the CodeofBusinessConductapplicabletoCN’sdirectors, ethical standards,includingreviewing,onaregularbasis, taking allreasonablestepstoensurethehighestqualityof policies andmeasuresforreceivingshareholderfeedback; appropriate, CN’sCorporateGovernanceManualand to governanceissuesandmonitoringreviewing,as monitoring andreviewing,asappropriate,CN’sapproach culture ofintegritythroughoutCN; integrity ofmanagementandthatcreatesa taking allreasonablemeasurestosatisfyitselfasthe favour effectivedecision-making; monitoring thesizeandcompositionofBoardto with thenon-managementdirectorsasagroup. parties tocommunicatedirectlywiththeBoardChairor overseeing thedisclosureofamethodforinterested education programsfordirectors; adopting andreviewingorientationcontinuing shareholders andfi approving thelistofBoardnomineesforelectionby their remuneration; chairs andindividualdirectorsdetermining Board, Boardcommittees,andcommittee ensuring theregularperformanceassessmentof appropriate disclosureofanysuchwaiver; the codefordirectorsandexecutiveoffi such code,approvinganywaiverfromcompliancewith executives andemployees,monitoringcompliancewith of integrityaswellcompetence. retention ofexecutiveswhoexhibitthehigheststandards in placefortherecruitment,training,developmentand taking allreasonablestepstoensurethatprocessesare the short-andlonger-term performanceofCN; and executivemanagementcompensationistiedtoboth ensuring thatanappropriateportionofPresidentandCEO llingBoardvacancies; nancialoffi cers and ensuring cersandensuring cers, other cers,other 33/8/08 5:41:33 PM / 8 / 0 8 51

5 CN MANAGEMENT INFORMATION CIRCULAR : 4

: 3 3 P M CCN_Proxy_2008_Eng_Mar08_v17.indd 52 N _ 52 P r o CN MANAGEMENT INFORMATION CIRCULAR x y _ 2 0 D. 0 8 _ E - - - Monitoring fi n g (ii) (i) information systems,includingbyoverseeing: and procedures,internalcontrolsmanagement and fi monitoring thequalityandintegrityofCN’saccounting monitoring CN’sinvestorrelationsprograms. adopting communicationsanddisclosurepolicies CN’s business; place toidentify, assessandmanagetheprincipalrisksof ensuring thatanappropriateriskassessmentprocessisin (iv) (iii) _ M a r auditors’ independenceandqualifi the reviewofAuditCommitteeonexternal appropriateness oftheirdisclosure; statements andotherfi the integrityandqualityofCN’sfi safety andsecurity); requirements (includingthoserelatedtoenvironment, CN’s compliancewithapplicablelegalandregulatory CN’s externalauditors;and the performanceofCN’sinternalauditfunctionand 0 nancial reporting systems, disclosure controls nancialreportingsystems,disclosurecontrols 8 _ v 1 7 . i nancial mattersandinternalcontrols n d d 5 2 nancial information and the nancialinformationandthe nancial nancial cations; professionalism in discharging their responsibilities. They are professionalism indischargingtheirresponsibilities.Theyare Board membersareexpectedtodemonstrateahighlevelof including onlyIndependentdirectorsisheldregularly. directors whoarenotIndependent,anexecutivesession the chairmanshipofBoardChair. Ifsuchgroupincludes Board meetingwithoutthepresenceofmanagementandunder The non-executiveBoardmembersmeetbeforeorafterevery F. The Board annually reviews the adequacy of its mandate. The Boardannuallyreviewstheadequacyofitsmandate. CEO orothercorporateoffi available toprovideadviceandcounselthePresident all meetingmaterialsinadvance.Theyarealsoexpectedtobe and activelyparticipateinsuchmeetings.Theyshouldreview committees onwhichtheysitandtorigorouslypreparefor expected toattendthemeetingsofBoardand E. - Monitoring environmental,safetyandsecuritymatters - - Monitoring Pension Fund matters environmental, safetyandsecuritypoliciespractices. monitoring andreviewing,asappropriate,CN’s CN’s Pension Trust Funds. approving theannualbudgetofInvestmentDivision Trust Funds plan offeredoradministeredbyCN(the“ connection withanewpensionplanoranyother Funds oranyotherpensiontrustfundestablishedin policies oftheCanadianNationalRailwayPension Trust fund policiesandpractices,includingtheinvestment monitoring andreviewing,asappropriate,CN’spension ”); cersofCNuponrequest. CN’s Pension 33/8/08 5:41:33 PM / 8 / 0 8 5 : 4

: 3 3 P M

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