DRAFT – v1 Feb. 19, 2012 13:00 PM

MANAGEMENT INFORMATION CIRCULAR APRIL 24, 2012 AND NOTICE OF ANNUAL MEETING OF SHAREHOLDERS March 13, 2012

Dear Shareholder:

On behalf of the Board of Directors and Management of Canadian National Railway Company (the “Company”), we cordially invite you to attend the annual meeting of shareholders that will be held this year at the World Trade and Convention Centre, Grand Ballroom (Room 200C), 1800 Argyle Street, Halifax, Nova Scotia (Canada), on Tuesday, April 24, 2012, at 10:00 a.m. (Atlantic Daylight Time).

This Information Circular describes the business to be conducted at the meeting and provides information on executive compensation and CN’s governance practices. In addition to these items, we will discuss, at the meeting, highlights of our 2011 performance and our plans for the future. You will have the opportunity to meet and interact with your directors and the senior offi cers of the Company.

Your participation in the affairs of the Company is important to us. If you are unable to attend in person, we encourage you to complete and return the enclosed proxy form or voting instruction form in the envelope provided for this purpose so that your views can be represented. Also, it is possible for you to vote over the Internet by following the instructions on the enclosed forms. Even if you plan to attend the meeting, you may fi nd it convenient to express your views in advance by completing and returning the proxy form or voting instruction form or by voting over the Internet.

If your shares are not registered in your name but are held in the name of a nominee, you may wish to consult the information on page 5 of the Information Circular with respect to how to vote your shares.

A live webcast of the meeting will be available on the Company’s website at www.cn.ca.

We look forward to seeing you at the meeting.

Sincerely,

Claude Mongeau David G.A. McLean PRESIDENT AND CHIEF EXECUTIVE OFFICER CHAIRMAN OF THE BOARD NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Our annual meeting of holders of common shares will be held at

THE WORLD TRADE AND CONVENTION CENTRE GRAND BALLROOM (ROOM 200C) 1800 ARGYLE STREET HALIFAX, NOVA SCOTIA (CANADA) on Tuesday, April 24, 2012, at 10:00 a.m. (Atlantic Daylight Time) for the purposes of:

1. receiving the consolidated fi nancial statements for the year ended December 31, 2011, and the auditors’ reports thereon;

2. electing the directors;

3. appointing the auditors;

4. considering and approving, in an advisory, non-binding capacity, a resolution (the full text of which is set out on page 6 of the accompanying management information circular) accepting the Company’s approach to executive compensation as disclosed in the Statement of Executive Compensation section of the accompanying management information circular; and

5. transacting such other business as may properly be brought before the Meeting or any adjournment or postponement thereof.

The directors have fi xed March 7, 2012 as the record date for the determination of the holders of common shares entitled to receive notice of the Meeting.

By order of the Board of Directors

Sean Finn EXECUTIVE VICE-PRESIDENT CORPORATE SERVICES AND CHIEF LEGAL OFFICER AND CORPORATE SECRETARY

March 13, 2012 Montréal, Quebec 2 CN MANAGEMENT INFORMATION CIRCULAR Information Circular. I voteifamanon-registeredshareholder?”onpage5ofthis shareholder, referenceismadetothesectionentitled“Howdo the adjournedorpostponedmeeting.Ifyouareanon-registered Daylight Time)onthebusinessdaypriortofi is adjournedorpostponed,bynolaterthan5:00p.m.(Atlantic (Atlantic DaylightTime)onApril23,2012,or, iftheMeeting envelope, orbyvotingovertheInternetnolaterthan5:00p.m. Computershare Trust CompanyofCanadaintheenclosed is defi shareholders andholdersofEmployeeShares(assuchterm proxy orvotinginstructionformand,inthecaseofregistered exercise yourrighttovotebysigningtheenclosedformof IMPORTANT as indicatedotherwise. contained hereinisgivenasatFebruary 29,2012,except forth intheforegoingNoticeofMeeting. at 10:00a.m.(AtlanticDaylightTime)forthepurposesset The MeetingwillbeheldonTuesday, April24,2012, “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 ned in this Information Circular) by returning it to nedinthisInformationCircular)byreturningitto – If you are not able to attend the Meeting, please –IfyouarenotabletoattendtheMeeting,please The information The information xed for xedfor StatementofCorporate 20 DescriptionofNominees 7 Nominees 7 for Election AdvisoryVote onExecutive 6 AppointmentofAuditors 6 ElectionofDirectors 6 Financial 6 Statements Businessofthe Meeting 6 QuestionsandAnswers – 3 What’s Inside 0 AuditCommitteeDisclosure 30 Director Orientationand 28 27 Board Compensation 27 Board Performance 24 Director Selection BoardandCommittee 24 CommitteesoftheBoard 22 ElectionofDirectors 22 22 Position Descriptions 21 Independent Chairman IndependenceofDirectors 21 CodeofBusinessConduct 20 20 General 19 Additional Disclosure BoardandCommittee 18 BoardofDirectors 14 Continuing Education Assessment Meetings of theBoard Governance Practices Relating toDirectors Attendance Compensation to theBoard Compensation Voting andProxies 72SCHEDULE “B” – 70SCHEDULE “A” – 69 Other Information 54 Summary Compensation 38 Compensation Discussion HumanResourcesand 35 StatementofExecutive 34 69 Approval AvailabilityofDocuments 69 69 Shareholder Proposals Directors’andOffi 69 InterestofInformedPersons 69 IndebtednessofDirectors 69 SecuritiesAuthorizedfor 69 68 Currency Exchange Termination andChange 67 Pension PlanBenefi 63 62 Employment Contracts/ IncentivePlanAwards 57 Reports oftheCommittees Mandate oftheBoard Insurance Transactions and OthersinMaterial and ExecutiveOffi Compensation Plans Issuance UnderEquity Information of ControlBenefi Arrangements Table and Analysis Compensation Committee Compensation ts cers cers’ ts will constituteapprovalofthesematters. A simplemajorityofthevotescast,inpersonorbyproxy, How willthesemattersbedecidedatthemeeting? that shareholdersvoteFORitems(i),(ii)and(iii). Our BoardofDirectorsandourmanagementarerecommending Executive CompensationsectionofthisInformationCircular. to executivecompensationdisclosedintheStatementof and (iii)inanadvisory, non-bindingcapacity, ontheapproach (ii) toappointKPMGLLPasauditorsoftheCompany, Shareholders willbevoting(i)toelectdirectorsoftheCompany, What willIbevotingon? February 29, 11.36% oftheoutstandingcommonsharesCNas 50,020,031 commonsharesoftheCompanyrepresenting have benefi of theBill&MelindaGatesFoundation Trust, isdeemedto sole memberofCascadeInvestment,L.L.C.andaco-trustee shares oftheCompanyisMr. H.Gates,III,who,asthe William 10% ormoreofthevotingrightsattachedtoanyclass control ordirectionover, directlyorindirectly, sharescarrying information, theonlypersonwhobenefi the Company, basedonthemostrecentpubliclyavailable To theknowledgeofDirectorsandsenioroffi common sharecarriestherighttoonevote. value. Subjecttothevotingrestrictionsdescribedbelow, each had outstanding440,405,713commonshareswithoutpar As oftheclosebusinessonF either inpersonorbyproxy. the Meetingoratanyadjournmentpostponementthereof, March 7,2012(the“ Shareholders whoareregisteredasatthecloseofbusinesson Who canvote? to voteyourshares. The followingquestionsandanswersprovideguidanceonhow Voting andProxies QUESTIONS ANDANSWERS cial ownership of and/or control or direction over cialownershipofand/orcontrolordirectionover 2012. record date ebruary 29, ebruary 29, ”), will be entitled to vote at ”), willbeentitledtovoteat cially owns, or exercises ciallyowns,orexercises 2012, the Company 2012, theCompany cers of cersof or herassociates. or controlled,directlyindirectly, bysuchpersonorhis rights attachedtothevotingsharesheld,benefi no personshall,inorbyproxy, exercisethevoting with hisorherassociatesexceedssuch15%maximum, or controlled,directlyindirectly, byanyonepersontogether the totalnumberofvotingsharesheld,benefi be casttoelectdirectorsoftheCompany. Inaddition,where the votesattachedtoallourvotingsharesthatmayordinarily to whichareattachedmorethan15%intheaggregateof benefi no person,togetherwithhisorherassociates,shallhold, Our articlesofincorporation,asamended,providethat What arethevotingrestrictions? if Iamanon-registeredshareholder?”. please seetheinstructionsbelowunder“HowdoIvote If yourcommonsharesareheldinthenameofanominee, in personattheMeetingorbyproxy, asexplainedbelow. registered inyourname,youcanvotecommonshares If youareeligibletovoteandyourcommonshares How doIvote? at [email protected]. at 1-800-564-6253,byfax1-888-453-0330oremail 9th Floor, Toronto, OntarioM5J2Y1,bytelephone Computershare Trust CompanyofCanada,100UniversityAve., You cancontactthetransferagenteitherbymailat How canIcontactthetransferagent? or [email protected]. Company’s proxysolicitationagent,toll-freeat1-800-926-6756 your formofproxy, pleasecallPhoenixAdvisoryPartners, the this InformationCircularorrequireassistanceincompleting If youhavequestionsabouttheinformationcontainedin Who canIcallwithquestions? to out-of-pocket expenses. cost estimatedtobeC$30,000plusadditionalcostsrelating of proxiesinCanadaandtheUnitedStates,atanaggregate the servicesofPhoenixAdvisoryPartners forthesolicitation to theCompany. TheCompanyhasretainedandwillpayfor offi solicitation isbeingmadeprimarilybymail,butourdirectors, Management oftheCompanyissolicitingyourproxy. The Who issolicitingmyproxy? cers or employees may also solicit proxies at a nominal cost cersoremployeesmayalsosolicitproxiesatanominalcost ciallyownorcontrol,directlyindirectly, votingshares cially owned ciallyowned cially owned ciallyowned

3 CN MANAGEMENT INFORMATION CIRCULAR 4 CN MANAGEMENT INFORMATION CIRCULAR . VOTINGBY PROXY 1. How doIvoteifamaregisteredshareholder? • • What isthedeadlineforreceivingformofproxy? • How canIsendmyformofproxy? appointed andattendstheMeeting. that thepersonyouappointisawareheorshe completing anotherproperformofproxy. Makesure in theblankspaceprovidedformofproxyorby exercised bywritingthenameofsuchpersonorcompany and actonyourbehalfattheMeeting.Thatrightmaybe or company(whoneednotbeashareholder)toattend However, youhavetherighttoappointanyotherperson the PresidentandChiefExecutiveOffi as proxiesinsuchformofproxyaretheBoardChairand the enclosedformofproxy. Thepersonscurrentlynamed someone elsetovoteforyouasyourproxyholderbyusing your sharecertifi You arearegisteredshareholderifyournameappearson Offi the BoardChairorPresidentandChiefExecutive common sharesrepresentedbyproxiesinfavourof on theproxy. Ifnoinstructionsareindicated,your voting inaccordancewithyourinstructionsindicated Your commonshareswillbevotedorwithheldfrom my proxy? How willmycommonsharesbevotedifIgive for theadjournedorpostponedmeeting. Daylight Time)onthebusinessdaypriortofi or postponed,bynolaterthan5:00p.m.(Atlantic Time) onApril23,2012,oriftheMeetingisadjourned or avoteovertheInternetis5:00p.m.(AtlanticDaylight The deadlineforreceivingdulycompletedformsofproxy on theformofproxy. can voteovertheInternetbyfollowinginstructions Company ofCanada,intheenvelopeprovided,oryou the Company’scommonshares,ComputershareTrust form ofproxytothetransferagentandregistrarfor You caneitherreturnadulycompletedandexecuted of thisInformationCircular, in theStatementofExecutiveCompensationsection the approachtoexecutivecompensationdisclosed FOR, inanadvisory, non-bindingcapacity, FOR theappointmentofKPMGLLPasauditors, as directors, FOR theelectionofmanagement’snominees cer willbevotedasfollows: cate. If this is the case, you may appoint cate.Ifthisisthecase,youmayappoint ceroftheCompany. xed xed . VOTINGINPERSON 2. • If Ichangemymind,howcanrevokeproxy? Meeting, donotcompleteorreturntheformofproxy. counted attheMeeting. Canada attheregistrationtable.Your votewillbetakenand to arepresentativeofComputershareTrust Companyof If youwishtovoteinperson,maypresentyourself over theInternet,bywayofasubsequentInternetvote. other mannerpermittedbylaworinthecaseofavote or anyadjournmentpostponementthereof, orinany with thechairofMeetingonday or anyadjournmentpostponementthereof, or(ii)fi the lastbusinessdayprecedingofMeeting up toandincluding5:00p.m.(AtlanticDaylightTime)on West, Montréal,Quebec,Canada,H3B2M9)atanytime offi Corporate SecretaryoftheCompanyatregistered (duly authorizedinwriting),and(i)depositedwiththe a laterdate)executedbyyou,oryourattorney in writing(whichincludesanotherformofproxywith You mayrevokeyourproxyatanytimebyaninstrument business likelytobebroughtbeforetheMeeting. management isnotawareofanyamendmentorother directors willbeunabletoserveifelectedoffi reason tobelievethatanyofthenomineesforelectionas of theCompanymayrecommend.Managementhasno in hisorhersteadofsuchotherpersonasmanagement proxy infavourofmanagementwillvotefortheelection for election,itisintendedthatthepersonactingunder election asadirectorbecomeunabletoacceptnomination the Meeting. such otherbusinessasmayproperlybebroughtbefore amendments toanyoftheforegoingmattersoron and atthediscretionofproxyholderinrespect ce of the Company (935 de La Gauchetière Street ceoftheCompany(935deLaGauchetièreStreet Should any nominee named herein for Should anynomineenamedhereinfor If you wish to vote in person at the If youwishtovoteinpersonatthe ce and ceand led led . VOTINGINPERSON 2. GIVINGYOUR VOTINGINSTRUCTIONS 1. that youcanvoteyourcommonshares: a non-registeredshareholder, therearetwoways,listedbelow, prohibited fromvotingsharesforthebroker’sclient.Ifyouare 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? as youwillbevotingattheMeeting. complete therequestforvotinginstructionssenttoyou Computershare Trust CompanyofCanada.Donototherwise present themselvesattheMeetingtoarepresentativeof shareholders whoappointthemselvesasproxyholdersshould and returninstructionsofyournominee.Non-registered appoint yourselfasproxyholderandfollowthesignature for votinginstructionsprovidedbyyournomineeto insert yourownnameinthespaceprovidedonrequest However, ifyouwishtovoteinpersonattheMeeting, shares arevotedattheMeeting. non-registered shareholderstoensurethattheircommon instructions, whichshouldbecarefullyfollowedby mailing proceduresandprovidesitsownsignaturereturn of commonsharesyouhold.Everynomineehasitsown your nomineearequestforvotinginstructionsthenumber Accordingly, youwillreceiveorhavealreadyreceivedfrom voting instructionsfromyouinadvanceoftheMeeting. Applicable securitieslawsrequireyournomineetoseek c instructions, brokers and their agents or nominees are cinstructions,brokersandtheiragentsornomineesare nancial nancial Operations (the“ Plans anditsUnionManagementSavingsforU.S. under itsCanadianandU.S.EmployeeShareInvestment Common sharespurchasedbyemployeesoftheCompany How doIvoteifownEmployeeShares? respect toEmployee Shares. common shares.Noformofproxy istobecompletedwith the enclosedformofproxywith respecttosuchadditional common sharesoutsidethePlans, heorshemustalsocomplete to EmployeeShares.Intheevent thatanemployeeholds The votinginstructionformmust beusedonlywithrespect Internet, bywayofsubsequenttelephoneorinternetdirections. law, orinthecaseofdirectionsgivenbytelephoneover postponement thereof, orinanyothermannerpermittedby Meeting onthedayoforanyadjournment or postponementthereof, or(ii)fi day precedingtheofMeetingoranyadjournment including 5:00p.m.(AtlanticDaylightTime)onthelastbusiness of CNattheregisteredoffi intention torevokeis(i)depositedwiththeCorporateSecretary provided suchwritteninstrumentindicatingtheholder’s Shares, orbytheholder’sattorneydulyauthorizedinwriting, instrument inwritingexecutedbytheholderofEmployee as indicatedonavotinginstructionform,atanytimebyan A holderofEmployeeSharesmayrevokehisorherdirections, I voteifamanon-registeredshareholder?” Meeting, refertoparagraph2ofthesectionentitled“Howdo be voted.IfyouwishtovoteEmployeeSharesinpersonatthe given votinginstructionsbytelephoneorovertheInternet)will signed andreturned(orinrespectofwhichtheemployeehas Shares inrespectofwhichavotinginstructionformhasbeen may properlybebroughtbeforetheMeeting.OnlyEmployee enclosed votinginstructionformoronsuchotherbusinessas in respectofamendmentstotheitemsmentionedon the discretionofcustodianorsuchotherpersonindicated, management’s recommendationsmentionedaboveandat an item,theEmployeeShareswillbevotedinaccordancewith 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’ custodian Plans cialowner. Ifnochoiceisspecifi ”), areknownas“ ce of CN at any time up to and ceofCNatanytimeuptoand ”), unless the employees have ”), unlesstheemployeeshave cial owners of Employee Shares cialownersofEmployeeShares led with the chair of the ledwiththechairof Employee Shares ed for edfor ”. ”.

5 CN MANAGEMENT INFORMATION CIRCULAR 6 CN MANAGEMENT INFORMATION CIRCULAR and amaximumof21directors(hereinafterthe“ our BoardofDirectorsshallconsistaminimumseven Our articlesofincorporation,asamended,providethat Election ofDirectors at (514)399-7091orInvestorRelations399-0052. who requestscopiesbycontactingourCorporateSecretary at www.cn.ca, andinprint,freeofcharge,toanyshareholder Form 40-FavailableonEDGARatwww.sec.gov, onourwebsite at www.sedar.com, intheCompany’sannualreporton Company, availableonourwebsiteatwww.cn.ca, onSEDAR thereon, areincludedinthe2011AnnualReportof December 31,2011,togetherwiththeauditors’reports Our consolidatedfi Financial Statements BUSINESS OFTHEMEETING of anythedirectors. the commonsharesbewithheldfromvotingonelection given suchproxyorvotinginstructionformhasdirectedthat nominee attheirdiscretionunlesstheshareholderwhohas voting instructionformreservetherighttovoteforanother the personsdesignatedinaccompanyingformofproxyor but shouldthatoccurforanyreasonbeforetheMeeting, that anyofthesenomineeswillbeunabletoserveasadirector, The BoardofDirectorsandmanagementdonotcontemplate have confi to actasdirectorsoftheCompanyforensuingyearand of theBoardDirectorsandmanagement,wellqualifi of thesenominees. or votinginstructionformintendtovoteFORtheelection the personsdesignatedinaccompanyingformofproxy Nominating Committee.Unlessauthorityiswithheld, the BoardofDirectorsbyCorporateGovernanceand Company. Allpersonsnominatedwererecommendedto for electionasdirectorsarecurrentlyofthe as management’snominees.Allofthenomineesproposed of Nominees”willbepresentedforelectionattheMeeting entitled “NomineesforElectiontotheBoard–Description the closeofMeeting. The termofoffi or appointed. of shareholdersoruntilsuchperson’ssuccessoriselected current year, eachtoholdoffi of Directors,13personsaretobeelectedasdirectorsforthe “ Board ofDirectors rmed their willingness to serve as directors. rmedtheirwillingnesstoserveasdirectors. ce of each of the present directors expires at ceofeachthepresentdirectorsexpiresat nancial statements for the year ended nancialstatementsfortheyearended The persons nominated are, in the opinion Thepersonsnominatedare,intheopinion ”). Pursuant to a resolution of the Board ”). PursuanttoaresolutionoftheBoard The persons named in the section The personsnamedinthesection ce until the next annual meeting ceuntilthenextannualmeeting Board ed ed ” or ” or intend tovoteFORthefollowingresolution: instructed, thepersonsdesignatedinformofproxy FOR theresolutionsetoutbelowand,unlessotherwise The BoardofDirectorsrecommendsthatshareholdersvote plans withtheinterestsofourshareholders. compensation plansforexecutives,andthealignmentofsuch executive compensationprinciples,thestructureof year businessplan.ThesectionalsodescribestheCompany’s executives andensuringthatitislinkedtotheCompany’sthree- Compensation Committeeinoverseeingcompensationof Such sectiondescribestheroleofHumanResourcesand Executive CompensationsectionofthisInformationCircular. executive compensation,asdisclosedintheStatementof meeting anadvisoryvoteontheCompany’sapproachto shareholders withanannualopportunitytocastatits Similarly tolastyear, theCompanyisagainprovidingits Executive Compensation Advisory Vote on hold offi appointment ofKPMGLLPasauditorstheCompanyto of proxyorvotinginstructionformintendtovoteFORthe withheld, thepersonsdesignatedinaccompanyingform the nextannualmeetingofshareholders. that KPMGLLPbeappointedtoserveasourauditorsuntil The BoardofDirectorsandtheAuditCommitteerecommend Appointment ofAuditors compensation inthecontextofshareholders’specifi if appropriate,reviewtheCompany’sapproachtoexecutive Committee willconsidertheresultsofthisprocessand, of DirectorsandtheHumanResourcesCompensation the opportunitytoexpresstheirspecifi to engagewithshareholdersaviewgiving Resources andCompensationCommitteewilloverseeaprocess advisory resolution,theBoardChairorofHuman proxy atthemeetingarevotedagainstabovenon-binding that, ifamajorityofthesharesrepresentedinpersonorby The BoardofDirectorshasadoptedapolicytotheeffect “ March 13,2012.” of theInformationCircularCompanydated entitled “StatementofExecutiveCompensation” to executivecompensationdisclosedinthesection of Directors,theshareholdersacceptapproach diminish theroleandresponsibilitiesofBoard RESOLVED that,onanadvisory basisandnotto ce untilthenextannualmeetingofshareholders. c concerns. The Board cconcerns.TheBoard Unless authority is Unless authorityis cconcerns. as directors.AllnomineesarecurrentdirectorsoftheCompany. The followingtablessetoutinformationasofFebruary 29,2012,unlessotherwiseindicated,regardingthenomineesforelecti Description ofNominees ELECTION TOTHEBOARD NOMINEES FOR taei lnigCmite 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE 100% 100% 100% Strategic Planning Committee Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensation Committee Corporate Governance&Nominating Committee Finance Committee(Chair) Board 100% MEMBER OF 151,711 155,443 February 2011 C$11,850,974 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE 100% 100% 100% Investment CommitteeofCN’sPension Trust Funds Human Resources&CompensationCommittee Finance Committee Environment, Safety&SecurityCommittee Strategic PlanningCommittee(Chair) Board 100% 113,680 MEMBER OF 115,965 February 2011 C$8,834,400 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED SECURITIES HELD SECURITIES HELD

(7) (6) (3) (3) Independent Director since:April15,2003 Toronto, Ontario,Canada Age: 72 CHARLESBAILLIE,O.C.,A. LL.D. Independent Director since:May7,1996 Long BeachIsland,NewJersey, U.S.A. Age: 72 MICHAEL R.ARMELLINO, CFA (2) (2) (1) (1) (5) (5) 100% 100% N/A aaCroain (1998-2008) (2003-present) (2003-present) Dana Corporation TELUS Corporation George Weston Limited Business School. from theUniversityofToronto andanMBAfromHarvard Mr. inPolitical BaillieholdsanHonoursB.A. Scienceand Economics Royal ConservatoryofMusic. Honorary DoctoratefromQueen’sUniversity, andisaFellow ofthe into theCanadianBusinessHallofFame in2008.Mr. Baillie holdsan appointed anOffi Theatre Company, LuminatoandBusinessfortheArts.Hewas Harbour Front andonthenationalboard ofdirectorsSoulpepper Chair oftheArtGalleryOntario.HeispresidentAuthorsat heavily involvedintheartsformanyyearsandiscurrentlyHonorary Executives andChancellorEmeritusofQueen’sUniversity. Hehasbeen Mr. BaillieisapastchairmanoftheCanadianCouncilChief is alsoadirectorofGeorgeWeston LimitedandTELUS Corporation. directors ofAlbertaInvestmentManagementCorporation(AIMCo)and bank thatspannedfi and asChiefExecutiveOffi Mr. Baillieretired as chairofTheToronto-Dominion BankinApril2003, of Business(NewYork University),NewYork. Mr. Armellinoholds anMBAinfi computer softwarecompany. New Jersey. Mr. ArmellinoisalsoadirectorofArmantaCorp.,private free healthcareforthosewithouthealthcareinBergenCounty, Volunteer MedicalInitiative,aprivatelyfundedorganizationproviding Center Foundation andFounder andsenioradvisoroftheBergen of thePeddie School,aTrustee oftheHackensackUniversityMedical Mr. ArmellinoisaTrustee andmemberoftheExecutiveCommittee Charge ofResearch. Sachs &Co.,includingseniortransportationanalystandPartner in Management. Priorto1991,hehadheldvariouspositionsatGoldman, was chairandChiefExecutiveOffi The GoldmanSachsGroup,LP. From 1991to1994,Mr. Armellino Mr. Armellino,acharteredfi cer of the Order of Canada in 2006 and inducted ceroftheOrderCanadain2006andinducted vedecades.Mr. Baillie ischairoftheboard cer in December 2002 after a career at the cerinDecember2002afteracareeratthe nancialanalyst,isaRetiredPartner, nance from the Stern School nancefromtheSternSchool cer of Goldman Sachs Asset cerofGoldmanSachsAsset on on

7 CN MANAGEMENT INFORMATION CIRCULAR 8 CN MANAGEMENT INFORMATION CIRCULAR iac omte 100% 80% 100% 100% Strategic PlanningCommittee Finance Committee Corporate GovernanceandNominatingCommittee Audit Committee Board 100% MEMBER OF 2,739 5,073 C$386,469 February 2011 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE 100% 100% Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee Environment Safety&SecurityCommittee Audit Committee Board 100% MEMBER OF 45,680 47,833 February 2011 C$3,646,788 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED taei lnigCmite 100% Strategic PlanningCommittee

(8) SECURITIES HELD SECURITIES HELD

(7) (6) (3) (7) (6) (3) Age: 73 HUGH J.BOLTON, FCA Independent Director since:January1, 2011 Dallas, Texas, U.S.A. Age: 65 DONALD J.CARTY, O.C., LL.D. Independent Director since:April15,2003 Edmonton, Alberta,Canada (2) (2) (1) (1) (5) 100% TEDNEOTHERPUBLIC BOARDSDURINGPAST 5YEARS ATTENDANCE el n. (1992-present) (2001-2007) (2004-2011) (2006-present) (2009-present) (2006-present) Sears HoldingCorp. Hawaiian Holdings,Inc. Dell, Inc. Gluskin Sheff&Associates Barrick GoldCorporation Talisman EnergyInc. from theHarvardBusinessSchool. Laws fromQueen’sUniversity, andaMasterofBusinessAdministration Mr. CartyholdsanundergraduatedegreeandHonoraryDoctorof and Porter Airlines,Inc. Talisman EnergyInc.HeischairmanofVirginAmericaAirlines Inc. on theboardsofDell,Inc.,Gluskin,Sheff&AssociatesInc.and Mr. CartyisleaddirectorofBarrickGoldCorporationandalsoserves Directors. HewasnamedanOffi In 1999,BoardAlertnamedMr. Cartyoneoftheyear’sOutstanding Star andisaformerchairmanofBigBrothersSistersAmerica. Cox SchoolofBusiness.HeischairmanBigBrothersSistersLone Southern MethodistUniversityandtheExecutiveBoardofSMU In thevoluntarysector, Mr. CartyisontheBoardofTrustees of President andCEOofCPAirfrom1985–1987. and ControllerofAMRAirlineGroupAmericanAirlines.Hewas Vice-President –FinanceandPlanningSenior and AmericanAirlines.HehadpreviouslyservedasPresident,Executive Mr. Cartyretiredin 2003aschairmanandCEOofAMRCorporation Dell, Inc.,apositionheassumedinJanuary2007.Beforejoining Mr. Cartyistheretired vice-chairmanandChiefFinancialOffi degree ofeconomicsfromtheUniversityAlberta. Mr. BoltonisaChartered Accountantandholdsanundergraduate Canada andtheCanadianTax Foundation. as amemberoftheBoardGovernorsJuniorAchievement Institute ofCharteredAccountantsAlberta.Hehaspreviouslyserved 2006 andisarecipientoftheLifetimeAchievementAwardfrom He wasinductedasafellowoftheInstituteCorporateDirectorsin Thomson Foundation. Saskatchewan, andoftheAlbertaBoardGovernorsMiller medivac helicoptersinAlberta,easternBritishColumbiaandwestern a non-profi He isalsoadirectoroftheShockTrauma AirRescueSociety(STARS), Financial GroupandWestJet AirlinesLtd. of CapitalPower Corporation,Teck ResourcesLimited,TDBank capping aforty-year careerwiththefi Partner ofCoopers&Lybrand Canada(nowPricewaterhouseCoopers), From 1992to1997,Mr. BoltonwaschairmanandChiefExecutive From 2001to2010healsoservedaschairofMatrikonInc. Inc. (energyandenergy-related servicesprovider, notpubliclytraded). Mr. BoltonisthechairmanofboarddirectorsEPCORUtilities arknIc (2001-2010) (2001-present) (2005-present) (2003-present) (2009-present) Matrikon Inc. Teck ResourcesLimited TD BankFinancialGroup WestJet AirlinesLtd. Capital Power Corporation t organization providing emergency medical transport using torganizationprovidingemergencymedicaltransportusing ceroftheOrderCanadain2003. rm.Mr. Boltonisalsoadirector cer of cerof iac omte 100% 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE 100% Strategic PlanningCommittee 100% Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee Finance Committee Corporate GovernanceandNominatingCommittee 42,918 Board 100% 45,350 MEMBER OF February 2011 C$3,454,836 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE Strategic PlanningCommittee Donations andSponsorshipsCommittee Board 100% MEMBER OF 45,009 47,634 February 2011 C$3,628,835 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED iac omte 100% 100% Investment CommitteeofCN’sPension Trust Funds Finance Committee Environment, SafetyandSecurityCommittee SECURITIES HELD SECURITIES HELD

(7) (6) (3) (7) (6) (3) Age: 62 GORDOND.GIFFIN AMBASSADOR Independent Director since:June1,2001 Palm BeachCounty, Florida,U.S.A. Age: 60 EDITH E.HOLIDAY Independent Director since:May1,2001 Atlanta, Georgia,U.S.A. (2) (2) (1) (1) (5) 100% (5) (5) 100% 100% esCroain (1993-present) (1994-present) (1999-present) Hess Corporation H.J. HeinzCompany (2004-present) Franklin Templeton GroupofFunds RTI InternationalMetals,Inc. White MountainsInsuranceGroup,Ltd. the DistrictofColumbia. and sheisadmittedtothebarsofstatesFlorida,Georgia Mrs. HolidayholdsaB.S.andJ.D.fromtheUniversityofFlorida, of diversityintheworkplace. distinction ontheboardofapubliccompanyandadvancedvalue Board ExcellenceAward,whichhonourswomenwhohaveservedwith She istherecipientofDirectWomen’s 2009SandraDayO’Connor Franklin Templeton (2003-2009) GroupofFunds. She isalsoadirectorortrusteeofvariousinvestmentcompaniesthe RTI InternationalMetals,Inc.andWhiteMountainsInsuranceGroup,Ltd. Mrs. HolidayisadirectorofH.J.HeinzCompany, HessCorporation, (2002-present) Cabinet, TheWhiteHouse. Counsel, UnitedStatesTreasury DepartmentandSecretaryofthe (2006-present) Mrs. HolidayisaCorporateDirectorandTrustee andaformerGeneral (2001-present) (2002-present) AbitibiBowater Inc. Canadian ImperialBankofCommerce TransAlta Corporation Canadian NaturalResourcesLimited Just EnergyGroupInc. University SchoolofLawinAtlanta,Georgia. Mr. Giffi Natural ResourcesLimitedandJustEnergyGroupInc. a directoroftheCanadianImperialBankCommerce, Mr. Giffi Arts Centre. Associates. HeischairmanoftheboardFriends oftheNational Mr. Giffi Fulbright Program. Presidential CenterandtheboardofdirectorsCanada-US Mr. Giffi States AmbassadortoCanadafromAugust1997April2001. government serviceformorethanthirtyyears.Mr. Giffi and publicpolicy. Hehasbeenengagedinthepracticeoflawor His practicefocusesoninternationaltransactionsandtradematters Aldridge, wherehemaintainsoffi Mr. Giffi vroscmais (1996-present) (various companies) n holds a B.A. from Duke University and a J.D. from Emory fromDukeUniversityandaJ.D.Emory nholdsaB.A. nisalsochairoftheboardTransAlta Corporationand nservesontheBoardofCounsellorsKissinger-McLarty nisamemberoftheBoardTrustees oftheJimmyCarter nisSeniorPartner ofthelawfi cesinWashington, D.C.andAtlanta. rmofMcKenna Long& n was United nwasUnited

9 CN MANAGEMENT INFORMATION CIRCULAR 10 CN MANAGEMENT INFORMATION CIRCULAR EBRO TEDNEOTHERPUBLICBOARDSDURINGPAST 5YEARS 100% ATTENDANCE Donations andSponsorshipsCommittee Audit Committee(Chair) Board 100% MEMBER OF 124,715 134,649 February 2011 C$10,265,640 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED 100% 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE 100% Strategic PlanningCommittee Investment CommitteeofCN’sPension Trust 100% Funds Human ResourcesandCompensationCommittee Audit Committee Environment, SafetyandSecurityCommittee(Chair) Board 100% MEMBER OF 80,944 83,671 February 2011 C$6,379,077 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED taei lnigCmite 100% 100% 100% Strategic PlanningCommittee Human ResourcesandCompensationCommittee Environment, SafetyandSecurityCommittee SECURITIES HELD SECURITIES HELD

(7) (6) (3) (7) (6) (3) Age: 63 O.C., D.COMM.,LL.D. V. MAUREEN KEMPSTONDARKES, Independent Director since:October25,1994 Moncton, NewBrunswick,Canada Age: 59 P.C., LL.D.,C.M. THE HON.DENISLOSIER, Independent Director since:March29,1995 Lauderdale-by-the-Sea, Florida,U.S.A. (2) (2) (1) (1) (5) 100% (5) 100% Business AdministrationfromtheUniversityofMoncton. Ontario. Mr. LosierwasawardedanHonoraryDoctorateDegreein Moncton andaMastersofEconomicsfromtheUniversityWestern Mr. Losierholdsa BachelorofEconomicsfromtheUniversity a MemberoftheOrderCanadain2011. chairs theboardofdirectorsInvestN.B.Mr. Losierwasappointed Brunswick, NAV CANADAandPlazacorpRetailPropertiesLtd.Healso Canadian LifeandHealthInsuranceAssociation,EnbridgeGasNew Business CouncilandadirectorofCanadianBloodServices,the a memberofthePrivyCouncil.HeisNewBrunswick Intelligence ReviewCommitteeofCanada,and,assuch,became Campaign. In2008,hewasnamedamemberoftheSecurity Mr. Losierwasco-chair oftheUniversityMoncton’sExcellence of EconomicDevelopmentandTourism. (2010-present) (1996-2008) Brunswick, includingMinisterofFisheriesandAquaculture cabinet levelpositionswiththegovernmentofProvinceNew insurance company).Between1989and1994,Mr. Losierheldvarious Mr. LosierisPresident andChiefExecutiveOffi Thomson Corporation Brookfi Enbridge Inc. from theUniversityofToronto Faculty ofLaw. Victoria UniversityintheofToronto andanLL.B.LawDegree Mrs. Kempston inhistoryandpoliticalsciencefrom DarkesholdsaB.A. Management Inc.,IrvingOilCo.Ltd.andEnbridgeInc. Mrs. Kempston DarkesisalsoadirectorofBrookfi is alsoadirectoroftheBridgepointHealthFoundation. inducted asafellowoftheInstituteCorporateDirectorsin2011.She recipient oftheGovernorGeneralCanada’sPersons Awardandwas Most Powerful Woman inInternationalBusiness.In2006,shewasthe Ontario andwasrankedbyFortune magazinein2009asthe12th She isanOffi Canada LimitedandVice-PresidentofGeneralMotorsCorporation. to 2001,shewasPresidentandGeneralManagerofMotors the highestoperatingposteverheldbyawomanatGM.From 1994 In 2009sheendeda35-yearcareeratGMduringwhichattained Latin America,AfricaandMiddleEast,GeneralMotorsCorporation. Mrs. Kempston DarkesistheretiredGroupVice-PresidentandPresident A AAA (2004-present) (2007-present) NAV CANADA Plazacorp RetailPropertiesLtd. edAstMngmn n. (2008-present) eldAssetManagementInc. cer of the Order of Canada, a member of the Order of ceroftheOrderCanada,amember cer, AssumptionLife(life eld Asset eldAsset iac omte 100% 100% 100% 100% Strategic PlanningCommittee Human ResourcesandCompensationCommittee Finance Committee Corporate GovernanceandNominatingCommittee taei lnigCmite 100% 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE Strategic PlanningCommittee Donations andSponsorshipsCommittee Corporate GovernanceandNominating Board (Chair) MEMBER OF 190,074 196,137 February 2011 C$14,953,485 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE Investment CommitteeofCN’sPension Trust 97,347 Board 100% MEMBER OF 100,356 February 2011 C$7,651,141 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED iac omte 100% 100% Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee Finance Committee omte Car 100% Committee (Chair) Funds (Chair) (5) 100% SECURITIES HELD SECURITIES HELD

(7) (6) (3) (7) (6) (3) Age: 72 P.C., LL.D. THE HON.EDWARD C.LUMLEY, Independent Director since:August31,1994 Vancouver, BritishColumbia,Canada Age: 73 DAVID McLEAN,O.B.C., G.A. LL.D. Independent Director since:July4,1996 South Lancaster, Ontario,Canada (2) (2) (1) (1) (5) 100% (5) 100% C n. (2003-present) (1989-2008) (1997-present) Magna InternationalInc. Dollar ThriftyAutomotiveGroup,Inc. Inc. BCE N/A the UniversityofAlberta. Mr. McLeanholds aBachelorofArtsandLawfrom Royal RoadsUniversity. Columbia, theUniversityofAlberta,SimonFraser Universityand degree fromthefollowingfourinstitutions:UniversityofBritish of BritishColumbiain1999.Hehasbeenawardedanhonorary Directors ofCanadain2006andwasappointedtotheOrder Mr. McLeanwasinducted asafellowoftheInstituteCorporate of Commerce. Columbia, theVancouver BoardofTrade andtheCanadianChamber past chairoftheboardgovernorsUniversityBritish of CanadianStudiesattheUniversityCaliforniaBerkeleyand of DucksUnlimited.HeisontheadvisoryboardInstitute He isatrusteeofWetlands AmericaTrust, Inc.,theU.S.foundation communications andaircraftcharters). McLean Group(realestateinvestment,fi Mr. McLeanisBoard ChairoftheCompanyandchairThe in1961. University ofWindsor Mr. LumleygraduatedwithaBachelorofCommercefromthe Inc.,BellCanadaandDollarThriftyAutomotiveGroup,Inc. of BCE andadirector He iscurrentlyChancelloroftheUniversityWindsor Parliament fornumerousCrowncorporations,bondsandcommissions. and Communications.Duringthisperiod,hewasresponsibleto Canada suchasIndustry, InternationalTrade, ScienceandTechnology which timeheheldvariouscabinetportfoliosintheGovernmentof Mr. LumleywasaMemberofParliament from1974to1984,during Group Inc. From 1986to1991,heservedaschairofNorandaManufacturing Mr. LumleyisVice-Chairman,BMOCapitalMarkets(investmentbank). lm and television facilities, lmandtelevisionfacilities,

11 CN MANAGEMENT INFORMATION CIRCULAR 12 CN MANAGEMENT INFORMATION CIRCULAR iac omte 100% 100% 100% 100% Strategic PlanningCommittee Finance Committee Environment, Safety&SecurityCommittee Audit Committee MEMBER OF Nil 5,849 C$445,586 February 2011 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE Strategic PlanningCommittee Donations andSponsorshipsCommittee(Chair) Board 220,998 MEMBER OF 225,782 February 2011 C$17,213,620 February 2012 Value atRisk OR CONTROLLED COMMON SHARESOWNED

(9) (2) SECURITIES HELD SECURITIES HELD

(3) (3) Age: 50 CLAUDE MONGEAU Independent Director since:April27,2011 Fort Lauderdale,Florida,U.S.A. Age: 62 JAMES E.O’CONNOR Not Independent Director since:October20,2009 Montréal, Quebec,Canada (2) eray21 983,000 1,008,000 February 2011 February 2012 OPTIONS HELD (1) (1) (5) (4) TEDNEOTHERPUBLIC BOARDSDURINGPAST 5YEARS ATTENDANCE 100% 100% 100% otlNtok (2006-2009) (2003-present) Nortel Networks GroupInc. SNC-Lavalin eulcSrie,Ic (1998-2011) (2011-present) Republic Services,Inc. Clean EnergyFuels Corp. in accounting)fromDePaul University, Chicago. Mr. O’Connorholds aBachelorofScienceinCommerce(concentration Clean EnergyFuels Corp. on theboardofdirectorsSouthFloridaP.G.A. ofAmericaand of directorstheSOSChildren’sVillage.Healsocurrentlyserves those thatbenefi Executive Team. Heisalsoactiveinmanycommunitycauses,especially Mr. O’Connorwas namedtotheInstitutionalInvestors’AllAmerican America’s BestCEOseachyear, between2005and2010.In2011, the richnessoftheirparticularheritage.Hewasnamedtolist their personalandprofessionallives,whilecontinuingtopreserve which rewardsAmericanswhoexemplifyoutstandingqualitiesinboth Honor fromtheNationalEthnicCoalitionofOrganizations(NECO) In 2001,Mr. O’Connor wastherecipientofEllisIslandMedal positions atWaste Management,Inc. Republic Services,Inc.Priorto1998,hehadheldvariousmanagement 1998 to2011,Mr. O’ConnorwaschairandChiefExecutiveOffi collection, recyclinganddisposalservicesintheUnitedStates.From Services, Inc.,aleadingproviderofnon-hazardoussolidwaste Mr. O’Connoristhe retiredchairoftheboarddirectorsRepublic Mr. MongeauholdsanMBAfromMcGillUniversity, Montréal. Mr. GroupInc. MongeauisalsoadirectorofSNC-Lavalin at Bain&Company. in thebusinessdevelopmentunitofImascoInc.andasaconsultant a Montréal-basedmanagementconsultingfi Prior tojoiningCN,Mr. MongeauwasapartnerwithSecorGroup, independent committeeofprominentCanadianbusinessleaders. in 1994.In2005,hewasselectedCanada’sCFOoftheYear byan Vice-President, CorporateDevelopmentuponjoiningtheCompany of Vice-President,StrategicandFinancialPlanningAssistant such positionuntilJune1,2009.Priortothisheheldthepositions Vice-President andChiefFinancialOffi Company onJanuary1,2010.In2000,hewasappointedExecutive Mr. MongeaubecamePresidentandChiefExecutiveOffi tchildren.Mr. O’Connor hasservedontheboard cer of the Company and held ceroftheCompanyandheld rm. He also worked rm.Healsoworked cer of the cerofthe cer of cerof 3 TheValue atRiskrepresentsthetotalvalueofcommonsharesandDRSUs(orDSUsforMr. Mongeau)whichtotalvalueisbase (3) Theinformationregardingcommonsharesbenefi (2) TheageofthedirectorsisprovidedasatApril24,2012,dateMeeting. (1) 4 TheinformationregardingoptionscomprisesthegrantedtoMr. MongeauundertheManagementLong-Term IncentivePla (4) 6 IncludesDirectorsRestrictedShareUnitsasatFebruary CharlesBaillie:53,343;Hu 29,2012, inthefollowingamounts:A. (6) TheDonationsCommitteeandtheInvestmentofCN’sPension Trust Funds aremixedcommitteescomposedofbothmemb (5) 7 IncludesDirectorsRestrictedShareUnitsasatFebruary CharlesBaillie:49,611;Hug 25,2011 inthefollowingamounts:A. (7) 9 OnApril27,2011Mr. O’ConnorbecameamemberoftheAudit,Environment,SafetyandSecurity, FinanceandStrategicPlanni (9) OnMarch8,2011,Mr. CartybecameamemberoftheAudit,CorporateGovernanceandNominating,FinanceStrategicPlanni (8) ui omte 100% 100% OTHERPUBLICBOARDSDURINGPAST 5YEARS ATTENDANCE 100% Strategic PlanningCommittee Investment CommitteeofCN’sPension Trust Funds Corporate GovernanceandNominatingCommittee 100% Audit Committee Human ResourcesandCompensationCommittee(Chair) Board 100% 129,567 MEMBER OF 139,405 February 2011 C$10,628,237 February 2012 Value atRisk COMMON SHARESOWNEDORCONTROLLED DSUs issuffi in DSUs,whichwillvestoveraperiodoffouryears.TheelectiontoreceiveeligibleincentivepaymentsDSUsisnolonger price forthe20tradingdayspriortoandincludingdateofincentivepayment.For eachparticipant,theCompanywill eligible incentivepaymentsinDSUspayablecashuponretirementorterminationofemployment.Thenumberreceivedb does notincludecommonsharesunderoptions.TheVIDPprovideseligibleseniormanagementemployeestheopportunitytoelectt (“ the VIDP, pleaseseetheDeferredCompensationPlanssectionofthisInformationCircular. James E.O’Connorusingtheclosingexchangerate(US$1=C$0.9895)onsamedate. shares ontheToronto StockExchange(C$76.24)ortheNewYork StockExchange(US$76.99)forMichaelR.Armellino,DonaldJ.Ca Company. of ExecutiveCompensation–ManagementLong-Term IncentivePlan”. resignation ordeath. and RobertPace: 47,001.PursuanttothetermsofDirectorsRestrictedShareUnits,directorsortheirestatescanonlyacc Gordon D.Giffi resignation ordeath. and RobertPace: 46,193.PursuanttothetermsofDirectorsRestrictedShareUnits,directorsortheirestatescanonlyacc Gordon D.Giffi DRSUs ”) electedascompensationbydirectors,wellDeferredShareUnits(“ cienttomeettheCompany’sstockownershipguidelines.Thevalueofeachparticipant’sDSUsispayableincashattime n:20,586;EdithE.Holiday:9,492;V. MaureenKempston Darkes:24,841;TheHon.DenisLosier:44,878;EdwardC.Luml n:19,333;EdithE.Holiday:8,206;V. MaureenKempston Darkes:24,414;TheHon.DenisLosier:41,857;EdwardC.Luml SECURITIES HELD

(7) (6) (3) Age: 57 ROBERT PACE Independent Director since:October25,1994 Glen Margaret,NovaScotia,Canada (2) ciallyowned,controlledordirectedhasbeenfurnishedbytherespectivenomineesindividuallyandincludesDirectorsRestric (1) (5) 100% DSUs ”) undertheCompany’sVoluntary IncentiveDeferralPlan(“ vradRat iie (2006-2010) (2007-present) (1998-present) Overland RealtyLimited High LinerFoods Incorporated Hydro OneInc. University inHalifax,NovaScotia. Mr. Pace holdsanMBAandLL.BLawDegreefromDalhousie a directorofHighLinerFoods IncorporatedandHydroOneInc. Foundation andtheWalter GordonFoundation. Mr. Pace isalso He isadirectoroftheAtlanticSalmonFederation, theAsiaPacifi Canada AdvisortothePrimeMinisterofCanada. Mr. Pace beganhiscareerasalawyerinHalifaxandworkedAtlantic (radio broadcasting,realestateandenvironmentalservices). Mr. Pace isPresidentandChiefExecutiveOffi gh J. Bolton: 43,935; Donald J. Carty: 5,073; Ambassador gh J.Bolton:43,935;DonaldCarty:5,073;Ambassador h J. Bolton: 43,180; Donald J. Carty: 2,739; Ambassador h J.Bolton:43,180;DonaldCarty:2,739;Ambassador available to a participant when the value of the participant’s vested available toaparticipantwhenthevalueofparticipant’svested ess their Directors Restricted Share Units upon retirement, ess theirDirectorsRestrictedShareUnitsuponretirement, ess their Directors Restricted Share Units upon retirement, ess theirDirectorsRestrictedShareUnitsuponretirement, grant a further 25% (Company match) of the amount elected grant afurther25%(Companymatch)oftheamountelected d ontheFebruary 29,2012closingpriceofthecommon ng Committees. ng Committees. n. For furtherdetailsontheplan,pleasesee“Statement y each participant is established using the average closing y eachparticipantisestablishedusingtheaverageclosing rty, AmbassadorGordonD.Giffi o receive their annual incentive bonus payment and other o receivetheirannualincentivebonuspaymentandother ers oftheBoardDirectorsaswelloffi cessationofemployment.For furtherdetailson ey: 42,146; David G.A. McLean: 86,257; McLean:86,257; ey: 42,146;DavidG.A. ey: 41,422; David G.A. McLean: 84,774 McLean:84,774 ey: 41,422;DavidG.A. VIDP ”) in the case of Claude Mongeau, but ”) inthecaseofClaudeMongeau,but cer, ThePace Group n, Edith E. Holiday and n,EdithE.Holidayand ted Share Units ted ShareUnits cers of the cersofthe c

13 CN MANAGEMENT INFORMATION CIRCULAR 14 CN MANAGEMENT INFORMATION CIRCULAR longer received a separate committee member retainer for the longer received a separatecommitteemember retainerforthe Chair andmembersofsuchCommittees. CommitteeChairsno a CommitteeChairretainerofUS$25,000 inclusiveforactingas Human ResourcesandCompensation Committeeswhoreceived Committee Chairs,exceptforthe ChairsoftheAuditand at US$3,500forCommitteeMembers andUS$15,000for member andCommitteeChair retainers remainedunchanged Board Chairwhencomparedto2010compensation.Committee average totalcompensationforCNdirectorsand36%the The changeresultedinayear-over-year reductionof21%in while keepingthealignmentwithshareholders’interest. provides greaterconsistencyintotaldirectorcompensation grant valuedatUS$350,000fortheBoardChair. Thisapproach grant valuedatUS$175,000fordirectors,andacommonshare number ofsharesandwouldbereplacedwithacommonshare Board Chairretainerswouldnolongerbecomprisedofafi in 2011,theannualsharegrantportionofDirectorand those ofotherClassIRailroads,itwasdecidedthatbeginning of bestpracticesanddirectorcompensationtrends,including of compensationfornon-executivedirectors.Afterareview and CompensationCommitteereviewedtheamountform Nominating CommitteeandtheChairofHumanResources program, theChairofCorporateGovernanceand In 2010,giventheexpiryofthencurrentcompensation U.S.-based companies. of theCompanytendstobecomparablethatlarge States andthecompensationofnon-executivedirectors non-executive directornomineesarefromtheUnited extensive operationsintheUnitedStates,sixof of beinganeffectivedirector. To refl Committees andtakesintoaccounttherisksresponsibilities the mostqualifi CN’s compensationprogramisdesignedtoattractandretain refl Company purchasedontheopenmarket,plusadditionalDRSUs resignation, retirementordeath,onecommonshareofthe Each DRSUentitlesthebenefi elect toreceivetheircommonsharegrantretainersinDRSUs. purchased ontheopenmarketorDRSUs.Theymayalso retainers eitherincash,commonsharesoftheCompany committee member, BoardChairandCommitteecash directors mayelecttoreceiveallorpartoftheirdirector, Requirement asdefi Share Units(“ 2011 wasintheformofcommonsharesorDirectorsRestricted the totalannualremunerationofnon-executivedirectorsfor investment intheCompany. Inaddition,approximately68%of Ownership” onpage16,thedirectorshaveasubstantial to theBoard–ofDirectorsCompensationShare shareholder value.Asindicatedunder“NomineesforElection The directorsoftheCompanyplayacentralroleinenhancing Board ofDirectorsCompensation ectingdividendequivalents. DRSUs ed people to serve on CN’s Board and Board edpeopletoserveonCN’sBoardand nedonpage16ofthisInformationCircular, ”). Subject to the Minimum Shareholding ”). SubjecttotheMinimumShareholding ciary thereof to receive upon ciarythereoftoreceiveupon ect the Company’s ecttheCompany’s xed xed table below: in 2011,CN’sdirectorswerecompensatedasindicatedthe annually. InconsiderationforservingontheBoardofDirectors Committee andapprovedbytheBoardin2011,isreviewed recommended bytheCorporateGovernanceandNominating The compensationstructureandlevelforCN’sdirectorswas of US$1,500. Board Meeting,CommitteeMeetingandTravel Attendancefees Board Chair, directorsandtheBoardChaircontinuedtoreceive remained atUS$15,000fordirectorsandUS$120,000the remain unchangedfromprioryears:Thecashretaineramount Member retainers.Allotheraspectsofdirectorcompensation additional Directorretainer, norCommitteeChairor Committees theychair. Moreover, theBoardChairreceivedno 3 Mr. Mongeaudoes notreceiveanycompensationforservingasdirectoroftheCompany. (3) Directors(includingBoardChair)maychoosetoreceiveallorpartoftheircashretainer (2) TheBoardChairreceivesnoadditionalDirectorRetainernorCommitteeor (1) YEO E AMOUNT Committee ChairRetainers Director ShareGrantRetainer Director CashRetainer Board ChairShareGrantRetainer Board ChairCashRetainer TYPE OFFEE Travel AttendanceFee Committee MeetingAttendanceFee Board MeetingAttendanceFee Committee MemberRetainer Other Committees Audit andHumanResources in theStatementofExecutiveCompensationSection. Mr. Mongeau’scompensationforservingasCEOoftheCompanyisdescribedindetail in DRSUs.Thecommonsharesarepurchasedontheopenmarket. in commonsharesorDRSUsandtheirsharegrantretainercanalsobereceived Committee MemberRetainer. Compensation Committees (3) (1) US$175,000 US$15,000 US$350,000 US$120,000 US$1,500 US$1,500 US$1,500 US$3,500 US$15,000 US$25,000 (2) (2) (2) (2) (2) (2) (2) 6 Thispercentageiscalculatedbydividingtheaggregateofcashretainerelectednon-executivedirectorstoberecei (6) Includesthevaluefor2011ofinsurancepremiumsaccidentaldeathanddismembermentaswellmedical (5) 4 Suchvaluesrepresentcommitteeattendancefeesreceivedincashfortomeetingsofboardcommitteeswhichth (4) 3 RepresentsacommonsharegrantvaluedatUS$175,000receivedbyeachnon-executiveDirectoraspartoftheRetain (3) IncludestravelfeeswhichamountedtoatotalofC$136,496,inaggregate,foralldirectors. (2) AlldirectorsearnedcompensationinU.S.currency. CompensationreceivedincashwasconvertedtoCanadiandollarsusing t (1) The tablebelowrefl TOTAL Robert Pace James E.O’Connor McLean David G.A. Edward C.Lumley The Hon. Denis Losier The Hon. Kempston Darkes V. Maureen Edith E.Holiday Gordon D.Giffi Ambassador Donald J.Carty Hugh J.Bolton CharlesBaillie A. Armellino Michael R. DIRECTOR NAME OF the valueprovidedundershare-basedawardscolumn,bytotalcolumn. the U.S.ThetotalcosttoCompanyforsuchbenefi dollars usingtheaveragerateofexchangeBankCanadafor2011(US$1=C$0.9891). Gordon D.Giffi the NewYork StockExchange(US$69.3803)andconvertedusingtheclosingexchangerateonsamedate(US$1=C$0.9932)forM Board ChairRetainer. ThevalueofsuchgrantwascalculatedasatJanuary27,2011usingthevolumeweightedaveragepriceon to bereceivedincommonsharesorDRSUsisincludedthesecolumns. CharlesBaillie(C$43,701),DonaldJ.Carty(C$14,898),TheHon.EdwardC.Lumley(C$43,701)andRo forth besidetheirname:A. directors andtheBoardChairmaychoosetoreceiveallorpartoftheircashretainersincommonsharesDRSUs.Thefollowin (US$1 =C$0.9932),onthepurchaseday(January27,2011).InadditiontocommonsharesorDRSUsreceivedbydirectors (US$1 =C$0.9891).CompensationelectedtobereceivedincommonsharesorDRSUswasconvertedCanadiandollarsusingthecl n n,EdithE.HolidayandJamesO’Connor. (C$) RETAINER BOARD DIRECTOR CHAIR AND ects indetailthecompensationearnedbynon-executivedirectors12-monthperiodendedDecember31,2011. 1,9 5213760351551465% 68% 535,144 3,467,719 3,551 46,577 347,620 2,201,593 65,281 685,447 – 147,877 109,028 – 277,197 118,692 4882,3 3956,1 7,1 ,8 9,4 78% 77% 291,240 61% 1,484 281,308 63% 65% 65% 284,591 173,810 1,484 275,523 72% 268,270 4,451 62,313 65% 266,291 173,810 2,967 1,484 13,905 173,810 263,384 78% 4,451 62,313 267,115 62% 173,810 173,810 56,379 11,869 24,830 2,967 13,905 173,810 278,341 56,379 278,490 60,830 10,386 173,810 14,898 59,346 1,484 14,898 173,810 2,967 12,693 17,309 48,960 24,728 13,847 59,346 14,898 173,810 14,837 173,810 – 13,847 14,837 – 59,346 16,155 59,346 14,837 – 13,905 – 14,837 12,693 14,837 14,898 14,898 14,837 14,837 14,898 14,837 ,9 ,3 5681583748180265% 178,022 7,418 115,873 35,608 9,232 – 9,891 1 1 (1) (1) (1) (C$) CHAIR COMMITTEE RETAINER tsisequaltoC$2,067. FEES EARNED (C$) RETAINER MEMBER COMMITTEE AND ATTENDANCE TRAVEL COMMITTEE BOARD AND FEES (C$) (1)(2) SHARE-BASED AWARDS ved in common shares or DRSUs described in note (1) above and ved incommonsharesorDRSUsdescribednote(1)aboveand (C$) 3 (4) (3) he average rate of exchange of the Bank of Canada for 2011 he averagerateofexchangetheBankCanadafor2011 er, andUS$350,000fortheBoardChairaspartof g directors made such election with respect to the amounts set g directorsmadesuchelectionwithrespecttotheamountsset ey were not members. Such values were converted to Canadian ey werenotmembers.SuchvaluesconvertedtoCanadian ALL OTHER and dental coverage for David G.A. McLean in Canada and McLeaninCanadaand and dentalcoverageforDavidG.A. such dateontheToronto StockExchange(C$68.9801)or COMPENSATION bert Pace (C$53,633).Theamountofcashretainerselected and theBoardChairasdescribedinnote(3)below, the osing rate of exchange of the Bank of Canada osing rateofexchangetheBankCanada ichael R.Armellino,DonaldJ.Carty, Ambassador (C$) (5) (C$) TOTAL SHARES AND/OR IN RECEIVED COMMON TOTAL PERCENTAGE OF FEES DRSUs (6)

15 CN MANAGEMENT INFORMATION CIRCULAR 16 CN MANAGEMENT INFORMATION CIRCULAR increased from C$250,000 to C$500,000 on March 8, 2011. increased fromC$250,000toC$500,000onMarch8,2011. related tohisorherholding.Theaforementionedtargetwas procedures orotherhedgingtoreducetheexposure Requirement shallnotbetheobjectofspecifi of CNheldtocomplywiththeMinimumShareholding and thecommonshares,DRSUsorsimilarshareequivalent to holdsuchvaluethroughouthisorhertenureasadirector Requirement common shareorDRSUgrant)(the“ of theBoardChairannualretainerincashand share orDRSUgrant(andfortheBoardChair, theaggregate annual DirectorRetainerincashandthecommon of: (i)C$500,000,or(ii)threetimestheaggregateof equivalents ofCN,ifany, withavalueofatleastthehigher joining theBoard,commonshares,DRSUsorsimilarshare non-executive directorshouldown,withinfi The Boardhasadoptedaguidelinestatingthateach Share Ownership ThevalueofoutstandingDRSUsisbasedontheclosingpricecommonshares (2) ShowsinformationregardingDRSUsheldbynon-executivedirectorsasof (1) December 31,2011withrespecttonon-executivedirectors. The tablebelowrefl Outstanding Share-basedAwards Robert Pace James E.O’Connor McLean David G.A. The Hon.EdwardC.Lumley The Hon.DenisLosier V. MaureenKempston Darkes Edith E.Holiday Ambassador GordonD.Giffi Donald J.Carty Hugh J.Bolton CharlesBaillie A. Michael R.Armellino NAME OFDIRECTOR Edith E.Holiday, usingtheDecember31,2011closingexchangerate(US$1=C$1.0170). Stock Exchange(US$78.56)forDonaldJ.Carty, AmbassadorGordonD.Giffi on December31,2011,theToronto StockExchange(C$80.15)ortheNewYork Board, ordeath. estates canonlyaccesstheirDRSUsuponretirementorresignationfromtheCompany’s DRSUs. PursuanttothetermsofDirectorsRestrictedShareUnits,directorsortheir in commonsharesorDRSUsandtheirshareretainercanalsobereceived December 31,2011.Thedirectorsmaychoosetoreceiveallorpartoftheircashretainers ”). Each non-executive director shall continue ”). Eachnon-executivedirectorshallcontinue ects all awards outstanding as at ectsallawardsoutstandingasat n NUMBER OFSHARES SHARES THAT HAVE Minimum Shareholding Minimum Shareholding OR UNITSOF NOT VESTED 7013,767,130 6,913,499 47,001 3,378,002 3,413,589 86,257 1,991,006 42,146 42,590 1,571,625 24,841 3,521,390 19,671 4,045,892 43,935 50,479 SHARE-BASED AWARDS ,4 667,048 222,589 8,349 2,786 ve years of veyearsof (#) c monetization cmonetization –– –– MARKET ORPAYOUT HAVE NOTVESTED AWARDS THAT SHARE-BASED n and nand (1) VALUE OF (C$) (2) Stock Exchange(US$76.99)forU.S.directors.) on theToronto StockExchangeof(C$76.24),ortheNewYork 29, 2012,closingpriceofthecommonsharesCompany directors isapproximatelyC$6.8M(basedontheFebruary (including DRSUs)oftheCompanyownedbynon-executive CN. Asofthedatehereof, theaveragevalueofcommonshares up to100%ofsuchretainersincommonsharesorDRSUs Shareholding Requirementismet,directorsmayelecttoreceive Shareholding Requirementismet.OncetheMinimum in commonsharesorDRSUsofCNuntilhisherMinimum of CNandmayelecttoreceiveup100%suchretainers Committee ChaircashretainersincommonsharesorDRSUs of hisorherannualDirector, committee,BoardChairand Each non-executivedirectorisrequiredtoreceiveatleast50% 4 DonaldJ.CartyandJamesE.O’Connorbeingnew Board membershavefi (4) 3 ThetotalvalueisbasedontheFebruary 29,2012closingpriceofthecommonsharesonToronto StockExchange(C$76.24 (3) IncludesDRSUselectedaspartofdirectorscompensation andDSUsundertheCompany’sVIDPheldbyClaudeMongeau. (2) ThenumberofcommonsharesandDRSUsheldby eachdirectorfor2012isasatFebruary 29,2012,andfor2011isasatFebr (1) current directorsasatFebruary 29,2012,andtheamountneededtomeetMinimumShareholdingRequirement. The followingtableprovidesinformationonthenumberandvalueofcommonsharesDRSUsownedbyCompany’s Robert Pace Gordon D.Giffi Ambassador Donald J.Carty YEAR Hugh J.Bolton CharlesBaillie A. Armellino Michael R. DIRECTOR James E.O’Connor Claude Mongeau McLean David G.A. Edward C.Lumley The Hon. Denis Losier The Hon. Kempston Darkes V. Maureen Edith E.Holiday for MichaelR.Armellino,DonaldJ.Carty, AmbassadorGordonD.Giffi n Variation Variation Variation Variation Variation Variation Variation Variation Variation Variation Variation Variation Variation 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012

(1) OR CONTROLLED OWNED, DIRECTED COMMON SHARES NUMBER OF 105,300 109,880 102,100 102,100 113,680 115,965 83,374 92,404 28,311 29,730 55,925 58,210 82,858 89,771 56,530 58,830 34,712 35,858 25,676 27,048 4,580 2,285 9,030 5,849 5,849 1,419 2,285 6,913 2,300 1,146 1,372 1,398 2,500 3,898 – – – – – NUMBER OF n,EdithE.HolidayandJamesO’Connor, usingtheclosingexchangerate(US$1=C$0.9895)onsamedate. veyearsfromtheirappointmenttotheBoardmeetguideline. DRSUs HELD 192,687 196,052 84,774 86,257 46,193 47,001 41,422 42,146 41,857 44,878 24,414 24,841 19,333 20,586 43,180 43,935 49,611 53,343 3,365 1,483 2,334 2,739 5,073 3,021 1,286 8,206 9,492 1,253 3,732 808 724 427 755 – – – – – – (2) AND DIRECTED CONTROLLED DRSUs SHARES OR OF OWNED, TOTAL COMMON NUMBER 113,680 220,998 225,782 190,074 196,137 115,965 129,567 139,405 100,356 124,715 134,649 151,711 155,443 97,347 80,944 83,671 42,918 45,350 45,009 47,634 45,680 47,833 4,784 6,063 9,838 9,934 2,334 2,739 5,073 3,732 2,285 5,849 5,849 3,009 2,727 2,432 2,625 2,153 – GUIDELINE REQUIREDTOMEET OR GUIDELINE INVESTMENT MET uary 25,2011. ) ortheNewYork StockExchange(US$76.99) 7,4 8,6 0.7 386,469 177,546 1,2 4,8 0.8 445,586 118,429 / 72360N/A 17,213,620 N/A (C$) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ (3) (4) (4) SHARESANDDRSUs OF TOTAL COMMON VALUE (VALUE AT RISK) 1809421 11,850,974 0682719 10,628,237 11 14,953,485 18 10,265,640 ,2,3 6 3,628,835 6 3,646,788 16 8,834,400 ,5,4 14 7,651,141 11 6 6,379,077 3,454,836 (C$) (3) AS MULTIPLE OF SHAREHOLDING REQUIREMENT VALUE AT RISK

17 CN MANAGEMENT INFORMATION CIRCULAR 18 CN MANAGEMENT INFORMATION CIRCULAR 4 JamesE.O’Connorattendedonanon-voting basisoneHumanResourcesCompensationCommitteemeetingandtwomeetingsofth (4) Inadditiontocommitteemembers,Claude Mongeauattendedfi (3) 2 DonaldJ.CartyattendedtwoAuditCommitteemeetingsandFinanceonanon-votingbasispriortohis (2) 1 Inadditiontocommitteemembers,allnon-executiveboardmembersattendedonanon-votingbasistheJanuaryandSeptember (1) of Boardandcommitteemeetingsheldduringthe12-monthperiodendedDecember31,2011. The tablesbelowshowtherecordofattendancebydirectoratmeetingsBoardanditscommittees,aswellnumber Board andCommitteeAttendance taei lnigCmite3 6 9 6 5 5 Strategic PlanningCommittee 5 3 Investment CommitteeofCN’sPension Trust Funds Human ResourcesandCompensationCommittee Finance Committee 5 Environment, SafetyandSecurityCommittee Donations andSponsorshipCommittee Corporate GovernanceandNominatingCommittee Audit Committee Board MEETINGS BOARD ANDCOMMITTEE Robert Pace James E.O’Connor Claude Mongeau McLean David G.A. Edward C.Lumley The Hon. The Hon.DenisLosier Kempston Darkes V. Maureen Edith E.Holiday Gordon D.Giffi Ambassador Donald J.Carty Hugh J.Bolton CharlesBaillie A. Michael R.Armellino DIRECTOR as partoftheorientationprogramfornewdirectors. program fornewdirectors(includingthosesetoutinnote(1)above). a non-votingbasis,threeHumanResourcesandCompensationCommitteemeetingsonemeetingoftheInvestmentCN Trust Funds andtheJanuary December2011meetingsoftheHumanResourcesandCompensationCommittee. fi veHumanResourcesandCompensationCommitteemeetingstwoInvestment ofCN’sPension Trust Funds onanon-votin (1) n (2) (3) (4) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (Chair) BOARD 9/9 6/6 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 COMMITTEE AUDIT (Chair) / / / / 12/12 3/3 – – 4/4 3/3 – 24/24 16/17 3/3 3/3 – 22/22 5/55/5–––5/5 4/4 – 3/3 2/2 2/2 5/5 – 4/4 3/3 6/6 – 5/5 6/6 6/6 3/3 – – – 5/5 3/3 3/3 3/3 2/2 – 6/6 – – 3/3 3/3 3/3 2/2 – 4/5 5/5 – 3/3 / / / / 6/6 25/25 5/5 3/3 6/6 3/3 6/6 2/2 – 5/5 – – 4/4 5/5 3/3 2/2 – – – 6/6 5/5 2/2 – – 3/3 – COMMITTEE NOMINATING AND NANCE GOVER- CORPORATE (Chair) NUMBER OF MEETINGS NUMBER OFMEETINGS veAuditCommitteemeetings,fi / / / / / / 20/20 3/3 2/2 3/3 – 3/3 2/2 2/2 HELD IN2011 COMMITTEE SHIPS SPONSOR- AND DONATIONS (Chair) / / / / / / 28/28 3/3 6/6 5/5 4/4 2/2 3/3 COMMITTEE SECURITY SAFETY AND ENVI- NUMBER AND%OFMEETINGSATTENDED RONMENT, (Chair) ve Environment, Safety and Security Committee meetings, six Finance Committee meetings, veEnvironment,SafetyandSecurityCommitteemeetings,sixFinance ––––3/36/6 COMMITTEE FINANCE (Chair) / / / / 21/21 3/3 6/6 3/3 2/2 COMMITTEE PENSATION COM- AND RESOURCES HUMAN (Chair) / / / 25/25 3/3 6/6 5/5 nomination on those committees. He also attended, on nominationonthosecommittees.Healsoattended, 2011 meetingsoftheInvestmentCommitteeCN’sPension FUNDS TRUST PENSION OF COMMITTEE CN’S INVESTMENT e InvestmentCommitteeofCN’sPension Trust Funds (Chair) ’s Pension Trust Funds aspartoftheorientation g basis. / / 24/24 3/3 6/6 COMMITTEE PLANNING STRATEGIC (Chair) / 25/25 3/3 (TOTAL) COMMITTEES (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) 24/24 (94%) ATTENDANCE OVERALL (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) (100%) 33/33 30/30 34/34 34/34 33/33 18/18 37/37 29/29 34/34 33/33 31/31 15/15 25/26 (96%) i) Mr. Lumley, adirectoroftheCompany, wasadirectorof (ii) Mr. Baillie,adirectoroftheCompany, wasadirector (i) appointed toholditsassets,exceptforthefollowing: with creditorsorhadareceiver, receivermanagerortrustee to orinstitutedanyproceedings,arrangementcompromise legislation relatingtobankruptcyorinsolvencywassubject that capacity, becamebankrupt,madeaproposalunderany capacity orwithinayearofthatpersonceasingtoactin of anycompanythat,whilesuchpersonwasactinginthat has been,inthelast10years,adirectororexecutiveoffi for electiontotheBoardofDirectors,nosuchnomineeisor and baseduponinformationprovidedtoitbythenominees As ofthedatehereof, totheknowledgeofCompany to Directors Additional DisclosureRelating (iii) Mr.(iii) Mongeau,adirectorandthePresidentChief the Air Canadawhenitvoluntarilyfi Dana Corporation; in February 2008.Mr. Baillieisnolongeradirector of successfully emergedfromChapter11 reorganization not includedintheChapter11 fi Asian-Pacifi Code onMarch3,2006.Dana’sEuropean,SouthAmerican, reorganization underChapter11 oftheU.S.Bankruptcy of DanaCorporationwhichfi and NNLeffectiveAugust10,2009; Middle East.Mr. MongeauresignedasadirectorofNNC subsidiaries madeconsequentialfi Code, andcertainEurope,MiddleEastAfrica United StatesunderChapter11 oftheU.S.Bankruptcy Certain U.S.subsidiariesfi creditor protectionproceedingsundertheCCAAinCanada. NNC, NNLandcertainotherCanadiansubsidiariesinitiated Limited (“ Nortel NetworksCorporation(“ Executive Offi a directorofAirCanada; arrangement inSeptember2004.Mr. Lumleyisnolonger proceedings andwasrestructuredpursuanttoaplanof April 2003.AirCanadasuccessfullyemergedfromtheCCAA Companies’ CreditorsArrangementAct NNL c, Canadian and Mexican subsidiaries are c,CanadianandMexicansubsidiariesare ceroftheCompany, becameadirectorof ”) on June 29, 2006. On January 14, 2009, ”) onJune29,2006.OnJanuary14,2009, led voluntary petitions in the ledvoluntarypetitionsinthe led voluntary petitions for ledvoluntarypetitionsfor NNC led for protection under ledforprotectionunder ling. Dana Corporation ling.DanaCorporation lings in Europe and the lingsinEuropeandthe ”) and Nortel Networks ”) andNortelNetworks (“ CCAA ”) in ”) in cer cer (iv) Mrs. Kempston Darkes,adirectoroftheCompany,(iv) (v) Mr. Giffi longer adirectorofAbitibiBowaterInc. the CCAAinCanadaonApril17,2009.Mr. Giffi Canadian subsidiariesfi April 16,2009.AbitibiBowaterInc.andcertainofits under Chapter11 oftheU.S.BankruptcyCodeon subsidiaries fi AbitibiBowater Inc.andcertainofitsU.S.Canadian of AbitibiBowaterInc.untilJanuary22,2009. was anoffi retired asaGMoffi acquired GM’smostvaluableassets.Mrs.Kempston Darkes on July10,2009inareorganizationwhichnewentity bankruptcy fi America, AfricaandtheMiddleEastwereincludedin operations forwhichshewasdirectlyresponsibleinLatin the U.S.BankruptcyCodeonJune1,2009.Noneof GM fi ledforbankruptcyprotectionunderChapter11 of n,adirectoroftheCompany, wasadirector cerofGeneralMotorsCorporation(“ ling. GM emerged from bankruptcy protection ling.GMemergedfrombankruptcyprotection led voluntary petitions in the United States ledvoluntarypetitionsintheUnitedStates ceronDecember1,2009;and led for creditor protection under ledforcreditorprotectionunder n is no nisno GM ”) when ”) when

19 CN MANAGEMENT INFORMATION CIRCULAR 20 CN MANAGEMENT INFORMATION CIRCULAR Sarbanes-Oxley Act Administrators (the“ with applicablerulesadoptedbytheCanadianSecurities Exchange (“ 2 Form 58-101F1, section5;Governance Policy, sections 3.8and3.9. (2) Form 58-101F1 oftheDisclosureInstrument (“Form 58-101F1”),section 2;GovernancePolicy, section3.4. (1) (“ related rulesoftheU.S.SecuritiesandExchangeCommission Toronto StockExchange(“ As aCanadianreportingissuerwithsecuritieslistedonthe to allpersonselectedorappointedtheBoardofDirectors. Governance Manualformspartofthedocumentationgiven the changingcircumstancesandourneeds.OurCorporate effectiveness andcomparingthemwithevolvingpractices, a viewtocontinuallyimprovingourpracticesbyassessingtheir Delivering Responsibly/Governance.Itisrevisedregularlywith Manual isavailableonourwebsiteatwww.cn.ca, under amended onMarch13,2012.OurCorporateGovernance by theBoardofDirectorsonJanuary21,2003,andlast Corporate GovernanceManualwhichwasformallyapproved of Directorsandeachitscommitteesaresetforthinour The role,specifi were designedinamannerconsistentwiththisobjective. corporate governanceandourpractices We arecommittedtoadheringthehigheststandardsof General PRACTICES CORPORATE GOVERNANCE STATEMENT OF Standards (the“ refers, whereappropriate,tothe NYSECorporateGovernance of theGovernancePolicy, whereapplicable.The Companyalso items oftheDisclosureInstrument aswelltotheguidelines Policy. Thetextandfootnotessetforthhereunder refertothe requirements oftheDisclosureInstrumentandGovernance its corporategovernancepracticesmeetandexceedthe their owngovernancepractices.TheCompanybelievesthat requires issuerstomaketheprescribeddisclosureregarding practices toCanadianissuers,whiletheDisclosureInstrument The GovernancePolicy providesguidanceongovernance Corporate GovernanceGuidelines(the“ “ 58-101 –DisclosureofCorporateGovernancePractices(the adopted, inJune2005,NationalInstrument The CSA the NYSEcorporategovernancerulesinallsignifi Governance, ourgovernancepractices,however, complywith on ourwebsiteatwww.cn.ca, underDeliveringResponsibly/ with Canadiangovernancerequirements.Exceptassummarized NYSE corporategovernancerules,providedthatwecomply Disclosure Instrument SEC ”). We areexemptedfromcomplyingwithmanyofthe NYSE c mandate and functioning rules of the Board cmandateandfunctioningrulesoftheBoard NYSE Standards ”), our corporate governance practices comply ”), ourcorporategovernancepracticescomply of2002(the“ CSA ”) andNationalPolicy 58-201– ”) and applicable provisions of the U.S. ”) andapplicableprovisionsoftheU.S. TSX ”) andtheNewYork Stock ”). Sarbanes-Oxley Act Governance Policy cantrespects. ”) and ”) and ”). ”). executive offi required tobefi of theCode.Nomaterialchangereporthaseverbeenfi contravention byemployeesoftheCompanytoprovisions of theCodewithinorganizationandonanymaterial management reportstosuchcommitteeontheimplementation relating totheCompany’sCodeofBusinessConduct.Eachyear, Committee, reviews,monitorsandoverseesthedisclosure The Board,throughitsCorporateGovernanceandNominating U.S. securitiesregulatoryauthorities. Secretary. TheCodehasalsobeenfi shareholder whorequestscopiesbycontactingourCorporate under DeliveringResponsibly/Governanceandinprinttoany version oftheCodeisavailableonourwebsiteatwww.cn.ca, and distributedtoallCNemployeesin2012.Theupdated legal requirements,theCodewasreviewedandupdated, continually improvingourpracticesandrefl aviewto connection therewith.With to adirectororexecutiveoffi No waiverhaseverbeengranted of anyillegalorunethicalbehaviour. compliance withlawsandreporting of corporateinformation,fairdealing, assets andopportunities,confi protection andproperuseofcorporate matters, includingconfl of CN.Itaddressesmanyimportant to directors,offi decision making.TheCodeisapplicable any employeestosupporteveryday serves asareadyreferenceguidefor and principles;mostimportantly, CN’s organizationalmission,values, current industrytrendsandstandards;clearlycommunicates Code ofBusinessConducttoensurethatitisconsistentwith In 2008,theBoardofDirectorsreviewedandupdatedits Code ofBusinessConduct Circular of theBoardissetoutinSchedule“A” tothisInformation which istheenhancementofshareholdervalue.Themandate the Companyinachievingitsprincipalcorporateobjective, corporate governancepracticesarewelldesignedtoassist The BoardofDirectorsistheopinionthatCompany’s Nominating Committee. on therecommendationofCorporateGovernanceand of theCompany’sgovernancepracticesdescribedbelow, (1) . The Board of Directors has approved the disclosure . TheBoardofDirectorshasapprovedthedisclosure cerconstitutingadeparturefromtheCode. cers and employees cersandemployees led pertaining to any conduct of a director or ledpertainingtoanyconductofadirectoror ict of interest, ictofinterest, cer in cerin dentiality dentiality led with the Canadian and ledwiththeCanadianand ecting evolving ectingevolving OUR WEBSITE. IS AVAILABLE ON MANUAL, WHICH GOVERNANCE CORPORATE FORTH INOUR ARE SET COMMITTEES AND OFITS OF DIRECTORS THE BOARD AND RULESOF MANDATE THE ROLE, (2) led or ledor 2 Form 58-101F1, section1(f);Governance Policy, section 3.2. (2) Form 58-101F1, sections1(a),(b) and (c);Governance Policy, section3.1. (1) at www.cn.ca, underDeliveringResponsibly/Governance. Governance Manualwhichisavailable onourwebsite by theBoard.Thesestandardsare setoutinCN’sCorporate authorities andtheNYSE additionalstandardsadopted standards developedbytheCanadian securitiesregulatory is anindependentdirector, theBoard ofDirectorsappliesthe Offi Board ofDirectors,exceptourPresidentandChiefExecutive of ourshareholders,allthenomineesforelectionto To betteraligntheinterestsofBoardDirectors withthose Independence ofDirectors CN’s HotLine. be submittedconfi of accountingorauditingmattersmay potential orrealwrongdoinginterms concerns ofemployeesregardingany of BusinessConductprovidesthat Responsibly/Governance. TheCode www.cn.ca, underDelivering are describedonourwebsiteat director sessions.Theseprocedures who presidesoverallnon-executive communicate directlywiththeChairman, complaints orconcernstousand(ii) interested parties(i)tosubmitaccountingandauditing The BoardofDirectorsalsoadoptedproceduresallowing to concernsarisingwithintheCompany. informal avenuewhichfacilitatesfairandequitableresolutions offi to theCorporateGovernanceandNominatingCommittee.The Business ConductisCN’sOmbudsman,whopresentsreports person intheimplementationofCompany’sCode in alldealingswithcustomers,suppliersandpartners.Akey their responsibilitiestotheCompanyandbefairimpartial may impairorappeartotheeffectiveperformanceof the employeesarealsorequiredtoavoidoutsideintereststhat As partoftheCompany’sCodeBusinessConduct, in thecompetentandethicaloperationofCompany. the Boardhasresponsibilityforoverseeingmanagement attached asSchedule“A” tothisInformationCircularstatesthat important partofitssuccess.Hence,themandateBoard The Companybelievesthatethicalbusinessconductisan participate orvoteinanysuchdiscussiondecision. has aninterest,theBoardwouldrequestsuchdirectornotto to anorganization,businessorassociationinwhichadirector been disclosed.Shouldtherebeadiscussionordecisionrelating make surethatthedirectorisinnosuchconfl interest. Everyyear, aquestionnaireissenttoeachdirector or association,whichcouldplacethedirectorinaconfl indirect interestheorshehasinanyorganization,business The Boardrequestseverydirectortodiscloseanydirector ceoftheOmbudsmanoffersaconfi cer, areindependent.Indeterminingwhetheradirector dentially through dentiallythrough dential, neutral and dential,neutraland THE CHAIRMAN. DIRECTLY WITH COMMUNICATE PARTIES TO INTERESTED ALLOWING PROCEDURES HAS ADOPTED OF DIRECTORS THE BOARD ict that has not ictthathasnot (1) ict of ictof election totheBoardofDirectorsareindependent: As showninthefollowingtable,12of13nomineesfor the Boardandthoseofmanagement. and respectstheboundariesbetweenresponsibilitiesof out itsresponsibilitieseffectivelyand(iii)clearlyunderstands enable ittofunctionindependentlyofmanagement,(ii)carries that theBoard(i)hasstructuresandproceduresinplaceto the BoardChairistotakeallreasonablemeasuresensure describes theresponsibilitiesofChairman.Thekeyrole Chair. TheCorporateGovernanceManual since 1994,istheindependentBoard who hasbeenadirectoroftheCompany by theBoard.Mr. McLean, DavidG.A. independent directorwhoisdesignated provides thattheBoardChairmustbean our CorporateGovernanceManual independently ofmanagement.Hence, Chairman contributestoallowingtheBoardfunction of thepositionsPresidentandChiefExecutiveOffi it becamepublicin1995andwebelievethattheseparation The Company’sBoardisledbyanon-executiveChairmansince of theBoard Independent Chairman Claude Mongeau McLean David G.A. Edward C.Lumley The Hon. The Hon.DenisLosier Kempston Darkes V. Maureen Edith E.Holiday NOTINDEPENDENT Gordon D.Giffi Ambassador INDEPENDENT Donald J.Carty Hugh J.Bolton CharlesBaillie A. Michael R.Armellino NAME Robert Pace James E.O’Connor n (2) INDEPENDENCE STATUS ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ INDEPENDENT. DIRECTORS ARE THE BOARDOF ELECTION TO NOMINEES FOR 12 OFTHE13 STATUS INDEPENDENCE FOR NON- REASON Company Offi Chief Executive President and cer and cerand cer of the cerofthe

21 CN MANAGEMENT INFORMATION CIRCULAR 22 CN MANAGEMENT INFORMATION CIRCULAR 3 GovernancePolicy, section3.13. (3) Form 58-101F1, section8. (2) Form 58-101F1,sections3(a)and(b); GovernancePolicy, section3.5. (1) and SponsorshipsCommittee,whicharemixedcommittees Committee ofCN’sPension Trust Funds andtheDonations The BoardofDirectorsalsoestablishedtheInvestment are availableaspartofCN’sCorporateGovernanceManual. and theStrategicPlanningCommitteetheircharters Committee, theEnvironment,SafetyandSecurityCommittee Committee, theHumanResourcesandCompensation Committee, theCorporateGovernanceandNominating These committeesaretheAuditCommittee,Finance committees thathavecertainresponsibilitiesforsuchareas. its supervisionmandateintosixareasandhasestablished which wearesubject,theBoardofDirectorshassubdivided activities andthegreatnumberoflawsregulationsto Given oursize,thenatureandgeographicalscopeof Committees oftheBoard supported bytheBoardofDirectors. of oneormorenomineeswhoarenotpartthecandidates to theBoardandthatnoproxymaterialiscirculatedinsupport nominees isthesameasnumberofdirectorstobeelected election ofdirectors”meansthatthenumberdirector involving anuncontestedelectionofdirectors.An“uncontested the resignationoffer. Thispolicyonlyappliesincircumstances any committeeorBoardofDirectorsdeliberationspertainingto her resignationshouldnotbepartof director whoofferedtotenderhisor the meetingofshareholders.The a pressreleasewithin90daysfollowing make itsdecisionandannounceitin it ornot.TheBoardofDirectorswill Board ofDirectorswhethertoaccept will considersuchofferandmakearecommendationtothe elected. TheCorporateGovernanceandNominatingCommittee following themeetingofshareholdersatwhichdirectoris offer totenderhisorherresignationtheChairmanpromptly the electionofdirectorsbyshareholders,willbeexpectedto number ofvotes“withheld”than“for”,withrespectto election asadirectoroftheCompanywhoreceivesgreater Corporate GovernanceManual,totheeffectthatanomineefor The BoardofDirectorshasadoptedapolicy, whichispartofour Election ofDirectors Executive Offi as wellapositiondescriptionforthePresidentandChief descriptions fortheBoardChairandCommitteeChairs, Our CorporateGovernanceManualincludesposition Position Descriptions ceroftheCompany. (1) (2) VOTING POLICY. A MAJORITY HAS ADOPTED OF DIRECTORS THE BOARD candidates qualifi Directors and,inconsultationwiththeBoardChair, identifi or desiredcompetenciesandskillstoimprovetheBoardof and monitorscriteriaforselectingdirectors,includingrequired Governance andNominatingCommitteedevelops,reviews governance matters.Aspartofitsresponsibilities,theCorporate of Directorsanditscommitteesoverseeingcorporate the responsibilityofmonitoringcompositionBoard The CorporateGovernanceandNominatingCommitteehas Corporate GovernanceandNominatingCommittee in ourCorporateGovernanceManual. described inthecharterofsuchcommitteewhichisincluded powers andoperationoftheFinanceCommitteearefurther recommendations totheBoardthereon.Theresponsibilities, or theengaginginotherformsoffi the borrowingofmoney, theissuingofdebtsecurities authority levelsestablishedbytheBoard,mayauthorize reviews fi opportunities andparametersfordebtorequityfi structure, cashfl Committee providesoversightwithrespecttoourcapital activities. Aspartoftheseresponsibilities,theFinance authorizing, approvingandrecommendingcertainfi the Company’sfi The FinanceCommitteehastheresponsibilityofoverseeing Finance Committee which isincludedinourCorporateGovernanceManual. Information Circularandinthecharterofsuchcommittee Practices –AuditCommitteeDisclosure”atpage30ofthis in thesectionentitled“StatementofCorporateGovernance The mandateoftheAuditCommitteeisfurtherdescribed internal controlsandexternalauditors. Company’s fi The AuditCommitteehastheresponsibilityofoverseeing Audit Committee of theBoardDirectors. of themandateeachcommittee The followingisabriefsummary to committees. Directors’ decision-makingauthority standing delegationsoftheBoard certain limitedexceptions,thereareno the BoardofDirectorsand,subjectto Company. Allcommitteesreportto of Directorsaswelloffi composed ofmemberstheBoard nancing documents and, within the scope of its nancingdocumentsand,withinthescopeofits nancial reporting, monitoring risk management, nancialreporting,monitoringriskmanagement, owsandkeyfi nancialpolicies,reviewingfi edtobecomeBoardmembers. cers of the cersofthe nancial ratios, reviews the nancialratios,reviewsthe nancing, or makes nancing,ormakes nancings and nancingsand COMMITTEE. OF EACHBOARD THE ACTIVITIES REPORTS ON PROVIDES CIRCULAR INFORMATION TO THIS SCHEDULE “B” (3) nancing, nancing,

nancial nancial es es are independent. of theHumanResourcesandCompensationCommittee independent directors.AsatFebruary 29,2012,allmembers and CompensationCommitteemustbecomposedsolelyof in ourCorporateGovernanceManual.TheHumanResources Circular andinthecharterofsuchcommitteewhichisincluded and CompensationCommittee”atpage35ofthisInformation “Statement ofExecutiveCompensation–HumanResources Committee isfurtherdescribedinthesectionentitled mandate oftheHumanResourcesandCompensation of personnelrequiredtomeetitsbusinessobjectives.The the Companycanattract,motivateandretainquality appropriate humanresourcessystemsareinplacesothat resources practicesbyensuring,amongstotherthings,that This Committeealsohasthemandatetoreviewhuman performance assessmentandsuccessionplanning. the responsibilityofmonitoringexecutivemanagement’s The HumanResourcesandCompensationCommitteehas Human ResourcesandCompensationCommittee 2 Form 58-101F1, section 6(b);GovernancePolicy, section3.10.TheNYSE Standardsstatethataboardshouldappointnomina (2) Form 58-101F1, section 6(c);GovernancePolicy, section3.11. (1) compensation consultants. of thisInformationCircularfordisclosureinrespectexecutive Committee –ExecutiveCompensationConsultants”atpage37 Executive Compensation–HumanResourcesand Reference isalsomadetothesubsectionentitled“Statementof from theCommitteememberselectionprocess. and thePresidentCEOofCompanyshallbeexcluded one membershallbeexperiencedinexecutivecompensation, Committee shallbeasittingCEOofanothercompany, atleast three membersoftheHumanResourcesandCompensation Corporate GovernanceManual,thatnomorethanonein The Boardhasadoptedapolicy, whichisincludedinour Committee areindependent. all membersoftheCorporateGovernanceandNominating solely ofindependentdirectors.AsatFebruary 29,2012, Committee providesthatsuchcommitteemustbecomposed The charteroftheCorporateGovernanceandNominating in ourCorporateGovernanceManual. described inthecharterofsuchcommitteewhichisincluded Corporate GovernanceandNominatingCommitteearefurther practices. Theresponsibilities,powersandoperationofthe should bemadetheretoandmonitorsthedisclosureofits applicable totheCompany, recommendsanychangethat This Committeereviewsthecorporategovernanceguidelines 4 Form 58-101F1, section7(d). (4) 3 Form 58-101F1,sections7(a),(b)and(c) andGovernancePolicy, sections3.15,3.16 and 3.17(regardingoffi (3) must be composed solely of independent directors. must becomposedsolely ofindependentdirectors. that suchcommitteeshould haveawrittencharter. TheBoardhasadoptedawrittenmandate fortheHumanResourcesandCompensa determined bytheCompany’s independentdirectorsonly. TheNYSEStandardsstatethataboardshould appointacompensationcom determined bythecorporation’s compensationcommitteeorbyallindependent directorsofthecorporation.OurCorporate Govern must be composed solely of independent directors. must becomposedsolelyofindependentdirectors. that suchcommitteeshouldhaveawrittencharter. TheBoardhasadoptedawrittenmandatefortheCorporate GovernanceandNom (3) (4) (2)

(1) is includedinourCorporateGovernanceManual. are furtherdescribedinthecharterofsuchcommitteewhich and operationoftheDonationsSponsorshipsCommittee donation andsponsorshiprequests.Theresponsibilities,powers and sponsorshipsstrategyforreviewingapproving responsibility, amongstotherthings,ofdevelopingadonations committee composedofdirectorsandoffi The DonationsandSponsorshipsCommittee,whichisamixed Donations andSponsorshipsCommittee Corporate GovernanceManual. in thecharterofsuchcommitteewhichisincludedour Committee ofCN’sPension Trust Funds arefurtherdescribed The responsibilities,powersandoperationoftheInvestment certain oftheinvestmentsmadebyCN’sPension Trust Funds. investment ofassetsCN’sPension Trust Funds andapproving payouts thereunder, advisingtheCNInvestmentDivisionon approving theCNInvestmentIncentivePlanandaward the activitiesofCNInvestmentDivision,reviewingand has theresponsibility, amongstotherthings,ofreviewing which isamixedcommitteecomposedofdirectorsandoffi The InvestmentCommitteeofCN’sPension Trust Funds, Investment CommitteeofCN’sPension Trust Funds Governance Manual. charter ofsuchcommitteewhichisincludedinourCorporate of theStrategicPlanningCommitteearefurtherdescribedin Board ofDirectors.Theresponsibilities,powersandoperation plan andcapitalbudgetpriortotheirformalapprovalbythe other appropriateexecutiveoffi reviews, withthePresidentandChiefExecutiveOffi conditions underlyingtheCompany’sbusinessplan.Italso as welltheeconomic,business,regulatoryandcompetitive strategic issues,includingthereviewofkeyassumptions, The StrategicPlanningCommitteefocusesonfi Strategic PlanningCommittee included inourCorporateGovernanceManual. are furtherdescribedinthecharterofsuchcommitteewhichis operation oftheEnvironment,SafetyandSecurityCommittee taken intoconsideration.Theresponsibilities,powersand whether environmental,safetyandsecurityissuesareadequately practices, andreviewingtheCompany’sbusinessplantoascertain security policies,assessingenvironmental,safetyand development andimplementationofenvironmental,safety responsibility, amongstotherthings,ofoverseeingthe The Environment,SafetyandSecurityCommitteehasthe Environment, SafetyandSecurityCommittee cers). The NYSE Standards state that the CEO’s compensation should be cers).TheNYSEStandardsstatethattheCEO’s compensationshouldbe ting committee composed entirely of independent directors and ting committeecomposedentirelyofindependent directorsand ance Manual provides that the CEO’s compensation is ance Manualprovidesthat theCEO’scompensationis inating Committee pursuant to which such committee inating Committeepursuanttowhichsuchcommittee mittee composed entirely of independent directors and mittee composedentirely ofindependentdirectorsand tion Committee pursuant to which such committee tion Committeepursuant towhichsuchcommittee cers, the Company’s business cers,theCompany’sbusiness cers, has the cers,hasthe nancial and nancialand cer and cerand cers, cers,

23 CN MANAGEMENT INFORMATION CIRCULAR 24 CN MANAGEMENT INFORMATION CIRCULAR 3 Form 58-101F1, section6(a);Governance Policy, sections 3.12,3.13and3.14. (3) Form 58-101F1, section1(e);Governance Policy, section 3.3. (2) Form 58-101F1,section1(g). (1) only bynon-executivedirectors. in camera December 31,2011,therewerenine During thefi the chairmanshipofBoardChair. presence ofmanagementandunder in meeting oftheBoardDirectors meet beforeoraftereveryin-person The independentBoardmembers In Camera supervisory responsibilities. of theBoardDirectorsorcommitteeshavingspecial progress oftheCompanyaretransmittedtothosemembers that allmeaningfulinformationconcerningtheaffairsand of suchcommittees.Thisopencommunicationensures under thesupervisionofparticularcommitteesandChairs executive offi through theOffi Chair andthePresidentChiefExecutiveOffi Communication regularlytakesplacebetweentheBoard of thisInformationCircular. for ElectiontotheBoard–andCommitteeAttendance” course of2011aresetoutinthesectionentitled“Nominees director forallboardandcommitteemeetingsheldduringthe total numberofmeetingsandtheattendancerecordforeach action orconsideration,additionalmeetingsarecalled.The the yeareventsorcircumstancesrequireBoardcommittee to planahead.Ifduringthecourseof discussions whileallowingmanagement meaningful informationsessionsand of in-depthpresentationsconduciveto this mannerhelpsinthepreparation year. We believethatproceedingin and committeeworkingplansforthe executive offi with theBoardandCommitteeChairsappropriate During suchprocess,theCorporateSecretary, incollaboration meetings oftheBoardDirectorsanditscommittees. has theresponsibilityofestablishingaschedulefor The BoardChair, incollaborationwiththeCorporateSecretary, Process Board andCommitteeMeetings in camera sessions that were attended sessions thatwereattended nancial year ended nancialyearended Meetings sessions, without the sessions,withoutthe cers having responsibilities for matters placed cershavingresponsibilitiesformattersplaced cers,establishesBoard ceoftheCorporateSecretary, between (1) (2) DIRECTORS. THE BOARDOF MEETING OF IN-PERSON AT EVERY MEMBERS BOARD INDEPENDENT ARE HELDBY SESSIONS IN CAMERA FOR THEYEAR. ESTABLISHED PLANS ARE WORKING COMMITTEE BOARD AND cer and, cerand,

with Boardmembers,andisupdated asmayberequired. This competencymatrixisreviewed regularlybytheBoardChair fi the Board,aswellhisorher independence, qualifi experience andgeographicallocation, ofeachcandidateto takes intoconsiderationtherepresentativity, bothintermsof and experience,meetstheneedsofBoard.TheBoardalso set developedbydirectors,throughtheirbusinessexpertise director nominationprocess.TheBoardensuresthattheskill representation andidentifi based onknowledgeareas,typesofexpertiseandgeographical and NominatingCommittee,developsacompetencymatrix the BoardChair, inconsultationwiththeCorporateGovernance our CorporateGovernanceManual.Aspartoftheprocess, Board ofDirectorsisguidedbytheprocessdescribedin certain areas.InproposingthelistofBoardnominees, expanding andcompletingtheBoard’soverallexpertisein recent andupcomingdirectorretirements,withaviewto Board Chairfocusedonboardrenewalinlightofboth as directors.In2010and2011,theCommittee candidates tostandasnomineesforelectionorappointment the needsofBoardinlongtermandidentifyingnew together withtheBoardChair, isresponsiblefordetermining The CorporateGovernanceandNominatingCommittee, Competency Matrix mandatory retirementdatesofcurrentdirectors. for nominationtotheBoardofDirectorsandismindful constantly onthelookoutandmonitoringfornewcandidates The CorporateGovernanceandNominatingCommitteeis absences, willnotberenominated. years, withoutavalidreasonforthe they sit,formorethantwoconsecutive or meetingsofcommitteesonwhich less than75%ofmeetingstheboard Manual, anydirectorwhohasattended As statedinourCorporateGovernance are expectedtoattendallmeetings. Board andboardcommitteemembers at Boardandcommitteemeetings. of Directors,includingtheirattendance performance asmembersoftheBoard an evaluationoftheireffectivenessand are alreadydirectorsoftheCompany, credentials underlyingeachnomination,and,fornomineeswho of Directors.Itconsiderstheirqualifi nominees forelectionorre-electionasmembersoftheBoard and NominatingCommitteeannuallyreviewsthecredentialsof In consultationwiththeBoardChair, theCorporateGovernance Review ofCredentials Director Selection nancial acumen, business judgment and board dynamics. nancialacumen,businessjudgment andboarddynamics. es any gaps to be addressed in the esanygapstobeaddressedinthe (3) cations, the validity of the cations,thevalidityof RENOMINATED. WILL NOTBE A VALID REASON YEARS WITHOUT MORE THANTWO MEETINGS FOR COMMITTEE BOARD OR THAN 75%OF ATTENDED LESS WHO HAS ANY DIRECTOR cations, cations, served togetherontheboardsofotherpubliccompanies. As ofFebruary 29,2012,nomembersofourBoard ofDirectors committee. generally serveonthesameoutsideboardor effect thatnomorethantwooftheCompany’sdirectorsshould Corporate GovernanceManual,tothe a policy, whichisincludedinour In addition,theBoardhasadopted Governance andNominatingCommittee. obtaining theapprovalofCorporate of CNalreadysitswithoutpreviously an outsideboardonwhichadirector shall notaccepttheinvitationtojoin the Boardhasadoptedapolicypursuanttowhichdirector aviewtofurtherstrengthendirectors’independence, With Common Directorships energy totheBoardofDirectors. interest, andhisorherabilitytodevotesuffi and willingnesstoserveonCN’sBoard,potentialconfl Offi or appointment,theBoardChairandChiefExecutive a regularbasis.Priortonominatingnewdirectorforelection The Boardhasdevelopedanevergreenlistwhichisupdatedon to theBoardofDirectorspossessingeachskill: the BoardChairandCorporateGovernanceNominatingCommittee,alongwithidentifi The followingtableidentifi Robert Pace James E.O’Connor Claude Mongeau McLean David G.A. Edward C.Lumley The Hon. The Hon.DenisLosier Kempston Darkes V. Maureen Edith E.Holiday Gordon D.Giffi Ambassador Donald J.Carty Hugh J.Bolton CharlesBaillie A. Michael R.Armellino cer meet with the candidate to discuss his or her interest cermeetwiththecandidatetodiscusshisorherinterest n AKTN IAC CONIGLGLSTRATEGY LEGAL ACCOUNTING FINANCE MARKETING SALES/ es some of the current skills and other factors considered as part of the competency matrix developed by essomeofthecurrentskillsandotherfactorsconsideredaspartcompetencymatrixdevelopedby ✓✓ ✓✓ ✓✓ ✓✓ ✓✓ ✓✓✓✓✓ ✓✓ ✓✓✓ ✓✓✓✓✓✓ ✓✓✓ ✓✓✓ ✓✓ ✓✓ ✓✓ ✓✓ ✓✓ ✓✓ ✓✓✓✓✓✓ ✓✓ ✓✓ ✓ ✓ ✓✓✓ ✓✓✓✓ ✓✓ ✓✓ ✓ ✓ ✓✓ ✓✓ cient time and cienttimeand COMPANY. ANOTHER PUBLIC THE BOARDOF TOGETHER ON MEMBERS SIT NO BOARD ✓ ✓ ✓✓ icts of ictsof ✓✓ • • • considering candidatestobecomedirectorsofCN: of CN,theBoardwillapplyfollowingguidelineswhen to makethecommitmentoftimenecessarybeadirector taking reasonablestepstoensuretheabilityofeachcandidate aviewto an individualcanserveisnecessarilylimited.With dedication oftime.Asaresult,thenumberboardsonwhich CN recognizesthatBoardmembershiprequiresasignifi Number ofDirectorships (excluding CN’sBoard). hold nomorethanfi for othercandidates,theBoardwillpreferindividualswho at whichanindividualisemployed;and in additiontomembershipontheboardofcorporation (4) publiccorporationdirectorships(excludingCN’sBoard) the Boardwillpreferindividualswhoholdnomorethanfour offi employees ofpubliccorporations(otherthanchiefexecutive non-public corporationsorotherentitiesandforfull-time for candidatesthathaveafull-timeemploymentwith an individualisemployed; to membershipontheboardofcorporationatwhich corporation directorships(excludingCN’sBoard)inaddition prefer individualswhoholdnomorethantwo(2)public senior executivesofpubliccorporations,theBoardwill for candidatesthatarechiefexecutiveoffi cers or senior executives of such public corporations), cersorseniorexecutivesofsuchpubliccorporations), ✓ RESOURCES HUMAN ✓ ✓ ✓ ✓ ve (5) public corporation directorships ve(5)publiccorporationdirectorships cation of each nominee for election cationofeachnomineeforelection ENVIRONMENT ENGINEERING/ ✓ INDUSTRY OF TRANSPORT KNOWLEDGE cers or other cersorother ✓✓ ✓✓ ✓✓ ✓✓ ✓✓ POLICY PUBLIC cant cant

25 CN MANAGEMENT INFORMATION CIRCULAR 26 CN MANAGEMENT INFORMATION CIRCULAR 1 Form 58-101F1, section1(d). (1) may serveontheBoard. appropriate ornecessarytolimitthenumberoftermsadirector a Boardcommittee.TheofDirectorshasnotdeemedit of suchdirector’scontinuanceasamembertheBoardor Board willhavetheopportunitytodecideappropriateness of anymajorchangeintheirprincipaloccupationsothatthe In addition,directorsareexpectedtoinformtheBoardChair shareholders followinghisorherseventy-fi be nominatedforre-electionattheannualmeetingof unless otherwisedeterminedbytheBoard,initsdiscretion, retirement agefordirectorswherebyadirectorwouldnot, The Boardhasalsoadoptedapolicyonthemandatory Retirement fromtheBoard updates fromtimetotime. potential Boardcandidates,whichit together withtheBoardChair, alistof Nominating Committeehasconstituted, CN, theCorporateGovernanceand candidates tobecomedirectorsof and theBoardChairinrecommending Governance andNominatingCommittee In ordertoassisttheCorporate Evergreen List a director. identify theotherreportingissuersofwhicheachnomineeis The biographiesonpages7to13ofthisInformationCircular 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 (1) cienttimetofulfi fthbirthday. TIME TOTIME. UPDATED FROM MAINTAINED AND CANDIDATES IS POTENTIAL BOARD LIST OF AN EVERGREEN ll their lltheir as ofFebruary 29,2012: The followingchartshowsthetenureofCompany’sBoard Board tenure connection withattendanceatsuchevents. reasonable travelandotherout-of-pocket expensesin and CompanyorBoardfunctionsarereimbursedfor are alsoinvitedtoattendtheAnnualMeetingofShareholders receive compensationforsuchparticipation.DirectorsEmeritus or acommitteeoftheBoardispresentnorshalltheyvote the purposeofdeterminingwhetheraquorumBoard at suchmeetings.DirectorsEmeritusshallnotbecountedfor and, ifpresent,mayparticipateinthediscussionsoccurring to attendmeetingsoftheBoardoranycommittee From timetotime,DirectorsEmeritusmaybeinvited,asguests, Crawford, RaymondCyr, JamesK.GrayandCedricRitchie. lifetime emeritusstatushasbeenbestoweduponPurdy and distinguishedserviceaccomplishments.Currently, have madesignifi status ofDirectorEmeritustoretiringorformerdirectorswho The BoardofDirectorsconfers,fromtimetotime,thehonorary Director Emeritus as directors. regarding lengthofBoardtenureeachnomineeforelection Please refertothebiographiesonpages713fordetails cant contributions to the Board through long cantcontributionstotheBoardthroughlong 31% 16 up and years 15% years 15 to 11 31% 6 to10 years 23% 0 to5years • • • 2 Form 58-101F1, section7(a)and Governance Policy, section3.17(b)(regarding directors). (2) Form 58-101F1, section9;Governance Policy, section 3.18. (1) • and iscomprisedofthefollowingsteps: Governance andNominatingCommitteetheBoardChair This processisunderthesupervisionofCorporate Chair, theCommitteeChairsandindividualdirectors. effectiveness, theeffectivenessofitscommittees,Board time totime,acomprehensiveprocessannuallyassessits The BoardofDirectorshasimplemented,andreviews,from Process Board Performance Assessment individual directorsinrespectof theirpersonalperformance. committees, BoardandCommittee Chairsandseparatelyto to improvetheeffectivenessofBoardDirectors, Committee ChairstotheBoardofDirectors,withsuggestions Committee andHumanResourcesCompensation Reports arethenmadebytheBoardChairandAudit Committee chairevaluationquestionnaires. the BoardChairandCorporateGovernanceNominating with eachdirectorhisorherresponsesandcommentson Compensation CommitteeChairsalsodiscussesindividually Committee orHumanResourcesand each director. OneoftheAudit to reviewtheself-evaluation of which thedirectormayhaveand any commentstothequestionnaires and inrespectofsuchdirector to discusstheanswersreceivedfrom and confi the BoardChaircontactseverydirectorandconductsopen Following receiptofthecompletedquestionnaires, Compensation Committee. Audit CommitteeandtheHumanResources are forwardeddirectlytoeachoftheChairs Governance andNominatingCommitteeChair, which questionnaires relatingtotheBoardChairandCorporate Board Chair, exceptfortheresponsestoevaluation a completesetoftheresponsesisforwardedto Each questionnaireisthensenttoeverydirectorand – – – years andinputfromtheBoardofDirectors: taking intoaccountcurrentissues,thefi Governance andNominatingCommitteetheBoardChair, of theCorporateSecretaryandapprovedby The followingquestionnairesarepreparedbytheOffi

Committee Chairevaluationquestionnaires. a BoardChairevaluationquestionnaire;and including aself-assessment byindividualdirectors; Board andcommitteeperformanceevaluationquestionnaires, dential one-on-one meetings dentialone-on-onemeetings ndings of previous ndingsofprevious PROCESS. ASSESSMENT COMPREHENSIVE IMPLEMENTED A THE BOARDHAS ce ce (1) Responsibly/Governance. available onourwebsiteatwww.cn.ca, underDelivering described inCN’sCorporateGovernanceManualwhichis The Boardperformanceassessmentprocessisfurther a reportwasmadebytheBoardChairtoofDirectors. directly toeachdirector, aswelltotheBoardChair, and in anindividualdirectorreportanddistributedbytheadvisor confi were completedbyeachdirectorandforwardeddirectly the processinvolvedpeerassessmentquestionnaireswhich to thecompositionofBoardwereveryrecent.In2007, given thefactthatonewascarriedoutin2007andchanges in 2004.In2011,nosuchassessmentwasdeemednecessary with theassistanceofanindependentadvisor, aswasdone and theBoardcarriedoutanindividualdirectorpeerassessment of 2007,theCorporateGovernanceandNominatingCommittee a peerassessmentthroughanindependentadvisor. Attheend considers onanannualbasistheappropriatenessofconducting The CorporateGovernanceandNominatingCommitteealso through one-on-onemeetingswitheachindividualdirector. The BoardChairleadsonanannualbasisapeerreviewprocess Peer Assessment Board andCommitteeChairsindividualdirectors. performance oftheBoardDirectors,committees, assist theBoardofDirectorsinindependentlyassessing from timetotime,hireanindependentadvisorassessor In additiontotheabove-mentionedprocess,Boardmay, Independent Advisor • by directorsin2011. Circular foradditionalinformationoncompensationreceived Board –ofDirectorsCompensation”thisInformation See thesectionentitled“NomineesforElectionto involved, withoutcompromisingadirector’sindependence. compensation realisticallyrefl non-executive directors,takingreasonablestepstoensuresuch to theBoardonadequacyandformofcompensationfor reviews withtheBoardChairandmakesrecommendations The CorporateGovernanceandNominatingCommitteeannually Board Compensation functioning andactivitiesoftheBoardcommittees. Board performanceassessmentinordertoimprovethe the overallresultsandsuggestionsderivedfromannual The BoardChairandCommitteeChairstakeintoconsideration dentiallytotheadvisor. Responseswerethenconsolidated (2) ects the responsibilities and risk ectstheresponsibilitiesandrisk

27 CN MANAGEMENT INFORMATION CIRCULAR 28 CN MANAGEMENT INFORMATION CIRCULAR 1 Form 58-101F1, sections4(a) and(b);GovernancePolicy, sections3.6and 3.7. (1) and CanadianU.S.securitieslawdevelopments. considerations, fi compensation, executivesuccessionplanning,keyaccounting and topics,includingcorporategovernance,executive reading materialsandpresentationsonavarietyofmatters In 2011,Boardmemberswereprovidedwitheducational the materialsprovidedtoBoardinadvanceofmeetings. on corporategovernanceandothertopicsarealsoincludedin programs. Educationalreadingmaterials back totheBoardonqualityofsuch educational programsandtoreport directors toattendseminarsandother leading institutions.We encourage educational programsprovidedby makes available,atitscost,ahostof by theBoardChair. TheCompanyalso other materialasdeemedappropriate to theCompany’sbusinessstrategyand or emergingtrendsthatmayberelevant successful boards,briefi to Boardeffectivenessandthebestpracticesassociatedwith to educationandinformationonanongoingbasispertaining The BoardChairarrangesformemberstohaveaccess Continuing Education and operations. familiarize themselveswiththeCompany, itsorganization containing corporateandotherinformationrequiredto New directorsareprovidedwithaDirectors’handbook appropriate informationoroutsideresourcesasrequired. individual directorsareexpectedtomakeandaccess the Boardanditscommittees,adiscussiononcontribution the BoardChairofmethodsoperationandroles and thenatureoperationofitsbusiness,areviewwith Company’s offi Our orientationprogramincludespresentationsbythe Orientation Continuing Education Director Orientationand cers on the Company’s organizational structure cersontheCompany’sorganizationalstructure nancial strategy, riskassessmentanddisclosure, ngs on factors ngsonfactors (1) TOPICS. MATTERS AND A VARIETY OF MEMBERS ON TO BOARD WERE PROVIDED PRESENTATIONS MATERIALS AND READING EDUCATIONAL events throughouttheyear. Directors alsoattendcommunitydinnersandothercompany projects andtolearnmoreaboutCN’soveralloperations. with CNoffi During suchevents,theBoardhadopportunitytointeract visited KirkYard andtheEJ&EpropertiesinUnitedStates. Information Technology commandcenterandin2011they They havealsovisitedcertainofCN’smainyards,aswellour terminals inPrinceGeorgeandatthePort ofPrinceRupert. CN ismakingsignifi with fi Moreover, thedirectorshavefromtimetobeenprovided business oftheCompany. its sustainabilityinitiativesandregulatorymattersrelevanttothe eBusiness, carmanagement,customerdamageprevention, business growthstrategy, operatingplans,supplychainstrategy, including presentationsonitscustomerengagementinitiatives, on mattersofstrategicimportancetotheCompany’sbusiness, at everyboardmeetingandreceivedextensivepresentations Directors alsointeractedwithexecutiveandseniormanagement rst-hand opportunities to visit certain sites in which rst-handopportunitiestovisitcertainsitesinwhich cers to gain a full appreciation of such strategic cerstogainafullappreciationofsuchstrategic cant investments, such as the intermodal cantinvestments,suchastheintermodal matters, thatthedirectorsofCompanyattendedin2011andearly2012. The tablebelowliststheexternalconferences,seminarsandcourses,aswelldedicatedinternalsessionsonkeyCNsubject January 10-11, 2012 “Risk & Liquidity; the Alpha and Omega “Risk&Liquidity;theAlphaandOmega PresentationonCN Pension Plan– CompensationCommittees:New IntegrityRisksandReturns, Discussion January 10-11,2012 November 29,2011 November 16-18,2011 PresentationonCustomerFIRST – StrategicGovernanceandLeadership November 2011 Vice-President,CorporateMarketing PresentationonCarManagement October 25,2011 PresentationoneBusiness October 3-4,2011 September 13,2011 PresentationonCNIntermodal: HRandCompensationconsulting ATTENDED BY PresentationonSupplyChainThinking June 14,2011 Periodically heldseminars PresentationofSafetyInitiatives April 26,2011 PRESENTED/HOSTEDBY DirectorSeriesProgram March 8,2011 January 25,2011 TITLEOFPRESENTATION 2011 2011 DATE OFPRESENTATION of AssetManagementToday” Pension Strategy Challenges, NewSolutionsProgram of Directors with theH.J.HeinzCo.Board Optional Services Presentation onCustomerFIRST– Damage Prevention Summit forCorporateBoardMembers Fleet Management Excellence andPrivate and Operations Overview oftheBusiness for OperationalandServiceExcellence and Survey Shareholder Value on Sustainabilityand accounting fi Senior Manager, eBusiness(CN) Information Offi Vice-President andChief fi avr uiesSho RobertPace (New York City) Institutional InvestorForums Director, Pensions andBenefi Vice-President –Treasurer Harvard BusinessSchool Global Compliance Ethical LeadershipGroup Management (CN) Assistant Vice-President,Revenue JamesE.O’Connor Emergency Response(CN) Assistant Vice-President,Safetyand Bank ofAmerica–MerrillLynch General Manager, CarFleet(CN) Vice-President, Petroleum andChemicals Vice-President, IndustrialProducts Operations (CN) General Manager, Intermodal Assistant Vice-President,Domestic Assistant Vice-President,International Vice-President, Intermodal General Manager, ServiceDelivery(CN) Vice-President, NetworkOptimization Senior Vice-President,Western Region Assistant Vice-President,B.C.South(CN) Regulatory Affairs General Manager, Safetyand Chief SafetyandSustainabilityOffi Major accountingfi rmsandvariouslawfi rmsandAAMI cer r MaureenKempston-Darkes rm rms and major rmsandmajor ts(CN) cer Edward C.Lumley All directors All directors A. CharlesBaillie A. Edith E.Holiday All directors All directors All directors All directors All directors All directors

29 CN MANAGEMENT INFORMATION CIRCULAR 30 CN MANAGEMENT INFORMATION CIRCULAR 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’sresponsibilitiescanbedividedinto Mandate oftheAuditCommittee Mr. O’ConnorwasappointedonApril27,2011. to theCompany’sAuditCommitteeonMarch8,2011,and subsidiary oftheCompany. Company, norisanaffi indirectly, anyfeefromtheCompanyorsubsidiaryof as adirectorormemberofBoardcommittee,directly Audit Committeereceives,otherthaninhisorhercapacity for intheCorporateGovernanceManual.Nomemberof is necessarilyamemberoftheAuditCommittee,asprovided Human ResourcesandCompensationCommittee,Mr. Pace, Darkes, JamesE.O’Connor, andRobertPace. TheChairofthe Hugh J.Bolton,DonaldCarty, V. MaureenKempston namely, TheHon.DenisLosier, ChairoftheCommittee, The AuditCommitteeiscomposedofsixindependentdirectors, Composition oftheAuditCommittee of ourAuditCommittee. Delivering Responsibly/Governancewithregardstothecharter at www.sedar.com andonourwebsiteatwww.cn.ca, under of ourAnnualInformationForm availableonSEDAR as summarizedhereinafter, andwereferyoutoSchedule“A” the requirementsregardingcompositionandresponsibilities, auditors intheirannualinformationform.We complywith of theirauditcommittees,aswellallfeespaidtoexternal the composition,educationandexperienceofmembers audit committeeanddiscloseinformationwithrespectto requiresissuerstoincludethecharteroftheir of theCSA National Instrument52-110–AuditCommittees(“ Audit CommitteeDisclosure (4) NI 52-110, section 2.3, subsection 7. NI52-110,section 2.3,subsection 7. (4) NI52-110,section 2.3,subsections 5and6. (3) NI52-110,section3.1, subsections1,2and3.TheNYSEStandardsthe applicablerulesoftheSECrequirethat inorde (2) NI52-110, section2.3,subsection1. (1) monitoring externalauditors. monitoring internalauditors;and monitoring riskmanagementandinternalcontrols; overseeing fi independent pursuantto suchdefi compensatory feefrom theCompanyoranysubsidiaryof norbeanaffi should not,otherthan in hisorhercapacityasadirectormember of aboardcommitteeandinotherlimitedcircumstances, nancialreporting; liatedpersonoftheCompany, orany (1) nition. (2) Mr. Cartyhasbeenappointed ling and distribution. linganddistribution. NI 52-110 nancial nancial liatedpersonoftheCompany oranysubsidiaryoftheCompany. AllmembersoftheAuditCommittee are ”) ”) these procedures. Delivering Responsibly/Governanceformoredetailson Governance sectionofourwebsiteatwww.cn.ca, under CN hasadoptedsuchprocedures.PleaserefertotheCorporate matters, whileinsuringconfi matters oremployeeconcernsregardingaccountingauditing regarding accounting,internalaccountingcontrolsorauditing retention andtreatmentofcomplaintsreceivedbytheCompany that thecommitteemustestablishproceduresforreceipt, Additionally, 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 relating thereto. the externalauditorsandanysignifi response and/oractionplanrelatedtoanyissueidentifi encountered inperformingtheaudit,andmanagement’s the resultsofexternalaudit,anysignifi Furthermore, theAuditCommitteeisinchargeofreviewing requiring Boardapproval. form andotherreportsordocuments,fi fi The AuditCommitteeisalsoresponsibleforreviewingthe the adequacyofthoseprocedures. the Company’sfi disclosure offi the proceduresinplaceforreviewofCompany’s The mandatealsoprovidesthatthecommitteeshouldreview Audit Committee. and ensuresthattheinternalauditorsareaccountableto its members.Itfurtherannuallyreviewstheinternalauditplan its responsibilities,staffi regularly monitoringtheinternalauditfunction’sperformance, Internal AuditorreportsdirectlytotheAuditCommittee,andfor The AuditCommitteeisresponsibleforensuringthattheChief MONITORING INTERNALAUDITORS nancial information contained in the annual information nancialinformationcontainedintheannual nancial information extracted or derived from nancialinformationextractedorderivedfrom nancial statements and periodically assess nancialstatementsandperiodicallyassess (4) r to be considered independent, a member of the Audit Committee r tobeconsideredindependent,amemberof the AuditCommittee accept directly or indirectly any consulting, advisory or other accept directlyorindirectly anyconsulting,advisoryorother ng, budget and the compensation of ng,budgetandthecompensationof dentialityandanonymity. (3) cant recommendations cantrecommendations nancial or otherwise, nancialorotherwise, cant problems cantproblems ed by edby 5 NI52-110,section 4.1. (5) NI52-110,section 2.3,subsection 8. (4) NI52-110,section2.3,subsection 3. (3) NI52-110,section2.3,subsection 4. (2) NI52-110,section2.3,subsection 2. (1) The AuditCommitteemetfi twice ayear, andmorefrequentlyasrequired. separately withtheAuditCommittee,withoutmanagement, appropriate. Theinternalandexternalauditorsmustmeet and externalauditorstodiscussreviewspecifi also hasdirectcommunicationchannelswiththeinternal retained byit.Pursuanttoitscharter, theAuditCommittee funding forpaymentoftheexternalauditorsandanyadvisors The committeemakesarrangementsfortheappropriate and retentionterms,subjecttoadvisingtheBoardChair. carry outitsresponsibilities,includingfi the AuditCommitteemayretainindependentadvisorstohelpit Furthermore, themandateofAuditCommitteestatesthat external auditors. employees orformeroftheCompany’sfi committee isresponsibleforreviewinghiringpolicies The mandateoftheAuditCommitteealsoprovidesthat and confi stating allrelationshipstheexternalauditorshavewithCN the formalwrittenstatementfromexternalauditors The AuditCommitteealsoreviewsatleastannually, with managementandtheresolutionthereof). and theexternalauditors(includingadisagreement,ifany, any materialwrittencommunicationsbetweentheCompany acceptability oftheCompany’saccountingprinciples,including auditors anddiscussingwiththemthequalitynotjust The AuditCommitteeisresponsibleforoverseeingtheexternal 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 the year, incompliancewithitsmandate. the majorsubjectareasreviewedbycommitteeduring set forthinSchedule“B”tothisInformationCircular, outlines sessions ateachmeeting.ThereportoftheAuditCommittee, rmingtheirindependence. (4) vetimesin2011andheld (1) xing such advisors’ fees xingsuchadvisors’fees (2) (5) (3) c issues as cissuesas rm of rmof cations, cations, in camera in camera Board (“ the standardsofPublicCompanyAccountingOversight with Canadiangenerallyacceptedauditingstandardsand audit ofourconsolidatedfi KPMG LLP, areresponsibleforperforminganindependent respect ofthe2011fi controls andproceduressystemsofinternalcontrolin assessing theadequacyandeffectivenessofourdisclosure The AuditCommitteereceivedperiodicallymanagement’sreport Control OverFinancialReporting Audit CommitteeReportRegardingInternal the consolidatedfi opinionsaddressingwhether serve asabasisforKPMGLLP’s in accordancewiththestandardsofPCAOB.Theseaudits the effectivenessofinternalcontroloverfi December 31,2011fi Company’s AnnualReportonForm 40-Ffortheyearended Canadian securitiesregulatorsand includedinthe audited consolidatedfi Committee recommendedtotheBoardthatCompany’s Based onthisreviewandthesediscussions,theAudit remitted totheAuditCommittee. Sarbanes-Oxley Act the independencerulesadoptedbySECpursuantto laws andtherulesregulationsthereunder, including to theCompanywithinmeaningofU.S.federalsecurities Québec” andareindependentpublicaccountantswithrespect of theCodeEthics“Ordredescomptablesagréésdu that KPMGLLPareindependentwithinthemeaningofrules KPMG LLPandtheCompanyincludingawrittenconfi A formalwrittenstatementdescribingallrelationshipsbetween with KPMGLLPthefi two relatedinterpretations.TheAuditCommitteehasdiscussed (Independence DiscussionswithAuditCommittees)andthe supersedes IndependenceStandardsBoardStandardNo. 1 and theletterrequiredbyRule3526ofPCAOB,which KPMG LLPprovidedtheCommitteewithwrittendisclosures fi the assessmentofeffectivenessourinternalcontrolover to theconductofauditourfi for theFinancialReportingProcess)includingmattersrelating ThoseHavingOversightResponsibility (Communications With Institute ofCharteredAccountantsHandbookSection5751 AuditCommittees)andCanadian (Communication With Public AccountantsStatementonAuditingStandardsNo.61 required tobediscussedbytheAmericanInstituteofCertifi The AuditCommitteehasdiscussedwithKPMGLLPthematters with U.S.generallyacceptedaccountingprinciples. position, resultsofoperations,andcashfl nancialreportingundersection404ofthe PCAOB ”) in the U.S., and an independent audit of ”) intheU.S.,andanindependentauditof nancialstatementsfairlypresentourfi , and Rule 3526 of the PCAOB was also , andRule3526ofthePCAOBwasalso rm’sindependencefromtheCompany. scalyear. TheCompany’sexternalauditors, ledwiththeSEC. nancialstatementsbefi nancial statements in accordance nancialstatementsinaccordance nancial statements and nancialstatementsand ows in conformity owsinconformity nancial reporting, nancialreporting, Sarbanes-Oxley Act led with ledwith rmation rmation nancial nancial ed ed .

31 CN MANAGEMENT INFORMATION CIRCULAR 32 CN MANAGEMENT INFORMATION CIRCULAR 1 NI52-110, section3.1,subsection4. (1) and regulations as suchtermsaredefi all membersoftheAuditCommitteearefi experience. AsrequiredinthecharterofAuditCommittee, Audit Committeerefl The BoardofDirectorsbelievesthatthecomposition Audit CommitteeMembers Education andRelevantExperienceofthe effectively serveontheAuditCommittee oftheCompany. that suchserviceinnowayimpairs Mr. Bolton’sabilityto of publiccompaniesincludingCN.TheBoardhasdetermined Alberta. Mr. Boltonisamemberoffourauditcommittees undergraduate degreeineconomicsfromtheUniversityof Institute ofCharteredAccountants.Mr. Boltonholdsan He isaCharteredAccountantandfellowoftheAlberta a publicaccountantandauditorwiththatfi Mr. BoltonwasapartnerofCoopers&Lybrand for34yearsand Coopers &Lybrand Canada(nowPricewaterhouseCoopers). to 1997,Mr. BoltonwaschairandChiefExecutivePartner of Ltd. andadirectorofCapitalPower Corporation.From 1992 Financial Group,Teck ResourcesLimitedandWestJet Airlines a directorandmemberoftheauditcommitteesTDBank Utilities Inc.andformerchairofMatrikonMr. Boltonis Mr. BoltonisthechairmanofboarddirectorsEPCOR of his/herresponsibilitiesasamemberthecommittee: this InformationCircularthatisrelevanttotheperformance of eachmembertheAuditCommitteeasdate The followingisadescriptionoftheeducationandexperience audit committeefunctions. procedures forfi in suchactivities;(d)anunderstandingofinternalcontrolsand or experienceactivelysupervisingonemorepersonsengaged be expectedtoraisedbytheCompany’sfi to thebreadthandcomplexityofissuesthatcanreasonably complexity ofaccountingissuesthataregenerallycomparable fi (c) experiencepreparing,auditing,analyzingorevaluating with theaccountingforestimates,accrualsandreserves; general applicationofsuchaccountingprinciplesinconnection principles andfi has: (a)anunderstandingofgenerallyacceptedaccounting expert”, theBoardconsidersifdirectorisapersonwho In determiningifadirectorisan“auditcommitteefi education andexperienceofeachcommitteemember. SEC. TheBoardhasmadesuchdeterminationbasedonthe as “auditcommitteefi members ofthecommitteemeetallcriteriatobedesignated nancial statements that present a breadth and level of nancialstatementsthatpresentabreadthandlevelof nancial statements; (b) the ability to assess the nancialstatements;(b)theabilitytoassess (1) nancial reporting; and (e) an understanding of nancialreporting;and(e)anunderstandingof and the NYSE Standards, and several andtheNYSEStandards,several ectsahighleveloffi ned under Canadian securities laws nedunderCanadiansecuritieslaws nancial expert” under the rules of the nancialexpert”undertherulesof nancial literacy and nancialliteracyand nancially literate, nanciallyliterate, rm for 40 years. rmfor40years. nancial statements, nancialstatements, nancial nancial of EconomicsfromtheUniversityWestern Ontario. New BrunswickandNAV Mr. CANADA. LosierholdsaMasters Retail PropertiesLtd.,andheisalsoadirectorofEnbridgeGas a directorandmemberoftheauditcommitteePlazacorp Development andTourism. Heisthechairof Invest N.B.and Minister ofFisheriesandAquacultureEconomic Province ofNewBrunswick,from1989to1994,including various cabinetlevelpositionswiththegovernmentof Chief ExecutiveOffi Mr. Losier, ChairmanoftheAuditCommittee,isPresidentand Toronto Faculty ofLaw. Toronto andaBachelorofLawdegreefromtheUniversity political sciencefromVictoriaUniversityattheof Mrs. Kempston DarkesholdsaBachelorofArtsinhistoryand Asset ManagementInc.andadirectorofEnbridge and chairoftheriskmanagementcommitteeBrookfield the auditcommitteeofIrvingOilCo.Ltd,andadirector Mrs. Kempston Darkesisalsoadirectorandmemberof Limited andVice-PresidentofGeneralMotorsCorporation. President andGeneralManagerofMotorsCanada ever heldbyawomanatGM.From 1994to2001,shewas GM duringwhichsheattainedthehighestoperatingpost Motors Corporation.In2009sheendeda35-yearcareerat and PresidentLatinAmerica,AfricaMiddleEast,General Mrs. Kempston DarkesistheretiredGroupVice-President of BusinessAdministrationfromtheHarvardSchool. and Gluskin,Sheff&AssociatesInc.Mr. CartyholdsaMaster Inc., aswelladirectorofDell,Inc. the auditcommitteeofTalisman Energy Corporation, directorandmemberof of theauditcommitteeBarrickGold serving asleaddirectorandmember Inc. andPorter AirlinesInc.and is is chairmanofVirginAmericaAirlines CP Airfrom1985–1987.Mr. Carty Airlines. HewasPresidentandCEOof of AMRAirlineGroupandAmerican and SeniorVice-PresidentController Vice-President –FinanceandPlanning previously servedasPresident,Executive and CEOofAMRCorporationAmericanAirlines.Hehad Before joiningDell,Mr. Cartyretiredin2003aschairman Officer ofDell,Inc.,apositionheassumedinJanuary2007. Mr. Cartyistheretiredvice-chairmanandChiefFinancial cerofAssumptionLife.Mr. Losierheld EXPERTS. FINANCIAL COMMITTEE ARE AUDIT MEMBERS AND SEVERAL LITERATE FINANCIALLY ARE COMMITTEE OF THEAUDIT ALL MEMBERS 1 NI52-110, section2.3,subsection4. (1) be pre-approved. ended December31,2011and2010thatwererequiredto audit-related andnon-auditrelatedservicesfortheyears all theservicesperformedbyourindependentauditorsfor the independentauditor. TheAuditCommitteepre-approved fees andtermsallnon-auditengagementsprovidedby approves allauditandaudit-relatedservices,engagement Pursuant tothetermsofitscharter, theAuditCommittee Company byKPMGLLPwerethefollowing: audit, audit-related,taxandallotherservicesprovidedtothe For theyearsendedDecember31,2011and2010,feesfor KPMG LLPhasservedastheCompany’sauditorssince1992. Auditors Fees business experience. in Halifax,NovaScotia,andhasmorethan25yearsof MBA andanLL.BLawDegreefromDalhousieUniversity Foods IncorporatedandHydroOneInc.Mr. Pace holdsan of directorsMaritimeBroadcastingSystemsInc.,HighLiner The Pace Group.Mr. Pace isalsoamemberoftheboard Mr. Pace isthePresidentandChiefExecutiveOffi DePaul University. of ScienceinCommerce(concentrationaccounting)from Clean EnergyFuels Corp.Mr. O’ConnorholdsaBachelor Investors’ AllAmericanExecutiveTeam. Heisadirectorof In 2011,Mr. O’ConnorwasnamedtotheInstitutional America’s BestCEOseachyearbetween2005and2010. at Waste Management,Inc.Hewasnamedtothelistof Prior to1998,hehadheldvariousmanagementpositions chair andChiefExecutiveOffi the UnitedStates.From 1998to2011,Mr. O’Connorwas solid wastecollection,recyclinganddisposalservicesin of RepublicServices,Inc.,aleadingprovidernon-hazardous Mr. O’Connoristheretiredchairmanofboarddirectors TOTAL FEES All Other Tax Audit-Related Audit THOUSANDS IN FEES cer of Republic Services, Inc. cerofRepublicServices,Inc. ,9 4,382 1,010 4,493 2,479 1,236 2,447 2011 1 893 810 (C$) –– cer of cerof 2010 (C$) OTHER FEES implications foremployeesandtaxcompliance. Consist offeesincurredforconsultationsoncross-bordertax TAX FEES comfort letters,inconnectionwiththeissuanceofsecurities. regulation andduediligenceotherservices,including services inconnectionwithreportsrequiredbystatuteor 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 The natureoftheservicesundereachcategoryisdescribedbelow. have specifi than theprohibitedserviceslistedabove,butonlyif LLP toprovidenon-auditservices,includingtaxother Pursuant tosuchresolutions,theCompanymayengageKPMG and legalservicesexpertunrelatedtotheaudit. or dealer, investmentadviser, orinvestmentbankingservices management functionsorhumanresourcesfunctions,broker reports, actuarialservices,internalauditoutsourcing opinions, orcontributionin-kind appraisal orvaluationservices,fairness systems designandimplementation, statements, fi to theaccountingrecordsorfi bookkeeping orotherservicesrelated Company anditssubsidiaries,including certain non-auditservicestothe from engagingKPMGLLPtoprovide resolutions prohibitingtheCompany and theBoardofDirectorshaveadopted auditors areprohibitedfromproviding.CN’sAuditCommittee Committee determineswhichnon-auditservicestheexternal The mandateoftheAuditCommitteeprovidesthat Non-Audit Services Nil nancialreporting. nancial statements and those of its subsidiaries, and nancialstatementsandthoseofitssubsidiaries, callybeenpre-approvedbytheAuditCommittee. nancial information nancialinformation nancial nancial SERVICES. NON-AUDIT CERTAIN PROVIDING FROM PROHIBITED AUDITORS ARE THE EXTERNAL nancial nancial (1)

33 CN MANAGEMENT INFORMATION CIRCULAR 34 CN MANAGEMENT INFORMATION CIRCULAR compensation, are intended to motivate executives to create compensation, areintended tomotivate executivestocreate which constitute morethan60%ofNEOs’target totaldirect performance). In addition,thelong-termincentive awards, total directcompensation wasdirectlylinkedto the Company’s variable pay(inaggregate,approximately 80%ofNEOs’target the compensationprogramappropriately balancesfi on thecreationoflong-termvalue forshareholders.For example, program andpoliciesencourage therightbehavioursandfocus policies. TheCommitteeisofthe viewthatourcompensation risks relatedtotheCompany’scompensationprogramand One oftheCommittee’skeyresponsibilitiesinvolvesoverseeing Effective riskmitigationfeatures business results. demonstrating thestrongalignmentofcompensationwith to executivesandmanagementthatexceededtargets, strong performancethereforeresultedinincentivepayouts the bestinCompany’shistory. TheCompany’svery earnings, producingfi In 2011,CNdeliveredrecordcarloadings,revenuesand corporate performanceobjectives. the achievementofaggressivetargetslinkedtoCompany’s Plan andRestrictedShareUnitsarethereforecontingenton on investedcapital.Payouts undertheAnnualIncentiveBonus iii) dilutedearningspershare;iv)freecashfl performance metrics:i)revenues;ii)operatingincome; to shareholdersandaregenerallybasedonfi organization’s short-andlong-termprofi As such,CN’scorporategoalsplayapivotalroleindrivingthe compensation packageswithshareholdervaluecreation. The Company’scompensationphilosophyistoalignexecutive compensation belowthe60thpercentile. overall aggregatepositioningofallexecutives’totaldirect of thecompensationpolicycontinuedtobemet,withan compensation consultant,reportedthattheobjectives 2011, Towers Watson, Management’sexternalexecutive the executives’respectivecomparatorgroups.InDecember compensation betweenthemedianand60thpercentileof compensation policy, whichaimstopositiontotaldirect 2011 wasthesecondyearunderrevisedexecutive Competitive compensationthatrewardsperformance Analysis onpage38. in 2011canbefoundtheCompensationDiscussionand summary ofthecompensationprocessandkeydecisionsmade 2011 StatementofExecutiveCompensation.Anexecutive (“ of theHumanResourcesandCompensationCommittee “Say onPay” vote.To assistyouinyourdecision,themembers For thesecondyear, youareinvitedtocastyouradvisory Dear Shareholder, STATEMENT OFEXECUTIVECOMPENSATION Committee ”) are pleased to present you with the Company’s ”) arepleasedtopresentyouwiththeCompany’s nancial results that were among nancialresultsthatwereamong tability and return tabilityandreturn ow; and v) return ow;andv)return vekeyfi xed and xedand nancial nancial “ non-disclosure ofconfi plans, thereforecontainnon-compete,non-solicitationand award agreements,aswellitsnon-registeredpension confi it importanttofocusonprotectingtheCompanyandits environment andCN’spositionwithintheindustrymake The highlycompetitivenatureoftheCompany’sbusiness CN islargelyrecognizedastheleaderinrailroadindustry. compensation programandpolicies. the riskmitigatingfeaturesthatformpartofCompany’s Please refertopage48foramoredetaileddescriptionof the useofanysingleperformancemetric. Annual IncentiveBonusPlandiversifi performance metricsunderthecorporatecomponentof risk timehorizon.Anothergoodexampleisthattheuseoffi longer-term valueandtogenerallyaligncompensationwiththe Edith E. Holiday David G.A. McLean DavidG.A. EdwardC.Lumley Edith E. Holiday DenisLosier Hugh J.Bolton V. MaureenKempston Darkes CharlesBaillie A. Michael R.Armellino COMMITTEE CHAIR Robert Pace We lookforwardtomeetingyou. Halifax onApril24,2012. related questionsattheannualmeetingofshareholdersin Committee, Mr. Pace, willbeavailabletoanswercompensation- and encourageyoutocastyourvote.TheChairofthe following informationwillassistyouinmakingyourdecision and retainsacommittedleadershipteam.We hopethatthe behaviours, ismarketcompetitive,andattracts,motivates strategy andshareholders’interestsbyencouragingtheright compensation programeffectivelyalignswiththebusiness The Committeeisdedicatedtoensuringthattheexecutive Continuous improvement employees complyingwiththeseConditions. the non-registeredpensionplansissubjecttocurrentorformer Conditions dential information. The Company’s long-term incentive dentialinformation.TheCompany’slong-termincentive ”). Payout underthelong-termincentiveplansor dential information conditions (the dentialinformationconditions(the es the risk associated with estheriskassociatedwith ve ve • • • and practices: on thesuitabilityofCompany’scompensationpolicies skills andexperienceenablingtheCommitteetomakedecisions his/her responsibilitiesasamemberoftheCommittee,including this InformationCircularthatisrelevanttotheperformanceof experience ofeachmembertheCommitteeasdate The followingisadescriptionoftheeducation,skillsand two committees’riskoversightresponsibilities. Committee. Thisoverlapeffectivelyprovidesalinkbetweenthe Darkes Denis Losier(AuditChair),HughJ.Bolton,V. Maureen Kempston Denis Losier, McLean. EdwardC.LumleyandDavidG.A. Hugh J.Bolton,EdithE.Holiday, V. MaureenKempston Darkes, CharlesBaillie, Chair oftheCommittee,MichaelR.Armellino,A. Committee membersatyear-end in2011wereRobertPace, (“ The HumanResourcesandCompensationCommittee Compensation Committee Composition oftheHumanResourcesand Compensation Committee Human Resourcesand Committee supervision ofallCoopers&Lybrand seniorpartners. Mr. Boltonwasresponsibleforthe compensationand (now PricewaterhouseCoopers). Duringthatperiod, Chief ExecutivePartner ofCoopers&Lybrand Canada From 1992to1997,Mr. Boltonwaschairmanand Capital Power CorporationandTDBankFinancialGroup. Matrikon Inc.,Teck ResourcesLimited,WestJet AirlinesLtd., serving asaboardmemberfordifferentcompaniessuch compensation committee.Mr. Boltonhasextensiveexperience Utilities Inc.andsits Mr. BoltonisthechairmanofboarddirectorsEPCOR committees ofvariousotherpubliccompanies. Corporation (AIMCo).Heservedonthehumanresources the boardofdirectorsAlbertaInvestmentManagement compensation committeeofTELUS Corporationandchairof to hisoffi head ofthehumanresourcesdepartmentreporteddirectly The Toronto-Dominion Bank.AsChiefExecutiveOffi Mr. BaillieistheretiredchairandChiefExecutiveOffi has strongleadershipandsuccessionplanningexperience. & Co.,includingPartner inChargeofResearch.Mr. Armellino Prior to1991,heheldvariouspositionsatGoldman,Sachs responsible fortheimplementationofincentiveprograms. As such,hemanagedapproximately400peopleandwas Chief ExecutiveOffi Group, LP. From 1991to1994,Mr. Armellinowaschairand Mr. ArmellinoisaRetiredPartner fromTheGoldmanSachs and RobertPace arealsomembers oftheAudit ce.Mr. Baillieischairofthehumanresourcesand ”) is comprised of nine independent directors. ”) iscomprisedofnineindependentdirectors. cer of Goldman Sachs Asset Management. cerofGoldmanSachsAssetManagement. ex offi cio on its human resources and onitshumanresourcesand cer, the cer of cerof • • • • • and practices. and practices. to humanresourcesandexecutive compensationpolicies estate company, whereheacquiredexperiencewithrespect also chairanddirectorofConcordPacifi committee for17years.For manyyears,Mr. McLeanwas as memberofthehumanresourcesandcompensation issues fromhisoffi acquired extensiveexperiencedealingwithhumanresources resources executivereporteddirectlytohim.Mr. McLeanhas The McLeanGroup.AsChiefExecutiveOffi Mr. McLeanischairandformerChiefExecutiveOffi the years. 10 publiccompaniesandchairedatleastfi has servedonthehumanresourcescommitteeofabout corporations employingthousandsofemployees.Mr. Lumley six cabinetportfolios,hewasresponsibleformanyCrown in theGovernmentofCanada.AsMinisterCrownfor 1984, duringwhichtimeheheldvariouscabinetportfolios Mr. LumleywasaMemberofParliament from1974to succession planningforotherpubliclytradedcompanies. of AssumptionLife.Mr. Losierhasalsobeeninvolvedin plan inpreparationofhissuccessionasChiefExecutiveOffi participating anddevelopingaleadershipdevelopment Mr. Losieralsogainedhumanresourcesexperiencebyactively of itsexecutivecompensationpoliciesandpractices. practices andbenefi with consultantstoassessAssumptionLife’shumanresources Resources reportsdirectlytoMr. Losier. Mr. Losierhasworked Life. AsChiefExecutiveOffi Mr. LosierisPresidentandChiefExecutiveOffi Asset ManagementInc.,IrvingOilCo.Ltd.andEnbridgeInc. and humanresourcescommittees,includingatBrookfi Mrs. Kempston Darkeshasservedonvariouscompensation of humanresources,whoreporteddirectlytoheroffi Limited, Mrs.Kempston Darkessupervisedtheseniorhead Corporation andasPresidentofGeneralMotorsCanada Latin America,AfricaandMiddleEastofGeneralMotors human resourcesandcompensationactivities.AsPresident Motors Corporation.Shewasresponsibleforsupervising Mrs. Kempston DarkeswasGroupVice-PresidentofGeneral the supervisionofapproximately2,250lawyers. Cabinet atTheWhiteHouse,Mrs.Holidaywasinchargeof United StatesTreasury DepartmentandasSecretaryofthe Mountains InsuranceGroup,Ltd.AsGeneralCounselatthe Hess Corporation,RTIInternationalMetals,Inc.andWhite member fordifferentcompaniessuchasH.J.HeinzCompany, Mrs. Holidayhasextensiveexperienceservingasaboard ce as chair of The McLean Group and ceaschairofTheMcLeanGroupand ts and to measure the competitiveness tsandtomeasurethecompetitiveness cer, theVice-PresidentofHuman c Group Inc., a real cGroupInc.,areal cer, thehuman ve of them over veofthemover cer, Assumption cer of cerof ce. ce. eld eld cer cer

35 CN MANAGEMENT INFORMATION CIRCULAR 36 CN MANAGEMENT INFORMATION CIRCULAR human resourcesandcompensation-relatedexperience: The followingtablesummarizestheCommitteemembers’ • n rcie / (67%) (78%) 6/9 7/9 (89%) (100%) (100%) 9/9 8/9 Oversight oflabourmatters (56%) 9/9 and practices materials relatedtocompensationpolicies Drafting orreviewofcontractsandotherlegal 5/9 compensation policiesandpractices Exposure tomarketanalysisrelated (78%) (89%) (100%) compensation policiesandpractices Oversight offi 7/9 representatives oncompensationissues 8/9 (78%) 9/9 Engagement withinvestorsandinvestor and practices (89%) requirements relatedtocompensationpolicies 7/9 Interpretation andapplicationofregulatory (89%) Pension planadministration/oversight 8/9 vs. business/operatingperformance (100%) Oversight ofstress-testingincentiveprograms 8/9 Development/oversight ofincentiveprograms 9/9 Approval ofemploymentcontracts talent development Leadership andsuccessionplanning, Organizational exposuretotheHRfunction Membership onHRcommittees AREA OFEXPERIENCE compensation trendsandchangestodisclosurerules. in ordertoupdatehisexistingknowledgerelatedexecutive Compensation Committees:NewChallenges,Solutions Harvard BusinessSchoolcourseoncompensationentitled Hydro OneInc.InNovember2011,Mr. Pace attendeda resources committeeofHighLinerFoods Incorporatedand business experience.Mr. Pace isalsoamemberofthehuman report directlytohim.Mr. Pace hasmorethan25yearsof Pace Groupandhumanresources offi Mr. Pace isthePresidentandChiefExecutiveOffi nancial analysis related to nancialanalysisrelatedto cers within the Group cerswithintheGroup VERY STRONG OR STRONG VERY STRONGOR NUMBER OF COMMITTEE NUMBER OFCOMMITTEE MEMBERS WITH MEMBERS WITH EXPERIENCE cer of The cerofThe , The Committeemetfi Responsibly/Governance. Corporate GovernanceManualatwww.cn.ca, underDelivering The Committee’sfullcharterisavailableaspartofCN’s • • • • • • • The Committee’sresponsibilitiesinclude: Compensation Committee Mandate oftheHumanResourcesand subject areasreviewedbytheCommitteeduringyear. Schedule “B”tothisInformationCircular, outlinesthemajor Resources andCompensationCommittee,setforthin sessions duringeachmeeting.ThereportoftheHuman business objectives. and retainthequalityofpersonnelrequiredtomeetits are inplacetoallowtheCompanyattract,motivate other things,thatappropriatehumanresourcessystems reviewing humanresourcespracticesbyensuring,among management’s compensation;and recommending totheBoardofDirectorsexecutive and reviewingdisclosureonsuchgroup; determining compensationoranyelementof overseeing theselectionofanybenchmarkgroupusedin likely tohaveamaterialadverseeffectonCN; CN’s compensationpoliciesandpracticesthatisreasonably mitigate suchrisksand(iii)anyidentifi in thatrespect;(ii)anypracticesCNusestoidentifyand and reviewingdisclosureon:(i)theroleofCommittee associated withCN’scompensationpoliciesandpractices overseeing theidentifi Company’s keypositions; reviewing leadershipandtalentmanagementforthe reviewing executivemanagement’sperformanceassessment; including thatofthePresidentandChiefExecutiveOffi succession planningfortheexecutivemanagementpositions, ensuring thatappropriatemechanismsareinplaceregarding vetimesin2011andheld cation and management of risks cationandmanagementofrisks ed risk arising from edriskarisingfrom in camera in camera cer; Company’s success. Company’s success. engage atalentedworkforcethatwillhelpsustainthe and practicesareinplacetoattract,retain,develop continued leadership,appropriatehumanresourcesprocesses The Committeeissatisfi executive positions. employees andinternalsuccessorsforcriticalmanagement managers andfocusedondevelopmentplansforhighpotential based onadisciplinedbottom-upassessmentofover3,000 made intheareaofsuccessionplanning.Theirreviewwas In addition,theCommitteeoversawongoingprogress management team. in leadershipdevelopmenttoenhancetheskillsof “Leadership Program”,whichaimstodeliverconsistency The Companyalsoinvestedintraininginitiativessuchasits help managerssuccessfullywelcomeandengagenewhires. tools, materials,websitesandadministrativeprocessesto The CompanydevelopedanewOnboardingprogramwith approximately 3,000individuals. quality ofitscandidatepool,whichfacilitatedthehiring improved theeffi to anewgenerationofrailroaders.Asresult,theCompany employed moretargetedsourcingstrategiestobetterreachout Company implementedanewtalentacquisitionsystemand workforce inlinewiththeCompany’sgrowth.For example,the individuals andfurtherengagingtheexistingmembersof management initiativesaimedatattractinghigh-quality Throughout 2011,theCommitteeoversawarangeoftalent Leadership DevelopmentandTalent Management ciency of its hiring process and enhanced the ciencyofitshiringprocessandenhancedthe edthat,underMr. Mongeau’s to theCommittee. Hugessen werecompensation-relatedservicesprovideddirectly Management. During2011,theonlyservicesperformedby Hugessen, thelatterhasagreednottoperformanyworkfor Pursuant toanunderstandingbetweentheCommitteeand by theCommitteetoperformcompensation-relatedservices. services providedtotheCompanybyconsultantretained of theCommitteeshallpre-approveallnon-compensation of DirectorsadoptedapolicytotheeffectthatChair such adviceisobjectiveandindependent.In2007,theBoard is satisfi evaluated Hugessen’sperformancefor2011.TheCommittee in 2011totalledapproximatelyC$95,000.TheCommittee related questions.Inaggregate,thefeesinvoicedbyHugessen Committee onexecutivecompensationrecommendationsand Hugessen toreviewandprovideadvicedirectlythe Inc. (“ the CommitteehasretainedservicesofHugessenConsulting presented forCommitteeapproval.SinceOctober2007, provide adviceoncompensationrecommendationsthatare to time,theservicesofexecutivecompensationconsultants services. TheCommitteealsoindependentlyretains,fromtime invoiced approximatelyC$135,000byTowers Watson forthese executive compensationmatters.In2011,Managementwas surveys andtrends,aswellexternalopinionsonvarious the servicesofTowers Watson toprovidemarketinformation, compensation foritsOffi Management retainsconsultingfi Executive CompensationConsultants COMPENSATION ADVISORYFEETOHUGESSEN All OtherFees Fees Compensation-Related Executive TYPE OFFEE Hugessen ed with the advice received from Hugessen and that edwiththeadvicereceivedfromHugessenandthat ”) for that purpose. The Committee mandated ”) forthatpurpose.TheCommitteemandated cers. In 2011, Management retained cers.In2011,Managementretained RENDERED SERVICES 1009,0 100 95,000 51,000 IN 2010 rms to assist in determining rmstoassistindetermining (C$) 000 RENDERED SERVICES IN 2011 (C$) OF TOTAL FEES FOR SERVICES PERCENTAGE RENDERED IN 2011 (%)

37 CN MANAGEMENT INFORMATION CIRCULAR 38 CN MANAGEMENT INFORMATION CIRCULAR compensation policy were met, with an overall aggregate compensation policy weremet,withanoverall aggregate groups. Towers Watson reported thattheobjectivesof year comparedagainstthatofthe respectivecomparator direct compensationofferedto allexecutivesduringthe compensation advisorprovidean assessmentofhowtotal process, Managementrequested thatitsexternalexecutive In December2011,aspartofthe annualcompensationreview on page40. More informationonthecomparatorgroupscanbefound sample withrevenuesbetweenUS$6billionandUS$10billion. data areprovidedfromorganizationsintheU.S.Industrial responsibility. Wheresize-adjustedresultsareinsuffi each CNexecutiverolebasedontheirrespectiverevenue comparator grouparesize-adjustedtorefl proprietary database,the“U.S.Industrial”.Dataforlatter of U.S.organizationsthatparticipateinTowers Watson’s for allotherexecutives,thecomparatorgroupisabroadsample NEOs, thecomparatorgroupconsistsofClassIRailroads,and and practicesofremunerationintherailroadindustry. For the competitive afterathoroughreviewofthestructure,levels positioning atthe75thpercentilewasdeterminedtobe respective comparatorgroups.Thisreductionfrommarket between themedianand60thpercentileofexecutives’ to targetamarketpositioningoftotaldirectcompensation as PresidentandCEOinJanuary2010,thepolicywasrevised groups. ConcurrentwiththeappointmentofClaudeMongeau the 75thpercentileofexecutives’respectivecomparator the policyaimedtopositiontotaldirectcompensationat the Company’sexecutivecompensationpolicy. Priorto2010, executives intermsoftotaldirectcompensationarebasedon Decisions onhowmuchtopaytheNEOsandallother defi benefi ii) annualincentivebonus;iii)long-termincentives;iv)pension compensation programforNEOswhichincludes:i)basesalary; The Companymaintainsacomprehensiveexecutive COMPENSATION FRAMEWORKANDPOLICY Corporate ServicesandChiefLegalOffi Marketing Offi Offi Keith E.CreelasExecutiveVice-PresidentandChiefOperating as ExecutiveVice-PresidentandChiefFinancialOffi and ChiefExecutiveOffi grow intheirrespectiveroles:ClaudeMongeauasPresident The teamofNamedExecutiveOffi 2011 wasmarkedbyconsistencyintheCompany’sleadership. NAMED EXECUTIVEOFFICERS Executive Summary and Analysis Compensation Discussion cer, Jean-JacquesRuestasExecutiveVice-PresidentandChief ne total direct compensation. netotaldirectcompensation. ts;andv)executiveperquisites.Thefi cer and Sean Finn as Executive Vice-President cerandSeanFinnasExecutiveVice-President cer(“ CEO cers(“ ”) oftheCompany, LucJobin cer. NEOs ect the scope of ectthescopeof rst three elements rstthreeelements ”) continued to ”) continuedto cer, cient, cient, the 60th percentile. the 60thpercentile. positioning ofallexecutives’totaldirectcompensationbelow Compensation” onpage50. see sectionentitled“PresidentandChiefExecutiveOffi For adiscussiononthecompensationofCEO, please employment contract. the Board.NeitherCEOnorotherNEOshavean of theBoardDirectors.TheCEOservesatwill by theCommitteeandapprovedindependentmembers the Committee.ThecompensationofCEOisrecommended is recommendedbytheCEOandreviewedapproved The compensationoftheNEOs,otherthanthatCEO, DECISION PROCESS with fi Overall corporateperformancefor2011wasverystrong, operational prioritiesrelatedtoeachNEO’sfunction. on individualperformancethatconsideredthestrategicand remaining 30%oftheannualincentivebonuswasbased are appropriateforacapitalintensivebusinesslikeCN’s.The is oftheviewthatitschosencorporateperformanceobjectives share, freecashfl targets forrevenues,operatingincome,dilutedearningsper annual incentivebonusandwasmeasuredagainstaggressive base salary. Corporateperformanceaccountedfor70%ofthe salary, andtheotherNEOs’targetbonuswassetat70%of In 2011,Mr. Mongeau’stargetbonuswas120%ofbase 2011 ANNUAL BONUSRESULTS For moreinformationonbasesalaries,pleaserefertopage43. and adequatepositioningagainstmarket. increases andrefl increases providedtoallNEOswereinlinewithexpectedmarket retention considerationsandsuccessionplans.Thesalary competitiveness, economicoutlook,leadershipabilities, Railroads comparatorgroup.Salaryincreasesrefl salaries weresetwithreferencetothemedianofClassI As partoftheNEOs’annualcompensationreview, base 2011 BASESALARYINCREASES page 44. 2011 resultsas reported bytheCompany, canbefoundon approved bythe BoardofDirectorsinJanuary 2011, andthe tables showingthe2011corporate performanceobjectives,as management employees),asset outintheplanrules.The NEOs andapproximately190other executivesandsenior resulting inacorporatebonusfactor of150%(or200%for assessed theperformanceof Companyat“farexceeds”, performance objectives.Consequently, theBoardofDirectors nancialresultsexceedingtargetsforallfi ect the NEOs’ growth in their continuing roles ecttheNEOs’growthintheircontinuingroles ow and return on invested capital. The Board owandreturnoninvestedcapital.TheBoard ve corporate vecorporate ect market ectmarket cer cer in accordance with the plan rules. As the minimum average in accordancewith theplanrules.Asminimum average of 122.6%therestrictedshare unitsawardedin2009, in 2009.Thisoutcomeresulted inaperformancevestingfactor December 31,2011of13.91%, exceedingthe13%targetset achieved athree-yearaveragereturn oninvestedcapitalto share unitsagainsttheperformance targets.TheCompany The Committeereviewedthevestingof2009restricted 2009 RESTRICTEDSHAREUNITAWARD PAYOUT options awardedpursuanttothatagreementwillbeforfeited. year oftheawardagreement,restrictedshareunitsandstock including NEOs,orothermanagementemployeeretireinthe approaching retirement.Inotherwords,shouldanexecutive, agreements, inordertoencourageretentionofkeytalent included inthestockoptionandrestrictedshareunitaward In 2011,a“one-yearminimumactiveservice”conditionwas Stock optionshavea10-yearterm. vest overfouryearsatarateof25%eachanniversarydate. The stockoptionsgrantedin2011wereconventionaland unit awardcanbefoundonpage46. objectives andpayoutconditionofthe2011restrictedshare condition mustbemet.Thetablesummarizingtheperformance Additionally, foranypayouttobemade,aminimumshareprice aggressive comparedtorecentrailroadindustryperformance. The Companysetsreturnoninvestedcapitaltargetsthatare capital targetfortheperiodendingonDecember31,2013. to NEOsissubjectathree-yearaveragereturnoninvested The payoutoftherestrictedshareunitsgrantedin2011 of theClassIRailroadscomparatorgroup. for NEOsweredeterminedwithreferencetothe60thpercentile leadership andtalentretention.Long-termincentivefairvalues data, aswellotherfactorssuchindividualperformance, granted toNEOs,theCommitteeconsideredexternalmarket In determiningtheappropriatelong-termincentivefairvalue performance-based restrictedshareunits. consist ofacombinationconventionalstockoptionsand and shareholdervaluecreation,long-termincentives To alignwithshort-andlong-termbusinessperformance 2011 LONG-TERM INCENTIVES plan compensation–Annualincentiveplansonpage54. Compensation Table underthecolumnNon-equityincentive the annualincentivebonuspayoutssetoutinSummary with thecorporatebonusfactor, servedasthebasistocalculate performance oftheNEOs.Theirrating,along In December2011,theCommitteereviewedindividual objectives andresultscanbefoundonpage46. The tableillustratingthe2009restrictedshareunitperformance of theawardagreementswerecompliedwith. the planoccurredinFebruary 2012,providedotherconditions closing sharepriceconditionwasalsomet,payoutunder that “ assess anypotentialriskimplications.Towers Watson concluded Company’s compensationprogram,policiesandpractices In 2011,Towers Watson wasmandatedtoreview the is availableonpages48and49. A completelistanddescriptionoftheserisk-mitigatingfeatures • • • • • interests. Thefollowingareexamplesofsuchcharacteristics: mitigating risksandaligninglong-termresultswithshareholder compensation programencouragetherightbehaviours,thus of thecharacteristicsinherentinCompany’sexecutive to guidecompensationprogramdesignanddecisions.Many The Companyhasaformalizedcompensationphilosophy RISK MITIGATION INOURCOMPENSATION PROGRAM current or former employees complying with these Conditions. current orformeremployeescomplying withtheseConditions. incentive plansorthenon-registered pensionplansissubjectto conditions (the“ non-solicitation andnon-disclosure ofconfi non-registered pensionplans,thereforecontainnon-compete, Company’s long-termincentiveawardagreements,aswell its efforts toprotectitselfanditsconfi industry leader. Inrecentyears,theCompanyhassteppedup and CNhasundergoneatransformationaljourneytobean The railroadindustryoperatesinahighlycompetitivemarket NON-COMPETE, NON-SOLICITATION ANDNON-DISCLOSURE a materialadverseeffectonthecompany CN’s compensationprogramsthatarereasonablylikelytohave management employees (approximately 195 individuals). management employees(approximately195individuals). Stock ownershipguidelinesapplytoexecutivesandsenior Executive compensationclawbackpolicyisinplace; a guaranteedminimumpayout; Incentive payoutopportunitiesarecappedanddonothave the AnnualIncentiveBonusPlan; Multiple performancemetricsaretobemetorexceededin as short-andlong-termincentives; Appropriate balancebetweenfi there doesnotappeartobesignifi Conditions ”). Payout underthelong-term xedandvariablepay, aswell dential information. The dentialinformation.The cant risks arising from cantrisksarisingfrom ”. ”. dential information dentialinformation

39 CN MANAGEMENT INFORMATION CIRCULAR 40 CN MANAGEMENT INFORMATION CIRCULAR for competitive and reasonable compensation levels. for competitiveandreasonable compensationlevels. believes thatthecompensation policyanditsprinciplesprovide is setwithreferencetothe60thpercentile.TheCommittee group, whereasthegrantdatefairvalueoflong-termincentives with referencetothemedianlevelofrespectivecomparator revised policy, basesalariesandtargetannualbonusesareset the railroadindustry. Inordertoachievetheobjectivesofthis review ofthestructure,levelsandpracticesremunerationin percentile wasdeterminedtobecompetitiveafterathorough groups. Thisreductioninmarketpositioningfromthe75th and 60thpercentileoftheexecutives’respectivecomparator positioning oftotaldirectcompensationbetweenthemedian in January2010,thepolicywasrevisedtotargetamarket the appointmentofClaudeMongeauasPresidentandCEO the executives’respectivecomparatorgroups.Concurrentwith position totaldirectcompensationatthe75thpercentileof Prior to2010,theexecutivecompensationpolicyaimed THE COMPANY’S EXECUTIVECOMPENSATION POLICY Compensation Policy to shareholders.Theexecutivecompensationprogramisalso the organization’sshort-andlong-termprofi to keycorporateobjectivesthatplayapivotalroleindriving proportion ofexecutiveincentiveremunerationisthereforetied rewards, thusencouragingtherightbehaviours.Asignifi Company’s long-termstrategy, itsbusinessplanandexecutive are designedtoensurethatthereisaclearlinkbetweenthe The Company’sexecutivecompensationprogramandpolicies Compensation Framework INCENTIVE BONUS ANNUAL BASE SALARY EXECUTIVE PERQUISITES PENSION BENEFITSAND • StockOptions • RestrictedShareUnits& LONG-TERM INCENTIVES compensation Indirect incentive Variable incentive Variable Fixed compensation tability and return tabilityandreturn cant cant “pay-for-performance” elements. compensation offering,whichisweightedtowardsvariable, bonus andlong-termincentivesdefi perquisites. Thecombinationofbasesalary, annualincentive iii) long-termincentives;iv)pensionbenefi fi The executivecompensationprogramiscomprisedof motivate outstandingexecutivetalent. designed tobecompetitive,inorderattract,retainand reference point,asdescribedbelow. executives, otherthantheNEOs,servesasthissecondary comparator groupusedtobenchmarkpaylevelsforallother comparability oftheabove-mentionedClassIRailroads.The but notfordirectbenchmarkingpurposes,giventhe of verifyingthealignmentwithgeneralcompensationtrends, considers datafromasecondaryreferencepointforpurposes and CanadianPacifi Corporation,NorfolkSouthernCorporation Corporation, CSX for theNEOswasfollowingClassIRailroads:UnionPacifi competes forexecutivetalent.In2011,thecomparatorgroup that arecomparableinsizeandwithwhomtheCompany considers acomparatorgroupofNorthAmericancompanies In determiningcompensationfortheNEOs,Company appropriate forthelevelandnatureofpositions. carefully reviewedandendorsedbytheCommitteeasbeing determined usingcomparatorgroups,whichhavebeen The medianand60thpercentilecompetitivepaylevelsare BENCHMARKING USINGCOMPARATOR GROUPS ve elements: i) base salary; ii) annual incentive bonus; veelements:i)basesalary;ii)annualincentivebonus; compensation Total cash c Railway Limited. The Committee also cRailwayLimited.TheCommitteealso compensation Total direct nes the total direct nesthetotaldirect ts; and v) executive ts;andv)executive program compensation Executive c executive compensationpolicy. Eachcomponentisthenfurtherdetailedinthissection. The followingtablesummarizesthecomponentsofCompany’sexecutivecompensationprogram,whichisdrivenby Components oftheExecutiveCompensationProgram Committee areprovidedwithupdatesrelatedtotheCompany’s three-year period.Throughouttheyear, membersofthe or canbeexpectedtoaffectCN’sbusinessinthefollowing business, regulatoryandcompetitiveconditionswhichaffect which ManagementexamineswiththeDirectorseconomic, The businessplanningprocessisanextensiveone,during Board duringtheStrategicPlanningCommitteemeetings. which ispreparedbyManagementandreviewedwiththefull Plan. ThesetargetsarederivedfromCN’sannualbusinessplan, Annual IncentiveBonusPlanandtheRestrictedShareUnits Board ofDirectorstheperformancetargetsrelatedtoboth The Committeereviewsandrecommendsforapprovalbythe abilities, retentionconsiderationsandsuccessionplans. comparator grouppractices,economicoutlook,leadership in Januaryeachyear, bytakingintoconsiderationmedian The Committeenormallyreviewsthebasesalariesofexecutives COMPENSATION DECISIONSANDPROCESS compensation consultant,Hugessen. the Committeealsoreceivesadvicefromitsindependent Throughout theannualexecutivecompensationreviewprocess, with revenuesbetweenUS$6billionandUS$10billion. are providedfromorganizationsintheU.S.Industrialsample responsibility. Wheresize-adjustedresultsareinsuffi of eachCNexecutiverolebasedontheirrespectiverevenue “ that participateinTowers Watson’s proprietarydatabase(the benchmarking purposesisabroadsampleofU.S.organizations For allotherexecutives,thecomparatorgroupusedfor U.S. Industrial OPNN EINSMAYFR OPPORTUNITY FORM Bonus Plan Incentive Annual DESIGNSUMMARY Base Salary COMPONENT Performance period:1year • Approximately 4,600managementemployees • Annual awardsbasedonachievementof • Performance period:annual • Individualsalaryrecommendationsbased • Fixedrateofpay • ”). Dataaresize-adjustedtorefl are eligible performance (30%) objectives (70%)andindividual fi considerations outlook, leadership,retentionandsuccession on competitiveassessmentandeconomic ve pre-determined corporate performance vepre-determinedcorporateperformance ect the scope ectthescope cient, data cient,data • Cash-based • Cash-based •Set with reference • Cash pay performance of theBoardDirectors. by theCommitteeandapprovedindependentmembers the Committee.ThecompensationofCEOisrecommended is recommendedbytheCEOandreviewedapproved The compensationoftheNEOs,otherthanthatCEO, description oftheplan. Long-Term IncentivePlan–pleaserefertopage60fora to oneindividual,pursuantthetermsofManagement limitation onthenumberofstockoptionsthatcanbeawarded of stockoptions,exceptinthecaseCEO, due tothe20% share unitsgrantedtoNEOsisapproximatelyequivalentthat Railroads comparatorgroup.Thefairvalueoftherestricted determined withreferencetothe60thpercentileofClassI and talentretention.Long-termincentivefairvalueswere well asotherfactorssuchindividualperformance,leadership in the“BenchmarkingUsingComparatorGroups”section,as the Committeeconsideredexternalmarketdata,asdiscussed appropriate long-termincentivefairvaluegrantedtoeachNEO, which takeplaceeachyearinJanuary. Indeterminingthe at themeetingsofCommitteeandBoardDirectors NEOs andothereligibleemployeesisreviewedapproved The annualgrantofrestrictedshareunitsandstockoptionsto to recommendexecutivecompensationdecisions. fi confi seek clarifi year, shouldtheywishtodiscussspecifi also haveopenaccesstoseniormanagementthroughoutthe performance againsttargets.TheCommitteeandtheBoard nancial performance and that they are appropriately equipped nancialperformanceandthattheyareappropriatelyequipped dent that they have detailed visibility of the Company’s dentthattheyhavedetailedvisibilityoftheCompany’s For othereligible • Target is120%of • 2.0 times the target 2.0 timesthetarget limited to1.5or a maximumpayout grade levelwith is basedon employees, target the target is limitedtotwice Maximum payout the otherNEOs. CEO and70%for base salaryforthe comparator group of therespective to themedian cation. The Board and the Committee are therefore cation.TheBoardandtheCommitteearetherefore Payouts subject to • • No guaranteed • Payouts are • Plan targets Useof multiple • Useof external • • Provides for LMNSOBJECTIVESAND RATIONALE ELEMENTS RISK-MITIGATING a clawbackpolicy minimum payout capped business plan review ofannual based onin-depth approved annually reviewed and metrics performance group analysis advisor andpeer (fi pay components a balancedmixof xedvs.variable) c business issues or cbusinessissuesor • Drive superior corporate Drivesuperiorcorporate • Reward theachievement • Reward theachievement • • Recognize sustained Providecompetitivelevel • performance and individual results in realizingoperating responsibility androle employee’s areaof aligned witheach of personalobjectives performance objectives annual corporate of abalancedset individual performance of fi xedcompensation

41 CN MANAGEMENT INFORMATION CIRCULAR 42 CN MANAGEMENT INFORMATION CIRCULAR Perquisites Executive Benefi Pension OPPORTUNITY FORM Incentives DESIGNSUMMARY Long-Term COMPONENT ts Healthcare andlifeinsurancebenefi • Pensionable serviceperiodformostplans: • Non-registered plans:Benefi • • Defi SavingsPlan:401(k)benefi • • Defi U.S. Pension Plans Non-registeredplans:Benefi • • Defi • Defi Performance period:4-yearvesting,10-year • Employeesmustremaininactiveand • Grantisapproximatelyofequalvaluetothe • Conventionalstockoptionsthatvestover • Stock options Performance period:3years • Employeesmustremaininactiveand • Payout conditionalontheattainmentof • Performance vestingsubjecttotheattainment • Canadian Pension Plans Restricted ShareUnits fi company-leased vehicle,parkingand executive physicalexam,clubmembership, Maximum of35years of IRSlimit registered plansandprovidebenefi base pay Company contributionsequalto3.5%of benefi base pay matching bytheCompany, limitedto3%of participant’s voluntarycontributionsand50% pensionable service earnings (outofthelast10years)multipliedby as apercentageofthefi of the registered plansandprovidebenefi Company-matched contributions the participant’srequiredcontributionsandon earnings multipliedbypensionableservice as apercentageofthefi option term for payout in whichthegrantwasmadetobeeligible continuous serviceuntilthelastdayofyear limitation underthestockoptionplan) receives adifferentproportionduetothe20% Restricted ShareUnits(exceptfortheCEOwho 4 yearsatarateof25%peryear for payout in whichthegrantwasmadetobeeligible continuous serviceuntilthelastdayofyear months oftheplanperiod a minimumsharepriceduringthelastthree targets of 3-yearaveragereturnoninvestedcapital nancialcounselling nedContributionFeature: Additional nedBenefi nedContributionPlan:Benefi nedBenefi ts included in the 401(k) based on tsincludedinthe401(k)basedon Income Tax Act tPlan:Benefi tPlan:Benefi limit ve-year highest average ve-yearhighestaverage ve-yearhighestaverage ts based on the tsbasedonthe ts payable calculated tspayablecalculated tspayablecalculated ts to supplement tstosupplement tstosupplement ts based on tsbasedon ts in excess tsinexcess tsinexcess ts, annual ts,annual • Cash • Cash • Non-cash • Non-cash • Stock options • Performance- retirement following payments perquisites perquisites in cash units payable based share • Most retirement • Non-registered opttv •No tax gross-ups • Competitive • RSU performance • Long-term to targetlevels) annual bonus(up base salaryand calculated with employees are senior management executives and benefi employees senior management to executivesand plans restricted capped at150% vesting factor executives for NEOsand comparator groups of therespective 60th percentile reference tothe determined with date fairvalue incentive grant ts for tsfor • Annual retirement • Use of corporate Useof corporate • • • Signifi Mixoffi • OBJECTIVESANDRATIONALE ELEMENTS RISK-MITIGATING Payouts subjectto • RSUpayoutsare • capped atUS$1M registered plan CEO fromnon- benefi related purposes to business- aircraft restricted on perquisites compensation term incentive towards long- weighting periods year performance Overlapping multi- a clawbackpolicy payout guaranteed is nominimum capped andthere measures and market cant cant ts to tsto nancial nancial • Provide an effective Provideaneffective • • Recognize individual Contributetoretention • Rewardtheachievement • • Align management compensation program and attractiveexecutive and potential contribution of keytalent performance of sustainedfi value growth with shareholder interests nancial nancial that eachemployeecaninfl performance oftheCompanyandtothoseareasitsbusiness any short-termincentiveshouldbetiedbothtotheoverall objectives. Thisdesignrefl achievement ofbothcorporate(70%)andindividual(30%) The bonuspayoutreceivedundertheAIBPdependson RepresentspercentageofbasesalaryasatDecember 31,2011. (1) Bonus Plan(“ based bonusplan.UndertheCompany’sAnnualIncentive employees areeligibletoparticipateinanannualperformance- In additiontotheNEOs,approximately4,600management ANNUAL INCENTIVEBONUSPLAN Securities Administrators. as requiredbythedisclosurerulesissuedCanadian Table onpage54reportstheamountsinCanadian dollars, salaries arepaidinU.S.dollars,theSummaryCompensation Mr. Finn’sfromUS$490,000toUS$500,000.WhileNEObase US$565,000, Mr. Ruest’sfromUS$490,000toUS$515,000and US$536,000 toUS$550,000,Mr. Creel’sfromUS$550,000to increased fromUS$950,000toUS$975,000,Mr. Jobin’sfrom against market.Mr. Mongeau’sbasesalarywastherefore growth intheircontinuingrolesandadequatepositioning line withexpectedmarketincreasesandsupporttheNEOs’ In 2011,thesalaryincreasesprovidedtoallNEOswerein comparator group. salaries ofincumbentsinequivalentpositionswithinthe meaningful andobjectivecomparisonwithU.S.denominated are generallypaidinU.S.dollarsordertoprovideforamore and CanadianPacifi Corporation,NorfolkSouthernCorporation Corporation, CSX railroads ofcomparablesizeandscope,namelyUnionPacifi current comparatorgroupfortheNEOscomprisesClassI abilities, retentionconsiderationsandsuccessionplans.The comparator grouppractices,economicoutlook,leadership in Januaryeachyear, bytakingintoconsiderationmedian The Committeenormallyreviewsthebasesalariesofexecutives BASE SALARY Vice-Presidents: for theCEO, theotherNEOs,SeniorVice-Presidents and expressed asapercentage(%)ofbasesalary, areasfollows OIINMINIMUM Vice-Presidents Senior Vice-Presidents Other NEOs CEO POSITION AIBP ”), minimum, target and maximum payouts, ”), minimum,targetandmaximumpayouts, c Railway Limited. The base salaries of NEOs cRailwayLimited.ThebasesalariesofNEOs ects the Company’s view that ectstheCompany’sviewthat uencedirectly. %6%130% 100/120% 140% 240% 50/60% 65% 70% 0% 120% 0% 0% 0% AGTMAXIMUM TARGET 1 (1) (1) c as reportedbytheCompany. the BoardofDirectorsinJanuary2011andresults objectives, includingeachobjective’sweight,asapprovedby The followingtableshowsthe2011corporateperformance 1. Corporate fi For 2011,theAIBPwascomprisedoffollowingcomponents: corporate performanceobjectives. annual bonuspayoutwhenfi employees) canbeappliedtoaneligibleemployee’s approximately 190otherexecutivesandseniormanagement performance factorof150%(or200%forNEOsand Under thetermsofAIBP, amaximumcorporate fi in January2011basedontheCompany’sbusinessand The 2011targetswereapprovedbytheBoardofDirectors are appropriateforacapitalintensivebusinesslikeCN’s. Board isoftheviewthatitschosencorporateobjectives profi role indrivingtheorganization’sshort-andlong-term because theyarequantifi on investedcapital(“ diluted earningspershare,freecashfl performance againsttargetsforrevenues,operatingincome, In 2011,theBoardofDirectorsassessedCompany’s current yeartargetsinrelationtotheprioryear’sresults. year-over-year fi which canimpactthecomparabilityofCompany’s arise aspartofthenormalbusinessCompany, excludes itemsfromtheprioryearthatdidnotnecessarily targets fortheupcomingyear, theCompanygenerally targets undertheAIBP. Inaddition,insettingtheAIBP are alsotakenintoaccountinestablishingtheCompany’s business inthefollowingthree-yearperiod.Suchitems which affectorcanbeexpectedtotheCompany’s economic, business,regulatoryandcompetitiveconditions Management examineswiththeBoardofDirectors, business planningprocessisanextensiveone,duringwhich reviewed andapprovedbytheBoardofDirectors.CN’s as setoutintheCompany’sbusinessplan,whichis the achievementofCompany’scorporateobjectives performance goalsandconditionsaredirectlyalignedwith growth andprofi that contributetotheCompany’slong-termfi linked totheachievementofabalancedsetobjectives nancialoutlookatthattime. tabilityandreturntoshareholders.Additionally, the nancial performance: nancial performance and the Company’s nancialperformanceandtheCompany’s tability. TheCommitteeensuresthat ROIC able components that play a key ablecomponentsthatplayakey ”). These measures were selected ”). Thesemeasureswereselected nancialresultsexceedallfi 70% of the bonus was 70%ofthebonuswas ow and 1-year return owand1-yearreturn nancial nancial ve ve

43 CN MANAGEMENT INFORMATION CIRCULAR 44 CN MANAGEMENT INFORMATION CIRCULAR 5 ROICmeasurestheCompany’seffi (5) actual 2011resultsasreportedbytheCompany. compares the2011adjustedperformancetargetswith to theCompany’sfuelsurcharges.Thefollowingtabletherefore between actualandforecastedoildieselpriceswithrespect targets wereadjustedtotakeintoconsiderationthedifference 2011 actualexchangerate.Inaddition,theCompany’srevenue performance targetswereadjustedtotakeintoaccountthe In ordertoallowforabettercomparisonagainstactualresults, year, theactualexchangeratewasUS$1=C$0.99. assuming anexchangerateofUS$1=C$1.02.Duringthe In January2011,theaboveperformancetargetswereset Free cashfl (4) Revenuetargetassumesfuelsurchargesthatarebasedonoilanddieselpricesincluded (3) (2) Results ObjectivessetassuminganexchangerateofUS$1=C$1.02. refl (1) 2011 ANNUAL PLAN INCENTIVEBONUS PERFORMANCE OBJECTIVESANDRESULTS – ROIC Flow Free Cash Per Share Earnings Diluted Income Operating Revenues SHARE DATA) (EXCEPT PER IN MILLIONS adjusted for certain items as determined by the Committee. adjusted forcertainitemsasdeterminedbytheCommittee. indebtedness andtheaverageshareholders’equity, andmay, incertaininstances,be calculated asnetincomebeforeinterestexpense,dividedbythetotalofaverage as akeymeasureoflong-termvaluegenerationtoitsshareholders.ROICisgenerally of major acquisitions, and the payment of dividends. of majoracquisitions,andthepaymentdividends. exchange fl receivable securitizationprogramandincashequivalentsresultingfromforeign fl after thepaymentofcapitalexpendituresanddividends.TheCompanydefi measure ofperformanceasitdemonstratestheCompany’sabilitytogeneratecash presented byothercompanies.TheCompanybelievesthatfreecashfl Accounting Principles(GAAP)andmay, therefore,notbecomparabletosimilarmeasures in theCompany’sBoard-approvedbusinessplan. ow as net cash provided by operating activities, adjusted for changes in the accounts owasnetcashprovidedbyoperatingactivities,adjustedforchangesintheaccounts (4) (5) (3) ectanactualexchangerateofUS$1=C$0.99. ow does not have any standardized meaning prescribed by Generally Accepted owdoesnothaveanystandardizedmeaningprescribedbyGenerallyAccepted uctuations, less net cash used in investing activities, adjusted for the impact uctuations,lessnetcashusedininvestingactivities,adjustedfortheimpact WEIGHT 0 5 5 ,7 Exceeds Exceeds 1,175 16.45% Exceeds 850 14.3% $5.41 13.8% Exceeds 750 $4.65 3,296 15% Exceeds $4.40 20% 9,028 3,290 15% 8,900 3,170 8,740 25% 25% CORPORATE OBJECTIVES ciency in the use of its capital funds and is viewed ciencyintheuseofitscapitalfundsandisviewed BASE (C$) STRETCH (C$) (1) RESULTS 2011 ow is a useful owisauseful (C$) (2)

nes free cash nesfreecash ASSESSMENT PERFOR- MANCE 3 Revenuetargethasbeenadjustedtorefl (3) (2) Results refl Objectivesadjustedtorefl (1) ANNUAL PLAN–ADJUSTEDTARGETS INCENTIVEBONUS PERFORMANCE OBJECTIVESANDRESULTS –2011 corporate objectives areexceeded. maximum corporateperformance factorisattainedwhenallfi management employees).Under thetermsofAIBP, the for NEOsandapproximately190 otherexecutivesandsenior maximum corporateperformance factorof150%(or200% the corporateperformanceat“far exceeds”,allowingforthe established corporateobjectives,theBoardofDirectorsassessed For 2011,afterconsideringthefi repurchased almost20millionshares. increased itsdividendby20%versustheprioryearand to returningvalueshareholders.In2011,theCompany At thesametime,Companymaintaineditscommitment funding requirements. the Company’smainpensionplanandinanticipationoffuture C$350 millionin2011tostrengthenthefi made avoluntarypensioncontributionofapproximately 2011 capitalspendingofC$1.71billion.TheCompanyalso assets. TheCompanyreinvestedinthebusiness,with supported inpartbythemonetizationofunderutilized The Companycontinuedtoproducesolidfreecashfl carloadings, revenuesandearnings. faster thantheoveralleconomyandtogeneraterecordannual on operationalexcellenceenabledCNtogrowitsbusiness Company’s broad-basedserviceinnovationandsustainedfocus CN deliveredexceptionalfi 5 ROICmeasurestheCompany’seffi (5) Free cashfl (4) ROIC Flow Free Cash Per Share Earnings Diluted Income Operating Revenues SHARE DATA) (EXCEPT PER IN MILLIONS assumed whensetinJanuary2011. adjusted for certain items as determined by the Committee. adjusted forcertainitemsasdeterminedbytheCommittee. indebtedness andtheaverageshareholders’equity, andmay, incertaininstances,be calculated asnetincomebeforeinterestexpense,dividedbythetotalofaverage as akeymeasureoflong-termvaluegenerationtoitsshareholders.ROICisgenerally and thepaymentofdividends. less netcashusedininvestingactivities,adjustedfortheimpactofmajoracquisitions, program andincashequivalentsresultingfromforeignexchangefl by operatingactivities,adjustedforchangesintheaccountsreceivablesecuritization expenditures anddividends.TheCompanydefi demonstrates theCompany’sabilitytogeneratecashafterpaymentofcapital The Companybelievesthatfreecashfl may, therefore,notbecomparabletosimilarmeasurespresentedbyothercompanies. based onactualoilanddieselpricesin2011. (1) (4) (5) (1) (1) (3) (1) ectanactualexchangerateofUS$1=C$0.99. ow does not have any standardized meaning prescribed by GAAP and owdoesnothaveanystandardizedmeaningprescribedbyGAAPand WEIGHT 0 9 9 ,7 Exceeds Exceeds 1,175 16.45% Exceeds 795 14.3% $5.41 13.8% Exceeds 695 $4.58 3,296 15% Exceeds $4.33 20% 9,028 3,231 15% 8,940 3,111 8,780 25% 25% ect the actual exchange rate of US$1 = C$0.99 vs. C$1.02 ecttheactualexchangerateofUS$1=C$0.99vs.C$1.02 CORPORATE OBJECTIVES nancial results in 2011. The nancialresultsin2011.The ciency in the use of its capital funds and is viewed ciencyintheuseofitscapitalfundsandisviewed BASE ow is a useful measure of performance as it owisausefulmeasureofperformanceasit (C$) ect actual fuel surcharges invoiced to clients ectactualfuelsurchargesinvoicedtoclients nancial results against nancialresultsagainst nesfreecashfl STRETCH (C$) nancial position of nancialpositionof ow as net cash provided owasnetcashprovided RESULTS 2011 (C$) ow, (2)

ASSESSMENT uctuations, uctuations, PERFOR- MANCE ve ve determination of the actual annual bonus payout: determination oftheactualannualbonuspayout: corporate andindividualperformancefactorsinteractinthe annual basesalary(asatDecember31,2011),targetpayout, The followingformulaillustrateshowaneligibleemployee’s factor willbeproratedtothesamelevel. performance factorbelow100%),theindividual performance beassessedat“partiallymeets”(i.e.acorporate the corporatecomponent.Inaddition,should component isconditionaluponapayoutbeingdeclaredunder Any annualincentivebonuspayoutundertheindividual NEOs, includingtheCEO, was120%. In 2011,theaverageindividualperformancefactorfor to beappliedthecalculationoftheirbonuspayout. performance ratings,whichtranslatestothefactor personal objectivesandapprovedeachoftheirindividual CEO, theCommitteedeterminedthatNEOshad mettheir For 2011,takingintoaccounttherecommendationsof as welltheiroverallleadershipinmeetingobjectives. other thantheCEO’s,individualachievementsagainstgoals, The Committeethenreviewedandrefl performance rating,subjecttoCommitteereviewandapproval. individual objectivesanddeterminedtheir consideration theirachievementsagainstpre-determined reviewed theperformanceofotherNEOs,takinginto considerations relatedtotheirfunction.Atyear-end, theCEO quantitative measuresandqualitativestrategicoperational In 2011,theindividualobjectivesofNEOsincludedboth 2. Individual performance: Annual Annual Salary Annual Base Annual Base Base by the Committee. by theCommittee. based onanindividualassessmentreviewedandapproved 150%. TheindividualperformancefactorfortheCEOis employees, theperformancefactorcanrangefrom0%to and seniormanagementemployees.For allothereligible 200% forNEOsandapproximately190otherexecutives The individualperformancefactorcanrangefrom0%to a highperformancecultureandstakeholderengagement. operational andserviceexcellence,leadership,fostering on: growingrevenuesatlowincrementalcost,balancing executive’s respectivefunction,withastrongoverallfocus the strategicandoperationalprioritiesrelatedtoeach on personalbusiness-orientedgoalsthatconsidered Salary ؋ Payout Target ؋ Target Payout ؋ 30% 30% of the bonus was based 30%ofthebonuswasbased + ؋ ؋ Performance Individual Individual ected on each NEO’s, ectedoneachNEO’s, Factor 70% ؋ ؋ Performance Performance below 100% Factor when Corporate Corporate Corporate Corporate Factor York StockExchangeonthegrantdate. common sharesontheToronto StockExchange ortheNew options grantedisequaltotheclosingpriceofCompany’s Company’s fi the secondtradingdayfollowingpublicreleaseof Based onthisapproach,theeffectivegrantdateisgenerally of theCompany’sfi the Company’sInsiderTrading Policy, followingthepublication The effectivegrantdateisthefi long-term incentiveplansareinherentlyperformance-based. executive grantswhensettingtheindividualawards,as page 40).TheCommitteedoesnottakeintoaccountprevious see section“BenchmarkingUsingComparatorGroups”on Class IRailroadsthatconstitutethecomparatorgroup(please of long-termincentivesgrantedoverthelastthreeyearsby as theCompany’scompensationphilosophyandvalue performance, retentionriskandsuccessionplans,aswell LTI award,theCommitteetakesintoconsiderationindividual place eachyearinJanuary. InordertodetermineeachNEO’s of theCommitteeandBoardDirectorswhichtake eligible employeesisreviewedandapprovedatthemeetings The annualgrantofRSUsandstockoptionstoNEOsother refer topage60foradescriptionoftheplan. terms oftheManagementLong-Term IncentivePlan–please options thatcanbeawardedtooneindividual,pursuantthe option value,duetothe20%limitationonnumberofstock incentive (“ all eligibleemployees,exceptfortheCEO. TheCEO’s long-term options andRSUsgrantedareofapproximatelyequalvaluefor executives andseniormanagementemployees.Thestock share units(“ elected tograntacombinationofstockoptionsandrestricted incentive vehicles.Since2005,theBoardofDirectorshas risk, aswellthedilutionimpactofdifferentlong-term position versusstockoptionholdings,executiveretention shareholder wealthprotection,executivestockownership include thebalancebetweenlong-termvaluecreationand the Company’slong-termincentivestrategy. Factors considered The BoardofDirectorsconsidersanumberfactorstoassess LONG-TERM INCENTIVES Annual incentiveplans. under thecolumnNon-equityincentiveplancompensation– reported intheSummaryCompensationTable onpage54, the CEO, was176%oftargetpayout.Theactualpayoutsare In 2011,theaveragepayoutforNEOs,including LTI nancial results. The exercise price of the stock nancialresults.Theexercisepriceofthestock RSU ”) award has a smaller relative weight in stock ”) awardhasasmallerrelativeweightinstock ” s nancialresultsforthepreviousyear. ) to NEOs, as well as to designated ) toNEOs,aswelldesignated rst day open for trading under rstdayopenfortradingunder

45 CN MANAGEMENT INFORMATION CIRCULAR 46 CN MANAGEMENT INFORMATION CIRCULAR 1 Interpolation appliesbetweenobjectives. (1) RESTRICTED SHAREUNITS–2011AWARD PERFORMANCE OBJECTIVES– criteria presentedinthetablebelow: employees aresubjecttotheattainmentofperformance The RSUsgrantedin2011toNEOsandotherdesignated of 2013. average closingsharepriceduringthelastthreemonths The RSUpayoutisalsoconditionaluponmeetingaminimum the AIBP(annual)andRSUPlan(3years). intensive businesslikeCN’sandthedifferingtimeperiodsfor AIBP, givenitsimportanceasafi as oneofthefi long-term valuegenerationtoitsshareholders.ROICisalsoused the useofitscapitalfundsandisviewedasakeymeasure by theCommittee.ROICmeasuresCompany’seffi certain instances,beadjustedforitemsasdetermined indebtedness andtheaverageshareholders’equity, andmay, in expense, dividedbythetotalofCompany’saveragenet plan yearsisgenerallycalculatedasnetincomebeforeinterest on December31,2013.TheROICforeachoftheapplicable average ROICobjectiveappliedtothethree-yearperiodending Company’s averageROICovertheplanperiod.In2011, in relationtotheachievementofatargetrelated three yearsandtheperformancevestingfactorisdetermined The RSUsawardedaregenerallyscheduledforpayoutafter between suchemployeesandtheshareholdersofCompany. talented employeesandtoprovidealignmentofinterests Plan istoenhancetheCompany’sabilityattractandretain by theBoardofDirectorsin2004.TheobjectiveRSU The RestrictedShareUnitsPlan(the“ RESTRICTED SHAREUNITS:2011AWARD to thatagreementwillbeforfeited. award agreement,RSUsandstockoptionsawardedpursuant NEOs, orothermanagementemployeeretireintheyearof retirement. Inotherwords,shouldanexecutive,including in ordertoencourageretentionofkeytalentapproaching included inthestockoptionsandRSUawardagreements, In 2011,a“one-yearminimumactiveservice”conditionwas three monthsof2013 share priceforthelast Minimum averageclosing Payout Condition: on December31,2013 three-year periodending Average ROICforthe Performance Objective: ve corporate performance measures under the vecorporateperformancemeasuresunderthe nancial measure for a capital nancialmeasureforacapital 15.0% andabove Below 12.0% RSU Plan US$66.70 ontheNYSE OBJECTIVE C$67.20 ontheTSX 14.0% 13.0% 12.0% ”) was approved ”) wasapproved or VESTING FACTOR PERFORMANCE ciency in ciencyin 150% 125% 100% 50% 0% (1) the RSU Plan. the RSUPlan. set outinthe2009awardagreementandaccordancewith occurred inFebruary 2012pursuanttothetermsandconditions average closingsharepriceconditionwasalsomet,payout in aperformancevestingfactorof122.6%.Astheminimum of 13.91%,exceedingthe13.0%target.Thisoutcomeresulted ROIC forthethree-yearperiodendingonDecember31,2011 employees vestedbasedontheachievementofanaverage The RSUsawardedin2009toNEOsandotherdesignated RESTRICTED SHAREUNITS:2009AWARD PAYOUT page 54,undertheShare-basedawardscolumn. in 2011isincludedtheSummaryCompensationTable on The grantdatefairvalueoftheRSUsawardedtoeachNEO currency oftherecipient’ssalary, willbecalculatedasfollows: If theperformancecriteriaaremet,payout,madein have a realizable value and be “in-the-money”. Gains would be have arealizablevalueandbe“in-the-money”. Gainswouldbe between thegrantdateand vestingdate,stockoptionswill long-term shareholdervalue.If the sharepriceincreases and otherdesignatedemployees forcreatingsustainable, Stock optionsaregrantedwith theobjectiveofrewardingNEOs in thecurrencyofrecipient’ssalary. anniversary dateandhavea10-yearterm.Grantsweremade conventional, vestoverfouryearsatarateof25%each for detailsofthePlan.Thestockoptionsgrantedin2011were Long-Term IncentivePlan(the“ designated employeespursuanttotheManagement Stock optionsweregrantedin2011toNEOsandother STOCK OPTIONS the yearcolumnonpage60. the year, undertheShare-basedawards–Value vestedduring section Incentiveplanawards–Value vestedorearnedduring The valuevestedduringtheyearforeachNEOisincludedin Interpolationappliesbetweenobjectives. (1) RESTRICTED SHAREUNITS–2009AWARD PERFORMANCE OBJECTIVESANDRESULTS – months of2011 for thelastthree closing shareprice Minimum average Payout Condition: on December31,2011 three-year periodending Average ROICforthe Performance Objective: Number of 2011 Number of2011 RSUs awarded ؋ 15% andabove Vesting Factor Performance Below 12% US$34.87 ontheNYSE OBJECTIVE C$42.95 ontheTSX 14% 13% 12% Plan or ”). Please refer to page 60 ”). Pleaserefertopage60 PERFORMANCE ؋ VESTING ATRRESULTS FACTOR 20-day average closing 20-day averageclosing 150% 125% 100% share price on January share priceonJanuary 50% 0% (1) 31, 2014 US$75.43 C$77.15 13.91% guidelines can be met through the holding of common guidelines canbe metthroughtheholdingofcommon which isreported annuallytotheCommittee.Stock ownership they arerequiredtomaintaincompliance withsuchguidelines, status thereafter, evenifthestock pricedeclines.Inaddition, initial stockownershiprequirements, theywillmaintaintheir executives andseniormanagement employeeshavemettheir 195 executivesandseniormanagement employees.Once was broadenedtoincludeatotalofapproximately a fi set asamultipleofbasesalary, tobeachievedwithin guidelines thatrequireaminimumlevelofstockownership, executives. In1999,theCompanyintroducedstockownership The Committeestronglysupportsstockownershipby STOCK OWNERSHIP Other Key CompensationPolicies oftheCompany participated intheESIP. employer contributionsvestimmediately. In2011,allNEOs the fi every payperiod.TheCompanyprovidesa35%matchon between 1%and10%oftheirgrossbasesalarytotheESIP open marketviapayrolldeductions.Employeesmaycontribute CN’s ownershipthroughthepurchaseofvotingshareson Company employees,providestheopportunitytoparticipatein The EmployeeShareInvestmentPlan(“ EMPLOYEE SHAREINVESTMENTPLAN perquisites havebeeneliminated. January 2010,taxgross-upsonthevalueofcertainexecutive incremental costsarefullyreimbursed.Additionally, since only, saveforexceptionalcircumstancesandprovidedall usage ofthecorporateaircrafttobusiness-relatedpurposes comply withtheaircraftutilisationpolicywhichrestricts with generalmarketpractices.Since2010,allexecutivesmust provide executiveperquisitesandpersonalbenefi to executives,theCommitteeintroducedspecifi Following areviewofthetypeandlevelperquisitesoffered generally determinedbythegradeofemployee’sposition. select perquisites;thetypeandvalueofperquisitesis senior managementemployeesarealsoeligibletoreceive healthcare benefi counselling andtaxservices,clubmembership,certain include theuseofacompany-leased vehicle,parking,fi in accordancewiththeCompany’spolicy. Thesetypically NEOs areeligibletoreceiveperquisitesandpersonalbenefi EXECUTIVE PERQUISITES page 54,undertheOption-basedawardscolumn. in 2011isincludedtheSummaryCompensationTable on The grantdatefairvalueofthestockoptionsawardedtoNEOs number ofoptionsexercised. of exerciseandthegrantdateshareprice,multipliedby equivalent tothedifferencebetweensharepriceondate realized oncethestockoptionsareexercised.Thegainwillbe ve-year period. In 2002, the application of the guidelines ve-yearperiod.In2002,theapplicationofguidelines rst 6% of employee contributions. Both employee and rst6%ofemployeecontributions.Bothand ts and life insurance. Other executives and tsandlifeinsurance.Otherexecutives ESIP ”), available to all ”), availabletoall c policies to cpoliciesto ts in line tsinline nancial nancial ts ts are asfollows: Voluntary IncentiveDeferralPlan.Stockownershiprequirements shares andvesteddeferredshareunitsundertheCompany’s STOCK OWNERSHIPSTATUS ASAT DECEMBER31,2011 of February 2012. such thathehasexceededhisstockownershiprequirementas maximum prescribedbytheVoluntary IncentiveDeferralPlan, has electedtodeferhis2011annualincentivebonusupthe for Mr. JobinwhojoinedtheCompanyinJune2009.Mr. Jobin NEOs haveexceededtheirshareownershiprequirements,except until oneyearafterretirement.AsatDecember31,2011,all The CEOisalsorequiredtomaintainhisstockownershiplevel ) intheeventownershiprestrictions inthe a) of thefollowingevents: or resignsforgoodreason.AChange ofControlmeansany of Control,unlesstheparticipant isterminatedwithoutcause and heldbyaparticipantwould notaccelerateuponaChange of non-performanceoptionsorRSUsawardedafterthatdate trigger provisions”.Pursuanttosuchprovisions,thevesting were amendedeffectiveMarch4,2008toinclude“double The ManagementLong-Term IncentivePlan and theRSUPlan CHANGE OFCONTROLPROVISIONS and “calls”. This relatestoallformsofderivatives,including“puts” form oftransactionsinpubliclytradedoptionsonCNsecurities. offi Under theCompany’sInsiderTrading Policy, nodirectors, NO HEDGINGPOLICY Mr. Jobinelected todeferhis2011annualbonus,therebyincreasingholdingposition (4) US$salarieswereconvertedtoCanadiandollarsusingtheaveragerateduringyear (3) Value isbasedontheclosingsharepriceofcommonsharesDecember31,2011 (2) Commonsharesand/orvesteddeferredshareunitsasatDecember31,2011. (1) iePeiet 1.5to2timessalary 1timessalary 5timessalary Senior Management 3timessalary Vice-Presidents Executive andSeniorVice-Presidents President andCEO Sean Finn Ruest Jean-Jacques Keith E.Creel Luc Jobin Claude Mongeau OFFICER NAMED EXECUTIVE cers or employees can engage in hedging activity or in any cersoremployeescanengageinhedgingactivityany a majorityofthe Company’soutstandingcommon shares; Commercialization Act to 3.2xhisbasesalaryasofFebruary 2012. (US$1 =C$0.9891). on theTSX(C$80.15),orfairmarketvalueattimeofpurchaseifgreater. (4) SHARES HELD NUMBER OF 0,4 ,9,5 ,7,2 14.8x 1,676,525 18.7x 8,291,357 103,448 4,821,863 18,076,710 225,536 87531786143606.3x 13.8x 1,483,650 1,528,160 3,107,816 2.4x 7,014,087 38,775 87,512 1,632,015 1,317,586 16,439 are repealed, a formal bid for arerepealed,a formal bidfor (1) HOLDINGS VALUE OF GUIDELINES (C$) 2 (3) (2) GUIDELINES TO REQUIRED VALUE MEET (C$) CN CN

OF SALARY A MULTIPLE HOLDINGS AS (3)(4)

47 CN MANAGEMENT INFORMATION CIRCULAR 48 CN MANAGEMENT INFORMATION CIRCULAR e) taking any action as a result of which relations between takinganyaction asaresultofwhichrelationsbetween e) takingadvantageorprofi d) soliciting,acceptingthebusinessofacustomer, client, c) engaginginanybusinessthatcompeteswith CN; b) ) the useofconfi a) commitments. Thosecommitmentsprohibit: to cancellationiftherecipientsfailcomplywithcertain after January22,2009,includingthe2009awards,aresubject share unitsandstockoptionsgrantedtosuchindividuals vice-presidents andseniorvice-presidents.Hence,therestricted to beexecutedinthefuturewithCEO, executive to therestrictedshareunitandstockoptionawardagreements the inclusionofnon-competeandnon-solicitationprovisions On January22,2009,theBoardofDirectorsapproved NON-COMPETE/NON-SOLICITATION PROVISIONS to takeintoaccountspecialcircumstances. March 4,2008,anddiscretionislefttotheBoardofDirectors 30 days.Thesenewprovisionsonlyaffectgrantsmadeafter such terminationorresignationandunitsshallbepaidwithin exercisable foraperiodof24calendarmonthsfromthedate Substitute optionsthatarevestedandexercisableshallremain or payableinfulluponsuchterminationresignation. which arenotthenexercisableshallvestandbecome a ChangeofControl,alloutstandingsubstituteoptionsorunits a resignationforgoodreasonwithin24calendarmonthsafter and aparticipantisterminatedwithoutcauseorsubmits units isgrantedtotheparticipant.Ifsuchsubstitute would notoccurifapropersubstitutetotheoriginaloptionsor The amendedprovisionsstatethataccelerationofvesting approvalbytheCompany’sshareholdersofa planof c) approvalbytheCompany’sshareholdersofan b) reputation ofCN. might otherwise bedetrimentaltothebusiness interestsor distributors, employeesorothers maybeimpairedorwhich CN anditsconsultants,customers, clients,suppliers, with CN;and of whichtheybecameawarein thecourseofemployment employees ofCN; supplier ordistributorofCNhiringengaging other thanperforminghisorherdutieswithCN; liquidation ordissolutionoftheCompany. corporation duringaperiodoftwoconsecutiveyears;or 51% oftheboarddirectorssurvivingorresulting that, infact,theseindividualscontinuetoconstituteatleast at thetimeofsuchtransaction,constituteBoardand immediately afterthetransactionareindividualswho, of thedirectorssurvivingorresultingcorporation agreement ofsuchtransactionprovidesthatatleast51% with orintoanothercorporation,unlessthedefi amalgamation, mergerorconsolidationoftheCompany dential CN information for any purpose dentialCNinformationforanypurpose t from any business opportunity tfromanybusinessopportunity nitive nitive senior management employees. senior managementemployees. non-registered pensionplansthatapplytoallexecutivesand provisions werealsoharmonizedin2010and2011acrossthe supplemental retirementplansandarrangements.Such non-compete andnon-solicitationprovisionstocertain in 2010,theBoardofDirectorsapprovedinclusion for allexecutivesandseniormanagementemployees.Similarly, the restrictedshareunitandstockoptionawardagreements inclusion ofnon-competeandnon-solicitationprovisionsto Effective January2011,theBoardofDirectorsextended a) the amount of incentive compensation received by the theamountofincentivecompensationreceivedby a) executive offi of fullorpartialcompensationfromanexecutiveformer an executive.TheBoardofDirectorsmayseekreimbursement of annualandlong-termincentivecompensationreceivedby best interesttodoso,requirereimbursementofalloraportion laws andtotheextentitdeterminesthatisinCompany’s in itssolediscretion,tothefullextentpermittedbygoverning Under thispolicy, whichappliestoallexecutives,theBoardmay, under theCompany’sannualandlong-termincentiveplans. compensation clawbackpolicyconcerningfutureawardsmade In March2008,theBoardofDirectorsadoptedanexecutive EXECUTIVE COMPENSATION CLAWBACK • the importanceoflonger-term valuecreation: compensation programservetomitigateriskandemphasize Hence, manycharacteristicsoftheCompany’sexecutive pay-for-performance, andencouragetherightbehaviours. with theCompany’sbusinessstrategy, emphasize executive compensationphilosophyandprogramthatalign Committee focusesondevelopingandrecommendingan shareholder value.Inordertosupportthisobjective,the One oftheCompany’sfundamentalgoalsistocreatesustained RISK MITIGATION INOURCOMPENSATION PROGRAM theincentivecompensationpaymentreceivedwouldhave c) theexecutiveoffi b) Company’s performance). target totaldirectcompensation wasdirectlylinkedtothe incentives (inaggregate,approximately 80%ofNEOs’ fi The compensationprogramappropriatelybalances xedandvariablepay, aswellshort-andlong-term fi by arestatementofallorportiontheCompany’s results thatweresubsequentlythesubjectoforaffected upon, orcontingenton,theachievementofcertainfi executive orformeroffi been lowerhadthefi caused theneedforrestatement;and intentional misconductorfraudthatcausedpartially nancialstatements; cerinsituationswhere: cer engaged in gross negligence, cerengagedingrossnegligence, nancialresultsbeenproperlyreported. cer was calculated based cerwascalculatedbased nancial nancial • • • • • • • • • • • accelerate upon a Change in Control. accelerate upon aChangeinControl. such thatthevesting ofLTI awardswouldgenerally not long-term incentiveplansinclude “double-triggerprovisions”, The NEOsarenotgovernedby employment contractsandthe for moreinformation). “Non-Compete/Non-Solicitation Provisions”onpage48 confi non-compete, non-solicitationandnon-disclosureof employment agreements,includingbutnotlimitedto with theconditionsoftheirbenefi non-registered pensionplans,areconditionaloncompliance payment ofretirementbenefi management employees,thepayoutofLTI awardsandthe Commencing atvariousdates,forseniorandexecutive non-registered pensionplanarecapped. Annual retirementbenefi more information). “Executive CompensationClawback”onpage48for awards receivedbyexecutives(pleaserefertosection or partialreimbursementofannualandlong-termincentive allows theBoard,incertainsituations,torequestfull The Company’sexecutivecompensationclawbackpolicy on page47formoreinformation). retirement (pleaserefertosection“StockOwnership” must maintainhisstockownershiplevelforoneyearafter specifi (approximately 195individuals)arerequiredtomeet shareholders, executivesandseniormanagementemployees In ordertofurtheraligntheirinterestswiththoseof price metrics. refl The performancemeasuresusedwithintheRSUPlan motivating executivestocreatelonger-term value. portion ofNEOcompensation,vestovera3-or4-yearperiod, The long-termincentiveawards,whichconstituteasignifi term behaviour. RSUs andstockoptions,whichencouragesconsistent,long- There aremulti-year, overlappingperformanceperiodsforthe possibility ofazeropayout,aswellpre-defi The AIBPandtheRSUPlanaredesignedtoinclude continued relevance. Company’s AIBPandRSUPlantakesplacetoensuretheir An annualreviewoftheperformancemeasuresunder Bonus Plan”onpage43formoreinformation). performance metric(pleaserefertosection“Annual Incentive diversifying theriskassociatedwithuseofanysingle “top-line” measuresand“bottom-line”measures,thus performance metricsthatareappropriatelybalancedbetween The corporatecomponentoftheAIBPincludesfi ectanappropriatebalancebetweenfi dential information conditions (please refer to section dentialinformationconditions (pleaserefertosection c stock ownership guidelines. In addition, the CEO cstockownershipguidelines.Inaddition,theCEO ts to the CEO from the tstotheCEOfrom ts under the Company’s tsundertheCompany’s t plans, award or tplans,awardor nancial and share nancialandshare ned maximum. nedmaximum. ve ve cant cant that “ assess anypotentialriskimplications.Towers Watson concluded Company’s compensationprogram,policiesandpractices In 2011,Towers Watson wasmandatedtoreviewthe • • oversight responsibilities. effectively providesalinkbetweenthetwoCommittees’risk Committee, isamemberoftheAuditCommittee.Thisoverlap Robert Pace, ChairoftheHumanResourcesandCompensation of theHumanResourcesandCompensationCommittee such, DenisLosier, ChairoftheAuditCommittee,isamember Committees, particularlywithregardtoriskmonitoring.As the AuditandHumanResourcesCompensation benefi or risk-relatedissue.TheCommitteealsobelievesinthe meetings toallowfordiscussionregardinganycompensation- Committee, areheldatthestartofeachCommittee For example, risks associatedwithCN’scompensationpoliciesandpractices. oversight rolerelatedtotheidentifi Throughout theyear, theCommitteeplaysanimportant are inplacewithintheCompany’scompensationprogram. assessment determinedthatproperriskmitigationfeatures from Towers Watson’s riskassessmentreportand initsown grants. TheCommitteestronglysupportstheconclusions prior totheCommitteeandBoardapprovingsuch were presentedtotheCommitteefortheirconsideration proposed byhumanresourcesmanagementandtheresults testing exercisewasperformedontheNEOs’2012LTI grants aligned withCN’spay-for-performance principles.Thestress- long-term incentiveawards,tovalidatethatprogramsare Management performmoreextensivestress-testingonfuture Towers Watson. Asaresult,theCommitteerequested that and indiscussingtheimprovementactionssuggestedby played anactiveroleinreviewingtheRiskAssessmentreport a materialadverseeffectonthecompany CN’s compensationprogramsthatarereasonablylikelytohave presented forCommitteeapproval. to provideadviceoncompensationrecommendationsthatare services ofanindependentexecutivecompensationconsultant compensation foritsOffi compensation consultanttoassistinthedeterminationof Management retainstheservicesofanexternalexecutive hedging activitiesagainstCNsecurities. executives andemployeesareprohibitedfromengagingin Under theCompany’sInsiderTrading Policy, directors, ts of a certain level of overlapping membership between tsofacertainleveloverlappingmembershipbetween there doesnotappeartobesignifi in camera sessions, restricted to members of the sessions,restrictedtomembersofthe cers. The Committee retains the cers.TheCommitteeretainsthe cation and management of cationandmanagementof cant risks arising from cantrisksarisingfrom ”. The Committee ”. TheCommittee

49 CN MANAGEMENT INFORMATION CIRCULAR 50 CN MANAGEMENT INFORMATION CIRCULAR maximum corporateperformance factorof200%fortheCEO. the corporateperformanceas“far exceeds”,allowingforthe established corporateobjectives, theBoardofDirectorsassessed After consideringthe2011fi individual performance. is basedoncorporateperformanceand30% the AnnualIncentiveBonusPlan,70%ofbonuspayout salary. Asisthecaseforothermanagementparticipantsin For 2011,Mr. Mongeau’stargetbonuswas120%ofhisbase Annual IncentiveBonusPlan continuing role. market increasesandrecognizingtheCEO’sgrowthinhis US$950,000 toUS$975,000(C$964,373),inlinewithexpected In 2011,Mr. Mongeau’sbasesalarywasincreasedfrom Base Salary and doesnothaveanemploymentcontract. the BoardofDirectors.TheCEOservesatwill the Committeeandapprovedbyindependentmembersof plans. Mr. Mongeau’sannualcompensationisrecommendedby leadership abilities,retentionconsiderationsandsuccession as competitivepositioningagainstmarket,economicoutlook, The CEO’sannualcompensationtakesintoaccountfactorssuch Corporation andCanadianPacifi Union Pacifi comparator groupconsistsofthefollowingClassIRailroads: practices ofremunerationintherailroadindustry. TheCEO’s competitive afterathoroughreviewofthestructure,levelsand market positioningatthe75thpercentilewasdeterminedtobe executives’ respectivecomparatorgroups.Thisreductionfrom compensation betweenthemedianand60thpercentileof was revisedtotargetamarketpositioningoftotaldirect and CEOinJanuary2010,theexecutivecompensationpolicy Concurrent withMr. Mongeau’sappointmentasPresident COMPENSATION Delivering Responsibly/Governance. Corporate GovernanceManual,availableatwww.cn.ca, under value. MoredetailsonhisroleareavailableintheCompany’s and operationalgoalsthatwillbuildlong-termshareholder leadership andvisionforCN,aswellachievingstrategic As PresidentandCEO, Mr. Mongeauisresponsibleforproviding Financial Offi Planning. HewasappointedExecutiveVice-PresidentandChief Development, andVice-President,StrategicFinancial and hasheldthepositionsofAssistantVice-PresidentCorporate (“ Mr. MongeaubecamePresidentandChiefExecutiveOffi CLAUDE MONGEAU, PRESIDENTANDCHIEFEXECUTIVEOFFICER President andChiefExecutiveOffi CEO ”) of CN on January 1, 2010. He joined CN in May 1994 ”) ofCNonJanuary1,2010.HejoinedinMay1994 c Corporation, CSX Corporation, Norfolk Southern Corporation,NorfolkSouthern cCorporation,CSX cer in October 2000. cerinOctober2000. nancial results against the nancialresultsagainstthe cRailwayLimited. cer Compensation cer cer car management program. car managementprogram. fulfi improvements inswitchwindowcomplianceandcarorder value totheentirerangeofcustomertouchpoints,including CustomerFIRST initiative–andesignedtobringgreater Mr. Mongeauoversawtheaggressiveroll-outofCompany’s focus onend-to-endsupplychainperformance.Inaddition, in customerserviceweredrivenbytheCompany’scontinued Company’s serviceexcellenceagenda.Overallimprovements Signifi to 2.23in2010. accident ratepermilliontrainmileswas2.25in2011compared 200,000 personhoursof1.55,downfrom1.72in2010andits reduction inemployeeinjurieswithaninjuryfrequencyrateper technology deployment.TheCompanypostedayear-over-year training, aswellanon-goingfocusoninnovationand investments todrivecontinuousimprovementinemployee broaden anddeepentheCompany’ssafetyculture,including In addition,Mr. Mongeaucontinuedtoleadtheefforts half oftheyear. achieved despiteunusuallyharshweatherconditionsinthefi including terminaldwellandtrainvelocity. Theseresultswere the industrywithrespecttokeyoperatingeffi improvement versustheprioryear. CNalsocontinuedtolead performance intheCompany’shistory, anda10basispoint an industryleadingoperatingratioof63.5%,thesecondbest CN deliveredasolidoperatingperformancein2011recording improving customerservice. incremental cost,whilemaintainingsafetyasatoppriority, and targeted on-goingproductivitygainstosupportgrowthatlow excellence. UnderMr. Mongeau’sleadership,theCompany business strategyofdeliveringoperationalandservice In 2011,Mr. MongeaucontinuedtoadvancetheCompany’s Operational andServiceExcellence bonus payoutofUS$2,076,750(C$2,112,055). Board ofDirectorstheapprovalCEO’sannualincentive individual performanceobjectivesandrecommendedtothe the CommitteedeterminedthatCEOhadmethisoverall Following areviewoftheCEO’sperformanceagainstobjectives, (20%); stakeholderengagementandleadership(20%). supply chainmanagement(20%);employeeengagement the followingareas:operationalandserviceexcellence(20%); beginning of2011includedelementscoveringperformancein the CommitteeandBoard.Theindividualgoalssetat the goals,objectivesandstandardsapprovedannuallyby The individualobjectivesoftheCEOaremeasuredagainst llment that were supported by the implementation of a new llmentthatweresupportedbytheimplementationofanew cant progress was made with respect to advancing the cantprogresswasmadewithrespecttoadvancingthe ciency metrics ciencymetrics rst rst 3,000 new hires in 2011. 3,000 newhiresin2011. allowed theCompanytosmoothly integrateapproximately and development.Theseonboardingtraininginitiatives training programsandon-goingopportunitiesfornetworking with aneffectivecompanyorientation,consistent,quality acceptance, Onboardingisdesignedtoprovidenewemployees new recruitsin2011.A24-monthprocessstartingatjob Mr. MongeaualsospearheadedanOnboardingProgramfor “on board”asquicklyandeffectivelypossible. employee safetyandproductivitytobringnewemployees the program’sgoalistoproviderighttrainingensure Intended toimprovetheeffectivenessofalltrainingsituations, and expandtrainingtools,facilitiesdeliveryresources. step forwardin2011withthelaunchofanefforttorevamp The Company’scommitmenttowardstrainingtookamajor continuous improvement. and creatinganenvironmentthatfostersteamwork competitive compensation,on-goingtraininganddevelopment, managing theCompany’shumanresourcesthatincludes: therefore focusedoncreatinganintegratedapproachto and challenginglearningenvironment.Mr. Mongeauis workers aredrawntoworkplacesthatfeatureacontinuous the labourmarketisincreasinglycompetitiveandthatyounger success wasanotherkeypriorityfor2011.CNrecognizesthat and byhelpingemployeesconnecttheircontributionstoCN’s Deepening employeeengagementbycontinuingtobuildpride Employee Engagement growth beyondbasemarketconditions. improvements incustomersatisfactionandaresupporting corrective actiontobetaken.Theseinitiativesaredriving potential pinchpointsalongthesupplychain,intimefor producing results.Thesetoolsprovidebettervisibilityinto The launchofvarioussupplychainmonitoringtoolsisalso opportunities forgrowth. becoming embeddedinhowwelookatourcustomersand Under Mr. Mongeau’sleadership,supplychainthinkingis have alreadybeensignedwithmorethantwentycustomers. of performance,thesupplychainandservicelevelagreements respect tobusinessconditionsandmoresystematicmonitoring by ourcustomersforclearertargets,on-goinginteractionwith across allsegmentsofthebusiness.Builtonneedidentifi for customercollaborationtodrivesupplychaineffi supply chainandservicelevelagreementsthatcreateaforum Supporting thisapproacharetheCompany’sgroundbreaking of theentiresupplychaincontinuedtoproduceresults. The Company’ssustainedfocusonimprovingtheeffi Supply ChainManagement ciencies ciencies ciency ciency ed ed Other NamedExecutiveOffi reported intheprescribedtablesCanadiandollars. Securities Administrators,amountspaidtoMr. Mongeauare In accordancewiththedisclosurerulesissuedbyCanadian awards columns. page 54,undertheShare-basedawardsandOption-based awards isincludedintheSummaryCompensationTable on 72,470 RSUsand120,000options.Thefairvalueofthese Long-Term IncentivePlan.In2011,Mr. Mongeaureceived subject tothe20%limitationunderManagement and conditionsasthoseoftheotherNEOsCompany, Incentive Plan.GrantstotheCEOaremadeonsamebasis pursuant totheRSUPlanandManagementLong-Term Restricted shareunitsandstockoptionsaregrantedtotheCEO Long-Term Incentives process andthatthereissustained,solidexecution. goals, thatthereisasenseofurgencyinthedecision-making that CN’smanagementteamisalignedtotheorganization’s discussions, Mr. Mongeauhasdemonstratedsuccessinensuring regular managementmeetingswiththeuseofmoreinformal teamwork throughouttheCompany. Bycombiningstructured, Mr. Mongeaumaintainedhisfocusonpromotingcohesionand Leadership with railroadoversight. First Nations,shareholdersandallCanadianU.S.regulators stakeholders includingindustryassociations,policymakers, his effortstopersonallyreachoutabroadgroupofexternal improve stakeholderengagement.Mr. Mongeaumaintained In 2011,theCompanycontinuedtobuildonitsefforts Stakeholder Engagement agreement wasratifi TCRC agreementwasratifi notably inadvanceoftheirDecember31expirydates.The Teamsters CanadaRailConference(TCRC) werealsoreached, agreements withtheUnitedSteelworkers(USW)and with theCanadianAutoWorkers (CAW)Union.Tentative In 2011,theCompanyreachedalandmark4-yearagreement Diploma inPublic AccountancyfromMcGillUniversity. the CanadianInstituteofChartered Accountantsandearnedhis Mr. JobinobtainedhisChartered AccountantAccreditationfrom goods, manufacturingandinvestment industries. a businessleaderandseniorexecutive withintheconsumer Offi Appointed CN’sExecutiveVice-PresidentandChiefFinancial information technology. management andgovernance,strategicplanning Mr. JobinisaccountablefortheCompany’sfi CHIEF FINANCIALOFFICER LUC JOBIN,EXECUTIVEVICE-PRESIDENT AND cerinJune2009,Mr. Jobinhas extensive experienceas edinearlyFebruary 2012. ed in late January 2012 and the USW edinlateJanuary2012andtheUSW cers’ Compensation nancial nancial

51 CN MANAGEMENT INFORMATION CIRCULAR 52 CN MANAGEMENT INFORMATION CIRCULAR of US$702,013 (C$713,947). Mr. Creelreceiveda2011annual bonusintheamount performance, aswellonhis individual assessment, performance objectives.Based on theCompany’sfi Mr. Creelwasassessedashaving methisoverallindividual management, assetutilization, service, safetyandpeople. against individualperformanceobjectives,including:cost In 2011,Mr. Creel’sperformancewasassessedbytheCEO Management Long-Term IncentivePlanrespectively. options, inaccordancewiththetermsofRSUPlanand approved a2011grantof21,620RSUsand43,240stock equivalent to70%ofbasesalary. Inaddition,theCommittee Annual IncentiveBonusPlan,his2011targetbonuswas role andadequatepositioningagainstmarket.Underthe increases andrecognizingtheCOO’sgrowthinhiscontinuing to US$565,000(C$558,842),inlinewithexpectedmarket In 2011,Mr. Creel’sbasesalarywasincreasedfromUS$550,000 he servedinthePersian GulfWar. as acommissionedoffi Business School.Mr. Creelhasamilitarybackgroundandserved completed theAdvancedManagementProgramatHarvard management fromJacksonvilleStateUniversity. Healso Mr. CreelobtainedaBachelorofSciencedegreeinmarketing/ experience inbothCanadaandtheUnitedStates. Offi Appointed CN’sExecutiveVice-PresidentandChiefOperating rail operations. Mr. CreelisaccountablefortheCompany’sNorthAmerican CHIEF OPERATING OFFICER KEITH CREEL,EXECUTIVEVICE-PRESIDENTAND bonus intheamountofUS$683,575(C$695,196). on hisindividualassessment,Mr. Jobinreceiveda2011annual Based ontheCompany’sfi as havingmethisoverallindividualperformanceobjectives. planning andemployeeengagement.Mr. Jobinwasassessed cross-functional growthandproductivityinitiatives,resource creation initiatives,acceleratingthedevelopmentof Company’s strategicagendaincludingtheexecutionofvalue company-wide fi against individualperformanceobjectives,including: Mr. Jobin’sperformancein2011wasassessedbytheCEO Management Long-Term IncentivePlanrespectively. options, inaccordancewiththetermsofRSUPlanand approved a2011grantof20,960RSUsand41,920stock equivalent to70%ofbasesalary. Inaddition,theCommittee the AnnualIncentiveBonusPlan,his2011targetbonuswas continuing roleandadequatepositioningagainstmarket.Under market increasesandrecognizingtheCFO’sgrowthinhis US$536,000 toUS$550,000(C$544,005),inlinewithexpected In 2011,Mr. Jobin’sbasesalarywasincreasedfrom cerinJanuary2010,Mr. Creelhasextensiverailway nancial management, progression of the nancialmanagement,progressionofthe cerintheU.S.Army, duringwhichtime nancial performance, as well as nancialperformance,aswell nancial nancial in the amount of US$639,888 (C$650,766). in theamountofUS$639,888(C$650,766). individual assessment,Mr. Ruestreceiveda2011annualbonus on theCompany’sfi having methisoverallindividualperformanceobjectives.Based customer-focused commercialteam.Mr. Ruestwasassessedas sustainability andbuildingaprogressivemarket-driven business withsolidgrowthpotential,pricingtovalueand the variousCNbusinessunits,creatingapremierintermodal business, embeddingasupplychainbusinessmindsetinto against individualperformanceobjectives,including:pre-selling Mr. Ruest’sperformancein2011wasassessedbytheCEO Management Long-Term IncentivePlanrespectively. options, inaccordancewiththetermsofRSUPlanand approved a2011grantof19,650RSUsand39,300stock equivalent to70%ofbasesalary. Inaddition,theCommittee the AnnualIncentiveBonusPlan,his2011targetbonuswas continuing roleandadequatepositioningagainstmarket.Under market increasesandrecognizingtheCMO’sgrowthinhis US$490,000 toUS$515,000(C$509,387),inlinewithexpected In 2011,Mr. Ruest’sbasesalarywasincreasedfrom of Michigan’sbusinessschool. He alsocompletedtheexecutiveprogramfromUniversity degree inappliedchemistryfromUniversitédeSherbrooke. marketing fromHECMontréalandaBachelorofScience Mr. RuestholdsaMastersinBusinessAdministration for amajorinternationalchemicalcompany. he accumulatedmorethan15yearsofexperienceworking experience withintherailwayindustry. PriortojoiningCN, He isaseasonedexecutiveandhasextensivemarketing sales, marketingandsupplychainsolutiongroups. for providingthestrategicdirectionandleadershipCN’s Chief MarketingOffi Mr. RuestwasappointedCN’sExecutiveVice-Presidentand AND CHIEFMARKETINGOFFICER JEAN-JACQUES RUEST, EXECUTIVEVICE-PRESIDENT Partner foranimportantMontreallawfi 2000. BeforejoiningtheCompany, hewastheManagingTax Vice-President, Treasurer andPrincipalTax CounselinJanuary Mr. FinnledCN’staxfunctionand wasappointedCN’s for CN’sCorporateGovernancepractices. security matters.AsCorporateSecretary, heisalsoresponsible legal, government,regulatory, publicaffairs,riskmitigationand Offi Executive Vice-PresidentCorporateServicesandChiefLegal Offi Mr. FinnwasappointedSeniorVice-President,ChiefLegal AND CHIEFLEGALOFFICER SEAN FINN,EXECUTIVEVICE-PRESIDENTCORPORATE SERVICES cer in December 2008. He is responsible for a wide array of cerinDecember2008.Heisresponsibleforawidearrayof cerandCorporateSecretaryinDecember2000CN’s nancial performance, as well as on his nancialperformance,aswellonhis cer on January 1, 2010 and is responsible ceronJanuary1,2010andisresponsible rm. rm. $ 100 $ 150 $ 200 during the covered period. during thecoveredperiod. December 31,2011.Itassumesreinvestmentofalldividends period beginningDecember31,2006totheending return oftheS&P/TSXandS&P500Indicesfrom in CN’scommonsharescomparedwiththecumulativetotal cumulative totalshareholderreturnona$100investment The followingPerformance Graphillustratestheyearly Performance Graph US$595,000 (C$605,115). Mr. Finnreceiveda2011annualbonusintheamountof fi individual performanceobjectives.BasedontheCompany’s transition. Mr. Finnwasassessedashavingmethisoverall leadership development,corporategovernanceandBoard stakeholder engagement,enterpriseriskmanagement, against individualperformanceobjectivesrelatedtosmart Mr. Finn’sperformancein2011wasassessedbytheCEO Management Long-Term IncentivePlanrespectively. options, inaccordancewiththetermsofRSUPlanand approved a2011grantof18,340RSUsand36,680stock equivalent to70%ofbasesalary. Inaddition,theCommittee Annual IncentiveBonusPlan,his2011targetbonuswas role andadequatepositioningagainstmarket.Underthe increases andrecognizingtheCLO’s growthinhiscontinuing to US$500,000(C$494,550),inlinewithexpectedmarket In 2011,Mr. Finn’sbasesalarywasincreasedfromUS$490,000 Executive Programs,UniversityofToronto. Boardroom ProgramattheRotmanSchoolofManagement, Rotman SchoolofManagement,aswelltheExcellencein Program givenbytheInstituteofCorporateDirectorsand Associations. Mr. FinnhascompletedtheDirectorsEducation Bar, andisamemberoftheCanadianAmericanBar of Montreal,afterwhichhewasadmittedtotheQuebec Mr. FinngraduatedfromthefacultyoflawUniversity nancial performance, as well as on his individual assessment, nancialperformance,aswellonhisindividualassessment, $ 50 S&P 500 S&P/TSX CNI CNR $0 0620 0820 002011 2010 2009 2008 2007 2006 N N S&P/TSX CNI CNR E-6DC0 E-8DC0 E-0DEC-11 DEC-10 DEC-09 DEC-08 DEC-07 DEC-06 10$0 6 8 9 $99 $97 $107 $117 $84 $199 $174 $99 $166 $66 $142 $133 $74 $105 $121 $89 $110 $100 $93 $111 $100 $95 $100 $100 S&P 500 the two. December 31,2011,anddemonstratesthecloselinkbetween earned byNEOsineachyearofthefi shares ontheTSXcomparedwithtotalcompensation total shareholderreturnona$100investmentinCN’scommon The followinggraphsillustratetheannualchangeincumulative compensation toshareholderreturn. equity-based incentiveplans,closelylinkingtheir of thecompensationearnedbyNEOswasderivedfrom of shareholders.Overthelastfi the compensationearnedbyNEOsandinvestmentreturn and appropriatelysupportsastrongrelationshipbetween that theCompany’sexecutivecompensationpolicyiseffective from equity-based incentiveplans.TheCommitteebelieves year, plustheyearlychangeinunrealizedandrealizedgains as theamountofbasesalaryandbonusearnedduring period. ThetotalcompensationearnedbyNEOsisdefi aggregate marketcapitalizationincreaseoverthesame represented about2.2%oftheapproximateC$10billion term incentives–thatwereearnedbyallNEOscombined compensation –basesalary, annualincentive,andlong- Over thelastfi -$10 $ 100 $ 20 $ 30 $ 40 $10 $ 25 $50 $75 $ 0 0720 0921 2011 2010 2009 2008 2007 $0 0720 0921 2011 2010 2009 2008 2007 the yearona$100investmentDecember31,2006($) Change inthecumulativetotalshareholderreturnduring Compensation earnedbyNEOsattributedtotheyear($M) ve years,thethreemaincomponentsof ve years,approximately80% ve-year period ending on ve-yearperiodendingon ned

53 CN MANAGEMENT INFORMATION CIRCULAR 54 CN MANAGEMENT INFORMATION CIRCULAR 1) Mr. Jobin’sshare-basedawardincludes1,035unitswhichrepresentthe25%company-match awardedundertheVoluntary Incen (10) ThepensionplanvaluesstatedforMr. JobinandMr. Creelexcludethenotionalinvestmentearnings(andlosses)fromD (9) AmountsshownincludeanyportionoftheannualbonusthatwasdeferredbyanNEO. Mr. Jobinelectedtodeferthetotality (8) Mr. Jobin’sshare-based awardincludes2,454deferredshareunitswhichrepresentthe25%company-match awardedundertheV (7) The2009and2010“All OtherCompensation”amountswereupdatedinordertoincludetheEmployercontributionunderEmp (6) Includesthevalueofperquisites,personalbenefi (5) Includesthecompensatoryvalueofpensionbenefi (4) RepresentstheincentiveearnedunderAnnualIncentiveBonusPlanforapplicableyear. Refertopage43forthedet (3) RepresentsthegrantdatefairvalueofawardscalculatedinaccordancewithAccountingStandardsCodifi (2) 1) Mr. Creel’s2010share-basedawardincludesaspecialof30,800RSUsgrantedfollowinghisappointmenttoExecutive (12) Onanannualbasis,Mr. Jobin’ssalaryin2009wasUS$525,000(C$599,550). (11) Mr. Mongeauwasappointed PresidentandChiefExecutiveOffi (1) SUMMARY COMPENSATION TABLE to page68forcurrencyexchangeinformation. December 31,2011,2010and2009.Fluctuationintheexchangeratemayaffectyear-over-year comparability. Pleaserefer The followingtablesetsforththeannualtotalcompensationinCanadiandollarsforNEOs,yearsended Summary CompensationTable Services andChiefLegalOffi Executive Vice-PresidentCorporate Sean Finn Chief MarketingOffi Executive Vice-Presidentand Jean-Jacques Ruest YEAR Chief OperatingOffi Executive Vice-Presidentand Keith E.Creel Chief FinancialOffi Executive Vice-Presidentand Luc Jobin Chief ExecutiveOffi President and Claude Mongeau POSITION NAME ANDPRINCIPAL to pages64and65fordetailsoftheDefi using asharepriceofUS$53.80withcompany-match of1,035units.Referto“DeferredCompensationPlans”onpage62fordeta US$67.84 andhereceivedacompanymatchof2,454units.Mr. Jobinalsoelectedtodeferthetotalityofhis2009AIBPpayout. 25% peryear. Mr. Jobinalsoelectedtodeferthetotalityofhis2010AIBPpayoutunderVIDP. The2010deferralwasconver payable incash.For 2011,hisdeferralwasequivalentto7,339unitsusingasharepriceofUS$77.31with25%companymatch Voluntary uptothemaximumlimitequivalenthisstockownershipguideline.Payouts IncentiveDeferralPlan(“VIDP”), fromt the deferralofhis2010AIBP. ThegrantdatefairvalueoftheawardwascalculatedbymultiplyingnumberunitsC$67 in thiscolumn.Detailsareprovidedthetableonpage56. Investment Plan.Perquisites andotherpersonalbenefi following hisappointmentasCEO. For Mr. Mongeau,theamountofCompensatoryChangeon2009accruedobligationwasupdatedfromC$1,557,000toC$2,452,000t methodology used. Accepted AccountingPrinciples(U.S.GAAP),inordertoalignwiththemethodologyusedCompany’sfi of his2009AIBP. ThegrantdatefairvalueoftheawardwascalculatedbymultiplyingnumberunitsC$53.32,shar Marketing Offi as ofJune1,2009.Mr. CreelwasappointedExecutiveVice-PresidentandChiefOperatingOffi (1) cerasofJanuary1,2010.Mr. FinnwasappointedExecutiveVice-PresidentCorporateServicesandChiefLegalOffi cer cer cer cer cer cer nedContributionSupplementalExecutiveRetirementPlans. 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 tsandothercompensation(asapplicable),forexamplepost-retirementbenefi tsasreportedinthe“Defi tsthatinaggregateamounttolessthanC$50,000or10%ofthetotalsalaryforanyNamedExecutiveOffi 548,160 504,651 494,550 382,000 504,651 509,387 582,420 566,445 558,842 353,757 552,026 544,005 610,970 978,405 964,373 cerasofJanuary1,2010.Mr. JobinjoinedCNandassumedtheroleofExecutiveVice-PresidentChiefFinancialOffi SALARY SALARY ($) (11) nedBenefi SHARE-BASED 1,651,914 1,012,563 2,770,200 2,924,889 745,462 637,146 740,202 212,989 637,146 793,074 851,957 872,583 597,780 765,249 851,957 AWARDS tPlans”and“Defi ($) 2 2 3 4 (5)(6) (4) (3) (2) (2) (10) (7) (12)

cereffectiveJanuary1,2010.Mr. RuestwasappointedExecutiveVice-PresidentandChief 1,000,164 1,000,164 1,670,400 1,878,000 875,143 570,285 574,042 250,041 570,285 615,045 674,685 676,706 542,822 635,535 656,048 AWARDS OPTION- BASED nedContributionPlans”tablesinthe“Pension PlanBenefi cation (ASC) 718 – Compensation – Stock Compensation, under U.S. Generally cation(ASC)718–CompensationStockCompensation,underU.S.Generally ($) nancial statements. Please refer to page 55 for a detailed description of the nancialstatements.Pleaserefertopage55foradetaileddescriptionofthe

NON-EQUITY INCENTIVE PLANS COMPENSATION – INCENTIVE PLAN INCENTIVE PLAN 2,012,573 2,112,055 377,414 579,951 605,115 257,000 605,537 650,766 234,163 662,384 694,992 420,610 400,957 679,685 713,947 ails oftheAIBP. efi ANNUAL ned Contribution Supplemental Executive Retirement Plan. Refer nedContributionSupplementalExecutiveRetirementPlan.Refer of his 2011 AIBP payout into deferred share units under the of his2011AIBPpayoutintodeferredshareunitsunderthe Vice-President andChiefOperatingOffi ts or the Employer contribution under the Employee Share tsortheEmployercontributionunderEmployeeShare ted into 9,817 deferred share units using a share price of ted into9,817deferredshareunitsusingapriceof he VIDP occur only upon cessation of employment and are he VIDPoccuronlyuponcessationofemploymentandare .89, the share price on the day of the award. .89, thesharepriceondayofaward. e price on the day of the award. e priceonthedayofaward. cereffectiveDecember1,2008. The deferral was converted into 4,141 deferred share units The deferralwasconvertedinto4,141deferredshareunits tive Deferral Plan, which vest over 4 years, upon the deferral tive DeferralPlan,whichvestover4years,uponthedeferral ($) of 1,835 units that will vest over four years, at a rate of of 1,835unitsthatwillvestoverfouryears,atarate oluntary Incentive Deferral Plan and vest over 4 years, upon oluntary IncentiveDeferralPlanandvestover4years,upon loyee Share Investment Plan. loyee ShareInvestmentPlan. (8) (8) (8)

ils. ils. 2,452,000 o refl 118,000 111,000 606,000 159,000 183,000 104,759 142,360 233,000 274,000 120,534 PENSION 84,000 38,686 54,990 68,351 ect the impact of the higher target bonus ecttheimpactofhighertargetbonus VALUE ($) (9) (9) (9) (9) (9) (9) C OMPENSATION ALL OTHER 14,066 14,698 14,293 13,832 14,179 11,812 15,295 16,442 15,145 82,119 81,624 29,186 11,862 11,724 ts” section on page 66. ts”sectiononpage66. 7,426 cer. cers are not reported cersarenotreported ($) C OMPENSATION 1,774,634 2,734,019 3,064,666 2,678,472 2,389,865 2,539,088 1,719,842 2,491,914 2,767,714 5,350,846 7,746,697 8,234,941 2,985,218 3,639,581 2,902,153 cer cer TOTAL ($) d Representstheperiodoftimethatawardsareexpectedtobeoutstanding.For option-basedawards,theCompanyuseshistori (d) Basedonthehistorical volatilityoftheCompany’sstockoveraperiodcommensuratewithexpectedtermaward, (c) Basedontheimpliedyieldavailablezero-coupongovernmentissueswithanequivalenttermcommensurateexpecte (b) TheJunevaluationrelatestotheawardmade toMr. JobinonJune1,2009. (a) the followingassumptions: is determinedusingthelattice-basedvaluationmodelandBlack-Scholesoption-pricingmodel,respectively, andconsiders the closingsharepriceofCompany’sstockonsuchdate.Thegrantdatefairvalueforrestrictedunitsandopt of stockoptionspursuanttotheManagementLong-Term IncentivePlan.ThegrantdatefairvalueforDSUsisdeterminedby Deferral Planandofperformance-basedrestrictedshareunitsundertheRSUPlan.Option-basedawardsrepresentaward Share-based awardsrepresenttheawardofcompany-matched deferredshareunits(DSUs)undertheVoluntary Incentive Accepted AccountingPrinciples(U.S.GAAP),inordertoalignwiththemethodologyusedCompany’sfi accordance withAccountingStandardsCodifi The fairvalueofthelong-termincentiveawardsrefl OF GRANTDATE FAIR VALUE OFAWARDS EXTENSION TONOTE(2)OFTHESUMMARYCOMPENSATION TABLE ONTHECALCULATION Resulting fairvalueperunit(C$) Expected term Expected annualdividendspershare(C$) of theaward Expected stockpricevolatilityoverterm the award Risk-free interestrateovertermof AWARDS (RSUs) SHARE-BASED Closing sharepriceongrantdate(C$) and groupsofemployeesthathavesimilarhistoricalexercisebehaviourareconsideredseparately. from tradedoptionsontheCompany’sstock. (b) (c) (d) (JANUARY) 2.0$41 2.6$40.36 $29.16 $34.16 $21.30 $68.89 $54.65 $48.57 $41.91 er . er er 3years 3years 2.6years 3 years .5 .0 .2 1.88% 1.62% 1.60% 1.55% 10 10 10 $1.30 $1.08 $1.01 $1.01 2009 7 9 9 28% 29% 29% 27% (JUNE) 2009 cation (ASC) 718 – Compensation – Stock Compensation, under U.S. Generally cation(ASC)718–CompensationStockCompensation,underU.S.Generally (a) (JANUARY) 2010 ects their expected value on the date of the grant and is calculated in ectstheirexpectedvalueonthedateofgrantandiscalculatedin (JANUARY) 2011 Expected term Expected annual of theaward Expected stockpricevolatilityoverterm the award Risk-free interestrateovertermof AWARDS OPTION-BASED Resulting fairvalueperstockoption(C$) Closing sharepriceongrantdate(C$) (b) (c) (d) dividends pershare(C$) nd for option-based awards, also considers the implied volatility nd foroption-basedawards,alsoconsiderstheimpliedvolatility cal data to estimate option exercise and employee termination, cal datatoestimateoptionexerciseandemployeetermination, d termoftheaward. (JANUARY) . er . er . er 5.3years 5.4years 5.3years 5.3 years 4.1$85 5.5$68.89 $54.65 $48.57 $41.91 1.0$55 1.5$15.65 $13.05 $15.51 $12.50 .5 .1 .4 2.53% 2.44% 2.51% 1.95% 10 10 10 $1.30 $1.08 $1.01 $1.01 2009 9 9 8 26% 28% 39% 39% nancial statements. nancialstatements. (JUNE) 2009 (a) (JANUARY) 2010 (JANUARY) ions ions 2011

55 CN MANAGEMENT INFORMATION CIRCULAR 56 CN MANAGEMENT INFORMATION CIRCULAR 2 Perquisites andother personalbenefi (2) 1 ThistableoutlinestheperquisitesandothercompensationreceivedbyNEOsin2009,20102011.Theamountsarecalcula (1) DETAILS OF“ALL OTHERCOMPENSATION” AMOUNTSFOR2011,2010AND2009 4 Representstheservicecostforpost-retirementlifeand medicalinsurance,ifapplicable. (4) RepresentsthevalueofCompany-match undertheEmployeeShareInvestmentPlan(“ESIP”). (3) Sean Finn Jean-Jacques Ruest Keith E.Creel Luc Jobin Claude Mongeau AEYEAR NAME exceptional circumstances. Effective January1,2010,theCompanyeliminatedtaxgross-upsandreviseditspolicytorestrictusageofcorporatea NEOs arereportedas“Nil”inthiscolumn. See section“ExecutivePerquisites” onpage47formoredetails. Perquisites andotherpersonalbenefi membership, executivephysicalexamandfi and lifeinsurancecoverage.TheincrementalcosttotheCompanyisdeterminedbyactual costofthecompany-leased vehicle 09 Nl EI mlyrcnrbto: 11,632 ESIPEmployercontribution: 10,574 ESIPEmployercontribution: 10,362 ESIPEmployercontribution: Nil 8,022 ESIPEmployercontribution: 11,862 Nil 10,505 11,724 ESIPEmployercontribution: Nil 10,673 ESIPEmployercontribution: Nil 12,231 ESIPEmployercontribution: Nil 11,862 ESIPEmployercontribution: 11,724 Nil ESIPEmployercontribution: 2009 6,426 Nil ESIPEmployercontribution: 2010 Nil 11,566 2011 ESIPEmployercontribution: Nil 11,398 ESIPEmployercontribution: 2009 Nil 12,945 ESIPEmployercontribution: 2010 Nil 2011 Nil 2009 Nil 2010 2011 2009 2010 2011 2009 Company-leased 2010 vehicle: 19,036 Company-leased 2011 vehicle: 18,104 tsincludetheuseofacompany-leased vehicle,parking,clubmembership,executivephysicalexam,fi n ieisrne 11,118 andlifeinsurance: Other 9,660 Healthcare Financial andlifeinsurance: perquisites: benefi Other counselling: 14,250 Healthcare 15,000 Financial perquisites: benefi counselling: 15,214 15,300 nancialcounsellingandbythecostofcertainhealthcarebenefi PERQUISITES ANDOTHER PERSONAL BENEFITS ts ts (C$) (2) Post-retirement Post-retirement Post-retirement benefi Post-retirement benefi Post-retirement benefi Post-retirement benefi Tax benefi benefi Post-retirement Post-retirement gross-up: Post-retirement benefi Post-retirement benefi 20,037 ESIPEmployercontribution: benefi 16,955 benefi Post-retirement 20,206 ESIPEmployercontribution: benefi Post-retirement benefi ts that amount to less than C$50,000 (in aggregate) or 10% of total salary for any of the tsthatamounttolessthanC$50,000(inaggregate)or10%oftotalsalaryforanythe (1) ts and life insurance coverage in excess of that offered to salaried employees. tsandlifeinsurancecoverageinexcessofthatofferedtosalariedemployees. ircraft to business-related purposes, save for certain ircraft tobusiness-relatedpurposes,saveforcertain ted basedontheincrementalcosttoCompany. (including gas and maintenance fees), parking, club (includinggasandmaintenancefees),parking,club t: 2,661 ts: 3,258 ts: 3,817 ts: 3,790 ts: 4,790 ts: 5,769 ts: 1,000 ts: 2,500 ts: 3,300 ts: 2,200 ts: 2,678 ts: 3,140 ts: COMPENSATION nancialcounselling,andcertainhealthcarebenefi OTHER (C$) (4) (3) (4) (3) (4) (3) (4) (3) (4) (3) (4) (3) (3) (3) (3) (4) (3) (4) (3) (4) (3) (4) (3) (4) (3) (4) (3) (TOTAL OFTHETWO PREVIOUS COMPENSATION COLUMNS) ALL OTHER 29,186 14,293 13,832 14,179 11,812 15,295 16,442 14,066 14,698 15,145 82,119 81,624 7,426 (C$) ts ts 4 Thedeferredshareunitsrepresentthe25%company-match granteduponthedeferralofAIBPorRSUpayout.Thecompany-m (4) Theoptionsgrantedin2011weremadeundertheManagementLong-Term IncentivePlanandvestoveraperiodoffouryears,w (3) TheRSUsgrantedin2011weremadeundertheRSUPlan.Underthisplan,payoutissubjecttoattainmentofaverage (2) 1 ThegrantdatefairvaluesreportedforRSUsandoptionsarecalculatedusingthesameassumptionsasdescribedinexte (1) Incentive Deferral Plan in 2011. Incentive DeferralPlanin2011. under theManagementLong-Term IncentivePlanandawardsofcompany-matched deferredshareunitsundertheVoluntary The followingtableshowsinformationregardinggrantsofRSUsmadetoNEOsundertheRSUPlan,stockoptions Share-based andOption-basedAwardsin2011 Incentive PlanAwards Keith E.Creel Luc Jobin Claude Mongeau Sean Finn Jean-Jacques Ruest AEGATDT AWARD TYPE DATE GRANT NAME award. UnexercisedoptionsshallexpireonthetenthanniversarydateofSeesection“ManagementLong-Term Incentive a minimumsharepriceconditionofC$67.20orUS$66.70,asdescribedunder“RestrictedShareUnits:2011Award”onpage46. performance vestingfactor(asanexample,threshold,target,andmaximumlevelsare50%,100%150%respectivel 25% peryear. Seesection“DeferredCompensationPlans”onpage62foradescriptionoftheplan. page 55.ThegrantdatefairvaluereportedforMr. Jobin’sDSUsiscalculatedbymultiplyingtheunroundednumberofunits(24 aur 7 01RSUs RSUs January 27,2011 RSUs January 27,2011 January 27,2011 January 31,2011 RSUs January 27,2011 January 27,2011 Options Options Options Options Options DSUs RSUs (3) (2) (3) (2) (3) (2) (4) (3) (2) (3) (2) SECURITIES, UNITS OR OTHERRIGHTS 120,000 36,680 18,340 39,300 19,650 43,240 21,620 41,920 20,960 72,470 2,454 (#) Cessation ofEmployment December 31,2013 December 31,2013 December 31,2013 December 31,2013 December 31,2013 END OF PLAN PERIOD END OFPLAN January 27,2021 January 27,2021 January 27,2021 January 27,2021 January 27,2021 nsion tofootnote2oftheSummaryCompensationTable on OR EXPIRYDATE ROIC targets for the plan period that determine the applicable ROIC targetsfortheplanperiodthatdetermineapplicable 54.2305) by the share price on the date of grant. 54.2305) bythesharepriceondateofgrant. ith 25% of the options vesting at each anniversary date of the ith 25%oftheoptionsvestingateachanniversarydate atched deferred share units vest over four years, at a rate of atched deferredshareunitsvestoverfouryears,atarateof Plan”onpage60foradescriptionoftheplan. y). The payout is also conditional upon meeting y). Thepayoutisalsoconditionaluponmeeting SHARE PRICE OF GRANT OF GRANT ON DATE 68.89 68.89 68.89 68.89 68.89 68.89 68.89 68.89 67.89 68.89 68.89 (C$) GRANT DATEGRANT 1,878,000 2,924,889 FAIR VALUE 574,042 740,202 615,045 793,074 676,706 872,583 166,618 656,048 845,945 AWARD’S (C$) (1)

57 CN MANAGEMENT INFORMATION CIRCULAR 58 CN MANAGEMENT INFORMATION CIRCULAR The followingtableshowsallawardsmadetoNEOsandoutstandingonDecember31,2011. Outstanding Share-basedAwardsandOption-based Sean Finn Jean-Jacques Ruest Keith E.Creel Luc Jobin Claude Mongeau NAME UNEXERCISED UNDERLYING NUMBER OF SECURITIES 2,0 05 010/73,5,8 6,7 3427119,644,123 13,422,721 20.422013/01/24 167,470 37,150,985 324,000 2021/01/27 52.112020/01/28 70.59 128,000 120,000 OPTIONS 6607.922/12 ,7,0 010321293,439,237 3,221,229 40,190 2018/01/24 4,070,503 2019/01/26 7,027,735 2020/01/28 48.90 2021/01/27 34.75 2013/01/24 52.11 3,326,225 2015/01/28 70.59 10,500 2016/01/27 20.42 48,500 41,500 36.23 43,700 2017/01/25 51.63 36,680 2018/01/24 11,000,458 81,000 9,365,231 2019/01/26 52.70 16,000 2020/01/28 48.46 6,273,341 11,600 2,890,749 2021/01/27 41.91 2016/01/27 52.11 16,800 78,270 2017/01/25 70.59 3,890,539 15,000 2017/06/11 45.69 20,000 2018/01/24 45.43 43,700 48,541 9,903,454 2019/01/26 53.91 39,300 2020/01/28 48.90 40,000 2021/01/27 34.75 28,000 2,960,184 2019/06/01 52.11 10,000 2020/01/28 70.59 60,000 2021/01/27 45.12 80,000 52.11 51,700 70.59 43,240 35,000 48,700 41,920 00029.682015/01/28 45.692016/01/27 45.432017/01/25 48.902018/01/24 80,000 34.752019/01/26 60,000 46,000 60,000 80,000 ,0 69 2016/06/12 46.95 6,400 (#) OPTION-BASED AWARDS EXERCISE OPTION PRICE (C$) (2) EXPIRATION (1) OPTION DATE IN-THE-MONEY UNEXERCISED VALUE OF OPTIONS (C$) 3 4 5 (6) (5) (4) (3) SHARES THAT NUMBER OF SHARES OR HAVE NOT UNITS OF VESTED (#) SHARE-BASED AWARDS OF SHARE-BASED PAYOUT VALUE AWARDS THAT MARKET OR HAVE NOT VESTED (C$) OR DISTRIBUTED PAYOUT VALUE SHARE-BASED AWARDS NOT MARKET OR OF VESTED PAID OUT (C$) 4 IncludesallRSUsoutstandingonDecember31,2011thathavenotvestedsuchdateundertheRSUPlan.Payouts forthese (4) Thevalueofunexercisedin-the-moneyoptionsatfi (3) AlloptionexercisepricesshownareinCanadiandollars.Whereapplicable,U.S.dollarsresultin (2) IncludesallstockoptionsgrantedundertheManagementLong-Term IncentivePlanandoutstandingonDecember31,2011. (1) 6 IncludesthevalueasatDecember31,2011of2009RSUawardsgrantedunderPlanbasedonclosingprice (6) ThevalueofoutstandingshareunitsawardedundertheRSUPlanisbasedonclosingpricecommonsharesT (5) of exercise. refer toNote2ofthistableforadditionaldetails.Thisvaluehasnotbeen,andmayneverbe,realized.Theactualgains,if December 31,2011exchangerateofUS$1=C$1.0170(i.e.US$78.56*1.0170C$79.90)andtheexercisepriceconvertedtoCanad is thedifferencebetweenclosingsharepriceofcommonsharesonDecember31,2011NewYork StockExchange(US$ shares onDecember31,2011,theTSX(C$80.15)andexerciseprice.Thevalueofunexercisedin-the-moneyoptionsatfi Canadian dollarsusingtheDecember31,2011exchangerateofUS$1=C$1.0170.Thefollowingtablepresentsoptionexercise (3,231 units)thathavenotvestedonsuchdateundertheVoluntary IncentiveDeferralPlan.Undertheplan,company-match defe and aminimumsharepriceconditionthatmayornotbeachieved.For Mr. Jobin,thevaluealsoincludescompany-match d of thecommonsharesonTSXDecember31,2011(C$80.15)andisequivalenttoC$258,942. will applytotheawardedshareunits.For Mr. Jobin,thevalueofcompany-matched deferredshareunitsawardedundertheV average returnoninvestedcapitalobjective(i.e.100%)andtheminimumsharepriceconditionwillbemet.Inaccordancewith NEOs, ofthemarketvaluevestedshare-basedawardsthatwerenotpaidoutordistributedonDecember31,2011: payable uponcessationofemployment(pleaserefertopage62formoredetailsontheCompany’sDeferredCompensationPlans).T Senior ExecutiveBonusSharePlanbasedontheclosingsharepriceofCompany’scommonsharesTSXC$80.15.Units January 31,2012(C$78.14).AlsoincludesthevalueasatDecember2011ofdeferredshareunitsthathavevestedunder and theminimumsharepriceconditionwasalsomet.Payout forthe2009RSUawardoccurredinFebruary 2012andwasbasedonth average returnoninvestedcapitalfortheperiodendingDecember31,2011was13.91%,exceedingtargetplanper 2021/01/27 Sean Finn Jean-Jacques Ruest Keith E.Creel Luc Jobin NEO 2015/01/28 2016/01/27 2017/01/25 2017/06/11 2018/01/24 2019/01/26 2019/06/01 2020/01/28 OPTION EXPIRATION DATE Claude Mongeau ,3,3 3,439,237 – 11,000,458 2,890,749 3,439,237 7,069,902 19,644,123 1,171,131 3,930,556 15,713,567 1,719,618 3,930,556 2009 RSUs 2009 RSUs 8,3 ,4,9 7,027,735 6,045,096 982,639 OPTION EXERCISE OPTION EXERCISE (C$) nancialyear-end foroptionsgrantedtoNEOsinCanadiandollarsisthedifferencebetweenclosingsharepriceofcomm ACCUMULATED ACCUMULATED 91 29.68 45.69 45.43 53.91 48.90 29.19 34.75 44.93 45.12 44.67 52.11 53.01 70.59 48.08 34.17 44.37 51.24 69.41 PRICE PRICE (US$) DSUs (C$) OPTION EXERCISE OPTIONEXERCISE TOTAL PRICE PRICE (C$) (C$) g from option grants to NEOs made in U.S. dollars, were converted to g fromoptiongrantstoNEOsmadeinU.S.dollars,wereconverted any, willdependonthevalueofcommonsharesdate SX on December 31, 2011 (C$80.15) assuming that the target SX onDecember31,2011(C$80.15)assumingthatthetarget the Company’s common shares on the TSX of C$80.15. The theCompany’scommonsharesonTSXofC$80.15.The units are conditional upon meeting performance criteria units areconditionaluponmeetingperformancecriteria nancialyear-end foroptionsgrantedtoNEOsinU.S.dollars the plan, a performance vesting factor between 0% and 150% the plan,aperformancevestingfactorbetween0%and150% the termsofVoluntary IncentiveDeferralPlanandthe rred shareunitsvestoverfouryears,atarateof25%peryear. oluntary Incentive Deferral Plan is based on the closing price oluntary IncentiveDeferralPlanisbasedontheclosingprice iod. The performance vesting factor was therefore 122.6% iod. Theperformancevestingfactorwastherefore122.6% eferred share units outstanding on December 31, 2011 eferred shareunitsoutstandingonDecember31,2011 held under these deferred compensation plans are only held underthesedeferredcompensationplansareonly he following table provides the breakdown, for each of the he followingtableprovidesthebreakdown,foreachof pricesthatwereconvertedtoCanadiandollars: 78.56) converted to Canadian dollars based on the 78.56) convertedtoCanadiandollarsbasedonthe e average 20-day share price for the period ending e average20-daysharepricefortheperiodending ian dollars using this same exchange rate. Please ian dollarsusingthissameexchangerate.Please on on

59 CN MANAGEMENT INFORMATION CIRCULAR 60 CN MANAGEMENT INFORMATION CIRCULAR FOR GRANTASAT FEBRUARY 29,2012 OPTIONS OUTSTANDING ANDAVAILABLE The ManagementLong-Term IncentivePlan(the“ Management Long-Term IncentivePlan RepresentstheamountofbonusearnedunderAnnualIncentiveBonusPlanforfi (3) IncludesRSUsgrantedin2009thatvestedonDecember31,2011undertheRSUPlanand,forMr. Jobin,the25%ofCompan (2) RepresentsthevalueofpotentialgainsfromoptionsgrantedunderManagementLong-Term IncentivePlanin2007,200 (1) December 31,2011. the annualincentivebonus,restrictedshareunits,deferredunitsandstockoptionsearnedduringfi The followingtableshowsthevaluefromincentiveplansvestedorearnedbyNEOsunderCompany’splans,includin Incentive PlanAwards–Value Vested orEarnedDuringtheYear February 29,2012. number ofsharesissuedandissuableunderthePlan,asat provides informationonthestatusofreserveand issued underthePlanis60,000,000.Thefollowingtable The maximumnumberofcommonsharesthatmaybe in 2002,whichoptionshaveallexpiredonJanuary25,2012. last timenon-executiveBoarddirectorsreceivedoptionswas remained asparticipantsinthePlanforpreviousgrants, non-executive BoarddirectorsunderthePlan.Whilethey of DirectorsonMarch8,2005,grantscannotbemadeto Directors. PursuanttoanamendmentapprovedbytheBoard Company oritsaffi Eligible participantsunderthePlanareemployeesof and onMarch4,2008. amended onApril28,1998,21,2005,24,2007 approved bytheCompanyShareholdersonMay7,1996and of options Shares issuedfollowingtheexercise Options issuableunderthePlan and outstanding Options alreadygranted Sean Finn Jean-Jacques Ruest Keith E.Creel Luc Jobin Claude Mongeau NAME made inFebruary 2012,basedonthe20-dayaverageclosingsharepriceendingJanuary31,2012(C$78.14/US$77.31). factor of122.6%andbytheclosingpricecommonsharesonDecember31,2011TSX(C$80.15).Asprovidedunder January 31,2011undertheVoluntary IncentiveDeferralPlan.TheRSUvaluesincludedinthetablehavebeencalculatedbymult realized. Theactualgains,ifany, willdependonthevalueofcommonsharesdateexercise. converted toCanadiandollarswhenapplicableusingtheexchangerateonsuchvestingdate(see“CurrencyExchangeInformation” the Plan).Thepotentialgainsarecalculatedasdifferencebetweenclosingpriceofcommonsharesoneacho year. Thesegrantsallvestoverfouryears,with25%ofoptions vesting oneachanniversarydate(seesection“ManagementLong liates as determined by the Board of liatesasdeterminedbytheBoardof 328939.83 2.36 43,278,983 10,413,189 ,0,2 1.43 6,307,828 # COMMON SHARES % OFOUTSTANDING Plan COMMON SHARES ”) was ”) was AWARDS –VALUE VESTED DURING OPTION-BASED ,9,0 ,3,3 605,115 713,947 2,112,055 3,439,237 3,930,556 3,930,556 1,095,602 1,426,095 1,791,834 nancialyearendingonDecember31,2011. 5,8 8,3 650,766 694,992 982,639 1,737,190 450,984 464,560 THE YEAR circumstances, uponthedeath of theholdersuchoptions. 1% limitation.Optionsarenon-transferable except,incertain table, thenumberofstockoptions grantediswellbelowthe the beginningofthatyear. Asdemonstrated intheprevious year islimitedto1%oftheoutstandingcommonsharesat regard towhichawardsmaybemadeduringacalendar amendment, themaximumnumberofcommonshareswith issued andoutstanding.AlsopursuanttotheMarch8,2005 may eventuallyhave,shallnotexceed5%ofthecommonshares the PlanandunderanyotherplanwhichCompanyhasor regard towhichawardsmaybemadeanyparticipantunder The maximumaggregatenumberofcommonshares,with in aparticularyearis20%oftheawardsthatyear. and/or bethesubjectofagranttoanyoneparticipant The maximumnumberofcommonsharesthatmaybeissued Plan asatDecember31oftheyearsindicatedbelow. options grantedundertheManagementLong-Term Incentive The followingtablepresentsinformationconcerningstock (C$) Number ofstockoptionsexercised as a%ofoutstandingshares Number ofstockoptionsgranted of stockoptionsoutstanding Weighted averageexerciseprice as ofyear-end Number ofstockoptionsoutstanding granted stockoptions Number ofemployeeswhowere Number ofstockoptionsgranted 1 2 (3) (2) (1) AWARDS –VALUE ption grant anniversary dates in 2011 and the exercise price, ption grantanniversarydatesin2011andtheexerciseprice, VESTED DURING iplying the number of units granted by the performance vesting iplying thenumberofunitsgrantedbyperformancevesting 8, 2009and2010thathavevestedduringthe2011fi -Term IncentivePlan”startingonpage60foradescriptionof y-matched deferredshareunitsthatvestedon SHARE-BASED on page 68). This value has not been, and may never be, onpage68).Thisvaluehasnotbeen,andmayneverbe, plan, the actual payout to the eligible executives was plan,theactualpayouttoeligibleexecutiveswas THE YEAR (C$) ,0,1 3,356,150 2,609,918 8,849,585 6,872,390 $08 C$34.30 C$40.80 4,4 743,100 646,340 nancial year ended nancialyearended .5 0.16% 0.15% 012010 2011 9 194 195 COMPENSATION –VALUE EARNED DURING INCENTIVE PLAN INCENTIVE PLAN NON-EQUITY THE YEAR nancial nancial (C$) g ii iii. ii. i. Company shallobtainshareholderapprovalfor: options underthePlan(“ Plan oramendthetermsofanythenoutstandingaward of theprovisionsPlanorsuspendterminate with applicablelegislationandregulations,mayamendany Plan orpursuanttoaspecifi the BoardofDirectorsorCommittee,asprovidedin provisions tothePlan.Suchamendmentstatethat ordinary resolutionconfi At the2007annualmeeting,shareholdersapprovedan STOCK OPTIONFEATURES Conditions Termination Ten years Vesting Criteria Option Period Atleastequaltotheclosingsharepriceofcommon Samecurrencyastherecipient’ssalary Exercise Price Grant Currency by willorpursuanttosuccession laws(estatesettlements); under thePlantobetransferable orassignableotherthan any amendmentwhichwouldpermitOptiongranted directors tobeeligiblefornewawardsunderthePlan; any amendmentwhichwouldallownon-employee by theCompany(a“ action ofasimilarnatureaffectingsuchsharesistaken converted orreclassifi the eventthatsuchsharesaresubdivided,consolidated, shares issuableunderthePlan,exceptforadjustmentsin any amendmenttothemaximumnumberofcommon currency) onthegrantdate. shares ontheTSXorNYSE(dependinggrant the Committee. the Committee. These conditionsaresubjecttothediscretionof Intheeventnon-compete,non-solicitation, • Intheeventofaparticipant’sdeath,allavailable • Inthecaseofretirement,optionsarecancelledthree • Intheeventthataparticipant’semploymentis • Stockoptionsshallbecancelleduponthe • Since2005,grantshavebeenofconventional • Optionsmaybecomeexercisableontheanniversary • and cancelled. and cancelled. are breached,theoptionsshallbeforfeited confi a periodoftwelvemonths. options maybeexercisedbytheestatewithin years aftertheretirementdate. participant’s employment. cancelled threemonthsafterterminationofthe all stockoptionsheldbysuchparticipantshallbe terminated bytheCompanyotherthanforcause, employment. cause oriftheparticipantvoluntarilyterminates termination ofaparticipant’semploymentfor options vestingoneachanniversary. options, whichvestoverfouryears,with25%of established foreachgrant. performance targets(“performanceoptions”)as date (“conventionaloptions”)and/oruponmeeting rming the addition of new amendment rmingtheadditionofnewamendment dentiality or other conditions of the grant dentialityorotherconditionsofthegrant Options Share Adjustment ed by the Company or that any other edbytheCompanyorthatanyother c delegation and in accordance cdelegationandinaccordance ”) provided,however, thatthe ”); on page47formoredetailssuchamendment. reason. Pleasereferto“ChangeofControlProvisions” participant isterminatedwithoutcauseorresignsforgood would notaccelerateuponaChangeofControl,unlessthe of non-performance-basedoptionsheldbyaparticipant provided thatapropersubstituteisgranted,thevesting a “doubletriggerprovision”.Pursuanttosuchprovisions, On March4,2008,thePlanwasamendedtoinclude the Plan. participants shallthenhaveterminatedinaccordancewith previously grantedunderthePlan,unlessrightsof concerned, affectthetermsandconditionsofOptions the writtenconsentordeemedofparticipants No amendment,suspensionorterminationshall,exceptwith ix. b. a. viii. vii. vi. v. iv. which ismorefavourabletoparticipants. and anyamendmenttoafi the additioninPlanofanyformfi that maybeissued: any increasetothemaximumnumberofcommonshares extension duetoablackoutperiod; beyond theoriginalexpirydate,exceptincaseofan any extensiontothetermofanoutstandingOption a ShareAdjustment; granted tothesameparticipant,exceptincaseof Option byanewwithreducedexerciseprice cancellation ofanOptionandthesubstitutionthat the Optionhasbeengrantedtoaparticipantorany any reductionintheexercisepriceofanOptionafter consideration isreceivedbytheCompany; participants receivingcommonshareswhilenocash unit provisionsoranyotherwhichresultin the additioninPlanofdeferredorrestrictedshare Plan reserve; deduction ofthenumberunderlyingsharesfrom cash orcommonshares,whichdoesnotprovideforafull the additionofacashlessexercisefeature,payablein participant; and under thePlanandanyotherplantoone calendar year;or under thePlantoanyoneparticipantduring nancial assistance provision nancialassistanceprovision nancial assistance nancialassistance

61 CN MANAGEMENT INFORMATION CIRCULAR 62 CN MANAGEMENT INFORMATION CIRCULAR into deferredshareunits(“ eligible incentiveplan(asapprovedbytheBoardofDirectors) annual bonus,RSUpayoutsandotheramountspaidunderan management employeestoelectdeferup100%oftheir Deferral Plan.ThisplanallowsNEOsandothersenior The Companyintroduced,in2002,itsVoluntary Incentive Deferred CompensationPlans their futurereturnstothesharepriceperformance. executives toincreasetheirstakeintheCompany, linking company-match, thisplanprovidesanopportunityfor Because ofitstaxeffectivenessandtheadditional executive’s irrevocableelection. instalments notexceedingtenyears,inaccordancewiththe after asix-monthwaitingperiodinlumpsumormonthly amounts deferredorvestedafterDecember31,2004ismade tax payers,incompliancewithU.S.regulations,paymentof made inalumpsumfollowingthetermination.For eligibleU.S. the deferralperiod.Payment foreligibleCanadianexecutivesis deferred shareunitsaswellaccruednotionaldividendsover termination dateandincludesthevestedcompany-matched on the20-dayaverageclosingsharepriceatretirementor The payoutofthedeferredshareunitsisestablishedbased year) fromthedeferraldate. deferred shareunitsvestoveraperiodoffouryears(25%per the numberofdeferredshareunits.Thesecompany-matched The Companyalsocreditsacompanymatchequalto25%of suffi value oftheparticipant’svesteddeferredshareunitaccountis deferred shareunitsisnotavailabletoaparticipantwhenthe words, theelectiontoreceiveeligibleincentivepaymentsin Company” onpage47foradetaileddescription).Inother Ownership” under“OtherKey CompensationPolicies ofthe under theStockOwnershipguidelines(seesectionon“Stock defer toDSUsisequivalenttheirownershiprequirement incentive plan.Themaximumtotalamountparticipantscan six monthspriortotheendofperformanceperiod average closingshareprice.Deferralelectionsaremadeatleast into anumberofunitsatthedeferraldate,using20-day Company’s commonshares.Theamountdeferredisconverted deferred shareunits,whencashdividendsarepaidonthe earns notionaldividends,whicharere-investedintoadditional unit isequivalenttoacommonshareoftheCompanyand retirement orterminationofemployment.Adeferredshare cienttomeettheCompany’sstockownershipguidelines. DSUs ”) payable in cash upon ”) payableincashupon • • policies astheotherexecutivesexceptforfollowing: eligible forthesamecompensationandbenefi performance andmarkettrends.ThePresidentCEOremains as partoftheannualcompensationreviewprocess,basedon For 2011,Mr. Mongeau’ssalarywasincreasedto US$975,000, CEO isnotforafi Mr. Mongeau’semployment.Mr. Mongeau’semploymentas at itsApril20,2009meeting,thetermsandconditionsof upon therecommendationofCommittee,approved, Company effectiveJanuary1,2010.TheBoardofDirectors, Claude MongeauwasappointedPresidentandCEOofthe Arrangements Employment Contracts/ amendment oftheplans. plans canbemade,unlesstheBoardofDirectorsapprovesan No modifi be madeunderthisplan. their retirementorterminationdate.Noadditionalawardsmay These awards,whichvestedinJanuary2001,arepayableupon past awardsmadeundertheSeniorExecutiveBonusSharePlan. Certain executivesholddeferredshareunitsinaccordancewith employment whicharealldescribedinthisInformationCircular. provided appointmentletterssettingforthgeneraldetailsof agreements withtheotherNamedExecutiveOffi The Companyhasnotenteredintoformalemployment • • Plan Benefi retirement iscappedatUS$1,000,000.Seealsothe“Pension the annualpensionbenefi The supplementalpensionplanremainsineffect,but 120% ofbasesalarywithapayoutrangingfrom0%to240%. Under theAnnualIncentiveBonusPlan,histargetpayoutis public companyboard. Mr. Mongeauislimitedtoparticipatinginonlyoneoutside for oneyearafterretirement. He isalsorequiredtomaintainthisstockownershiplevel stock ownershipequivalenttofi Mr. Mongeauisrequiredtomaintainaminimumlevelof cation to the nature of the deferrals under both cationtothenatureofdeferralsunderboth ts”sectionofthisInformationCircular. xedterm;heservesatthewillofBoard. t payable under this plan upon tpayableunderthisplanupon vetimeshisannualsalary. t plans and tplansand cers. It has only cers.Ithasonly the numberofyearspensionable service(maximum35years). and SMPP(approximatelyC$134,523 in2011),multipliedby earnings thatresultinthemaximum pensionundertheCNPP employee’s highestaverageearnings inexcessoftheaverage The annualamountpayableundertheSRSequals2%of SRS agreement. Messrs. Mongeau,RuestandFinnhaveeachsignedan Retirement Stipend(“SRS”). supplemental executiveretirementprogramcalledtheSpecial and non-solicitationclauses,participateinanon-registered, an agreement,whichincludesconfi Executives andseniormanagementemployeeswhoenterinto SPECIAL RETIREMENTSTIPEND participation begins. Company consent.Retirementbenefi eligible toreceiveanimmediate,unreducedpension,subject is age55oroveratthetimeofretirement,participant years ofpensionableserviceisatleast85andtheparticipant Under bothplans,ifthesumofparticipant’sageand - plus - 2011 andiscalculatedasfollows: to amaximumofC$2,552peryearpensionableservicefor annual retirementbenefi Bonus Plan,uptotheemployee’stargetlevel.Theaggregate bonuses paidbytheCompanyunderAnnualIncentive pensionable earningsincludebasesalary, overtime,and earnings consistofbasesalaryandovertime.UndertheSMPP, years, whicheverisgreater. UndertheCNPP, pensionable compensated serviceorthebestfi average pensionableearningsduringthelast60monthsof earnings. Highestaverageearningsaredefi based onpensionableyearsofserviceandhighestaverage pension plansdesignedtoprovideretirementbenefi and SMPP, whicharefederally-registered defi Messrs. Mongeau,RuestandFinnparticipateintheCNPP MANAGEMENT PENSIONPLAN(“SMPP”) CN’S PRINCIPAL ANDSENIOR PENSIONPLAN(“CNPP”) Other RetirementArrangements Canadian Pension Plansand Pension PlanBenefi (maximum 35years). multiplied bythenumberofyearspensionableservice 2.0% ofhighestaverageearningsinexcesstheYMPE, of pensionableservice(maximum35years) the CanadaPension Plan,multipliedbythenumberofyears maximum pensionableearnings(“ 1.7% ofhighestaverageearningsuptotheyear’s t payable under both plans is subject tpayableunderbothplansissubject ts ve consecutive calendar veconsecutivecalendar dentiality, non-compete YMPE ts vest immediately when tsvestimmediatelywhen ”) asdefi ned as the nedasthe nedbenefi ned under nedunder ts ts t US$1,000,000 (C$1,017,000). US$1,000,000 (C$1,017,000). Mr. Mongeau’sannualbenefi a letterofcredit. benefi service fortwoyearsanduntiltheageof55.SRSretirement benefi entered intoanSRSagreementonorafterJuly1,2002,the prior toJuly1,2002vestaftertwoyears.For employeeswho SRS benefi set outintheagreement. immediate, unreducedSRSbenefi the timeofretirement,participantiseligibletoreceivean service isatleast85andtheparticipantage55orover If thesumofparticipant’sageandyearspensionable employee’s targetlevel. Company undertheAnnualIncentiveBonusPlan,upto Earnings consistofbasesalaryandbonusespaidbythe AND SENIORMANAGEMENT(“DCPP”) DEFINED CONTRIBUTIONPENSIONPLANFOREXECUTIVES service asfollows: The contributionpercentageforexecutivesdependsonageand (C$22,970 in2011). to themaximumcontributionimposedby and theCompanycontributessamepercentage,subject percentage oftheirpensionableearningsintoaccount Executives participatingintheDCPPcontributeaspecifi automatically jointheDCPP. management employeeshiredonorafterJanuary1,2006 elected toremainintheCNPPandSMPP. Executivesandsenior SMPP mentionedabove.Messrs.Mongeau,RuestandFinn either jointheDCPPormaintainparticipationinCNPPand hired priortoJanuary1,2006hadaone-timeopportunity the samedate.Executivesandseniormanagementemployees a separatedefi employees otherthanexecutivesandseniormanagement, management employeesonJanuary1,2006.For non-unionized pension planthatwasintroducedforexecutivesandsenior The DCPPisafederally-registered defi Mr. JobinparticipatesintheDCPP. 05 8% 9% 6% 60 andabove %OFPENSIONABLEEARNINGS 50–59 7% 40–49 Up to39 POINTS (SUMOFAGEANDSERVICE) ts are paid out of operating funds and secured through tsarepaidoutofoperatingfundsandsecuredthrough tsbecomevestedonlyiftheemployeeremainsinactive ts for employees who entered into an SRS agreement tsforemployeeswhoenteredintoanSRSagreement ned contribution plan was also introduced on nedcontributionplanwasalsointroducedon t under the SRS shall not exceed tundertheSRSshallnotexceed t, subject to the conditions t,subjecttotheconditions ned contribution nedcontribution Income Tax Act c

63 CN MANAGEMENT INFORMATION CIRCULAR 64 CN MANAGEMENT INFORMATION CIRCULAR benefi or 30yearsofRailroadRetirement Boardservice.Retirement 65 orage60iftheemployeehas 30yearsofcreditedservice The retirementbenefi Code and arecappedattheaverageofU.S. Pensionable earningsconsistofbasesalaryandovertime months inthelast120fullconsecutiveofemployment. pensionable earningsduringthebest60fullconsecutive Highest averageearningsaredefi credited service(maximum35years). (C$78,533 in2011)multipliedbythenumberofyears Railroad RetirementBoardaveragecoveredcompensation earnings plus0.3%ofhighestaverageinexcess provide retirementbenefi This qualifi DEFINED BENEFITPENSIONPLAN Mr. CreelparticipatesinthefollowingU.S.pensionplans: U.S. Pension PlansandOtherRetirementArrangements accruing asoftheeffectivedate. covenants asaconditionofpaymentretirementbenefi certain confi Effective January1,2011,theDCSERPwasamendedtoinclude employment termination. DCPP. Nowithdrawalsordistributionsarepermittedpriorto same investmentoptionsasselectedbytheparticipantin Notional contributionsaccrueinvestmentcreditsusingthe do notcontributetotheDCSERP. contributions vestaftertwoyearsofemployment.Employees to anotionalaccountundertheDCSERP. Thesenotional in excessofthelimitisgraduallycreditedbyCompany an amountequaltoemployerandemployeecontributions employees withretirementbenefi plan designedtoprovideexecutivesandseniormanagement The DCSERPisanon-registereddefi Mr. JobinparticipatesintheDCSERP. RETIREMENT PLAN(“DCSERP”) DEFINED CONTRIBUTIONSUPPLEMENTAL EXECUTIVE employment termination. No withdrawalsordistributionsarepermittedpriorto in variousinvestmentfundsasselectedbytheparticipant. target level.Allcontributionsvestimmediatelyandareinvested under theAnnualIncentiveBonusPlanuptoemployee’s Pensionable earningsinclude basesalaryandbonusespayable reached thelimitprescribedby other words,foreachcalendaryear, oncecontributionshave Tax Act limit,overthelastfi tsvestafterfi limits applicable to the DCPP described above. In limitsapplicabletotheDCPPdescribedabove.In eddefi dentiality, non-compete,non-solicitationandother nedbenefi veyearsofemployment. t is payable without reduction at age tispayablewithoutreduction at age ts equal to 0.4% of highest average tsequalto0.4%ofhighestaverage ve years (C$242,046 in 2011). veyears(C$242,046in2011). t pension plan is designed to tpensionplanisdesignedto ned as the average nedastheaverage tsinexcessofthe Income Tax Act ned contribution pension nedcontributionpension Internal Revenue Internal Revenue intheDCPP, Income Income ts ts accruing asoftheeffectivedate. covenants asaconditionofpaymentretirementbenefi certain confi Effective July15,2010,theSERPwasamendedtoinclude delay. Retirementbenefi vested priortoJanuary1,2005arenotsubjectthesix-month or terminationofemployment.Retirementbenefi retirement ages,butnoearlierthansixmonthsafter their lifetimepensionbenefi Participants haduntilDecember31,2008toelectreceive service or30yearsofRailroadRetirementBoardservice. at age65or60iftheparticipanthas30yearsofcredited Generally, theSERPpensionbenefi and untiltheageof55. only iftheemployeeremainsinactiveserviceforfi the planonorafterJuly1,2002,SERPbenefi July 1,2002vestafterfi SERP benefi (iii) theU.S.RailroadRetirementBoardTier2pension;and (ii) thepensionpayableunderDefi (i) to theemployee’stargetlevel.TheSERPpensionisoffsetby: by theCompanyunderAnnualIncentiveBonusPlan,up employment. Earningsconsistofbasesalaryandbonusespaid consecutive monthsinthelast120fullof as theaveragepensionableearningsduringbest60full offsets describedbelow. Highestaverageearningsaredefi of yearscreditedservice(maximum35years)minusthe 2% ofhighestaverageearnings,multipliedbythenumber management employeeswithretirementbenefi pension plan.Itisdesignedtoprovideexecutivesandsenior The SERPisanon-qualifi SUPPLEMENTAL EXECUTIVERETIREMENTPLAN(“SERP”) in various investment funds as selected by the participant. in variousinvestmentfundsasselectedbytheparticipant. immediately andfullyvesteduponcontributionareinvested fi Company. Thematchingcontributionislimitedto50%ofthe Code subject tolimitationsimposedbytheU.S. make voluntary“pre-tax”contributionstotheSavingsPlan The SavingsPlanisaqualifi QUALIFIED SAVINGS PLAN(“SAVINGS PLAN”) rst6%oftheemployee’spre-taxsalary. Allcontributionsare available undertheSavingsPlandescribedbelow. with the3%maximumemployermatchingcontributions the amountofasinglelifeannuitythatcanbepurchased . The voluntary contributions are partially matched by the . Thevoluntarycontributionsarepartiallymatchedbythe ts for employees who joined the plan prior to tsforemployeeswhojoinedtheplanpriorto dentiality, non-compete,non-solicitationandother veyears.For employeeswhojoined ts cannot be paid earlier than age 55. tscannotbepaidearlierthanage55. ed,unfundeddefi ed401(k)plan.Participants may t at a different age than the above tatadifferentagethantheabove t is payable without reduction tispayablewithoutreduction nedBenefi nedbenefi Internal Revenue Internal Revenue ts become vested tsbecomevested ts equal to tsequalto ts accrued and tsaccruedand tPension Plan; ve years veyears t ts ts ned ned target level. target level. under theAnnualIncentiveBonusPlan,uptoemployee’s compensation consistsofbasesalaryandbonusespayable limitations imposedbytheU.S. contribution oneligiblecompensationwithoutregardtothe executives andseniormanagementemployeeswithaCompany The U.S.DCSERPisastand-aloneplan,whichprovides which complementstheDCFeature describedabove. The U.S.DCSERPisanon-qualifi RETIREMENT PLAN(“U.S.DCSERP”) U.S. DEFINEDCONTRIBUTIONSUPPLEMENTAL EXECUTIVE DC Feature ormaintainparticipationintheDefi January 1,2006hadaone-timeopportunitytoeitherjointhe on January1,2006.Non-unionizedemployeeshiredpriorto The DCFeature wasintroducedfornon-unionizedemployees DEFINED CONTRIBUTIONFEATURE (“DCFEATURE”) ceased toaccruecreditedserviceintheDefi Pension Planmentionedabove. OnJanuary1,2006,Mr. Creel to employment termination. to employmenttermination. participant. Nowithdrawalsordistributionsarepermittedprior are investedinvariousinvestmentfundsasselectedbythe after threeyearsofservicewiththeCompany. Contributions Internal RevenueCode the SavingsPlan,subjecttolimitationsimposedbyU.S. an additionalemployercontributionof3.5%basesalaryto Plan andjoinedtheDCFeature. TheDCFeature providesfor . Employer contributions are vested . Employercontributionsarevested Internal RevenueCode ed, unfunded pension plan ed,unfundedpensionplan nedBenefi nedBenefi tPension . Eligible . Eligible t service asfollows: The contributionpercentageforexecutivesdependsonageand benefi and othercovenantsasaconditionofpaymentretirement include certainconfi Effective January1,2011,theU.S.DCSERPwasamendedto in theSERPandjoinedU.S.DCSERP. On January1,2006,Mr. Creelceasedtoaccruecreditedservice or distributionsarepermittedpriortoemploymenttermination. after retirementorterminationofemployment.Nowithdrawals and benefi Contributions vestaftertwoyearsofservicewiththeCompany 05 7% 8% 5% 60 andabove %OFELIGIBLECOMPENSATION 50–59 6% 40–49 Up to39 POINTS (SUMOFAGEANDSERVICE) tsaccruingasoftheeffectivedate. ts cannot begin to be paid earlier than six months tscannotbegintobepaidearlierthansixmonths dentiality, non-compete,non-solicitation

65 CN MANAGEMENT INFORMATION CIRCULAR 66 CN MANAGEMENT INFORMATION CIRCULAR 1 Thechangeinthepresentvalueatendof 2011wasmainlyduetothedecreaseindiscountratewhichincreased (1) The followingtableprovidesthetotalpresentvalueforCN’snon-registereddefi Non-Registered PlansTable Mr. Creelparticipatesin theSavingsPlan,DCFeature andU.S.DCSERP. (4) Mr. Jobinparticipates in theDefi (3) Representsnotionalinvestmentcreditsandlosses,employeecontributions,ifany, andinvestmentgainslosses. (2) Representsemployercontributionsandnotionalcontributions. (1) Defi The tablebelowincludesamountsfromtheCompany’sregisteredandnon-registereddefi Defi Thechangeinpresentvaluethatisattributabletocompensationincludestheservicecostnetofemployeecontributions,t (1) 3 Thepresentvalueofdefi (3) Theprojectedpensionisbasedoncurrentcompensationlevelsandassumestheexecutivewillreceive80%ofhistargetbonu (2) 5 Mr. Creelnolonger accruesserviceintheDefi (5) 4 Thechangeinpresentvaluethatisnotcompensatoryincludesemployeecontributions,interestcost,assumptions (4) at www.sedar.com, andincludethevalueofactive,deferredretiredexecutiveseniormanagementmembersfor2011. page 67ofthe2011and2010AnnualReport,respectively, availableontheCompany’swebsiteatwww.cn.ca andonSEDAR These amountsweredeterminedusingthesameactuarialassumptionsasthoseusedinNote12–Pensions, onpage70and materialize. Amountsshowninthistableincludepensionbenefi at www.sedar.com. Theamountscalculatedinthistableareestimatesonlyandbasedonassumptions,whichmayornot and page67ofthe20112010AnnualReport,respectively, availableontheCompany’swebsiteatwww.cn.ca andonSEDAR The followingamountshavebeencalculatedusingthesameactuarialassumptionsasthoseusedinNote12–Pensions, onpage70 non-registered supplemental pension arrangements for 2011 and are in Canadian dollars. non-registered supplementalpensionarrangementsfor2011andareinCanadiandollars. NAME Plans inCanadaandU.S. Non-Registered Defi in CanadaandU.S. Non-Registered Defi PLANS Keith E.Creel Luc Jobin Claude Mongeau NAME Sean Finn Jean-Jacques Ruest Keith E.Creel and theimpactofplanchanges.Theservicecostnetemployeecontributionsisestimatedvalueemployerportiono in earnings.Theimpactonthepresentvalueatendof2011relatingtochangeassumptionswasmainlyduedec ned Benefi ned ContributionPlansTable (3) (4) (5) t PlansTable ned Contribution nedContribution nedBenefi nedbenefi NUMBER OF CREDITED YEARS OF SERVICE 56 0,0 0,0 ,8,0 7,0 000200130059003,275,000 509,000 183,000 2,000 8,639,000 1,600,000 10,000 274,000 1,000 171,000 2,583,000 (134,000) 407,000 407,000 6,765,000 203,000 1,157,000 15.67 470,000 17.67 t Plans tPlans .519001800166000(200 1,0)39001,953,000 359,000 (12,000) 0 (12,000) 0 1,606,000 158,000 139,000 9.75 nedContributionPension PlanandDCSERP. 828004700287001600(700 ,0 1,0 1,0 3,625,000 617,000 111,000 2,000 (57,000) 166,000 2,897,000 477,000 268,000 18 (#) tobligationisthevalueofbenefi NULBNFT AAL OPENING ANNUAL BENEFITSPAYABLE AT YEAR nedBenefi 2,0,0 258,300,000 224,400,000 PRESENT VALUE END (C$) OBLIGATION OF BENEFIT 0,0 1,400,000 900,000 OPENING ACCUMULATED VALUE tPension PlanorSERPsincehestartedparticipatingintheDCFeature and U.S.DCSERPonJanuary1,2006. AT START OFYEAR (C$) AT AGE65 8,4 03123381,064,806 337,761 203,308 15,687 80,351 142,360 781,147 179,715 (C$) (2) tsaccruedforallservicetothespecifi PRESENT VALUE (C$) OBLIGATION OF BENEFIT OBLIGATION CLOSING VALUE OF PRESENT DEFINED BENEFIT (C$) (C$) (1) tsfromtheCompany’sdefi (3) SERVICE COMPENSATORY COST AMOUNT eddate. OF SALARY/ (C$) nedbenefi COMPENSATORY CHANGE IMPACT 1 (2) (1) BONUS he increase in earnings in excess or below what was assumed he increaseinearningsexcessorbelowwhatwasassumed (C$) and gains and losses other than those resulting from a difference and gainslossesotherthanthoseresultingfromadifference present value. s fortheyearsafter2011. ned contribution plans. nedcontributionplans. tanddefi f benefi HNE TOTAL CHANGES rease inthediscountratewhichincreasedpresentvalue. nedbenefi OF PLAN OF PLAN NON-COMPENSATORY IMPACT tsaccruedduringthecalendaryear. (1) ned contribution plans. nedcontributionplans. AMOUNT t registered pension plans and tregisteredpensionplansand (C$) PENSATORY NON-COM- CHANGE ACCUMULATED VALUE (C$)

4 (3) (4) AT YEAREND OBLIGATION VALUE OF PRESENT DEFINED CLOSING BENEFIT (C$) (C$)

Severance entitlementpayable to theNEOswouldgenerallybedeterminedinaccordancewith applicablelegalrequirements. Intheeventofresignation,involuntarytermination,retirementorchangecontrol,payment ofawardsorvestedbene (1) in thecompensationplans,andsummarizedasfollows: retirement, changeofcontrolorainresponsibilitiesNamedExecutiveOffi The Companydoesnothavecontractualarrangementsorotheragreementsinconnectionwithtermination,resignation, Termination andChangeofControlBenefi Bonus Plan Incentive Annual Share Units Deferred Shares Units Restricted Options Stock Pension Plans Registered Arrangements Plans and Pension Non-Registered non-disclosure ofconfi (1) (1) (1) vested benefi Payment of cancelled All RSUsare CHANGEOFCONTROL cancelled options are RETIREMENT All stock INVOLUNTARY TERMINATION RESIGNATION the plan eligibility to Forfeits matched DSUs company- the vested including vested units, Payment ofall vested benefi Payment of dentialinformationprovisionsaspertherespective planrulesandarrangements. ts ts ts ts Payment ofvestedbenefi plan period on activeserviceduringthe criteria metandproratedbased Partial payoutifperformance forfeited otherwise months or within three vested options Exercise of months vesting forthree Continued 2009 before January Grants made active serviceinplanyear performance andproratedon on corporateandindividual Entitled toabonusbased matched DSUs including thevestedcompany- Payment ofallvestedunits, Payment ofvestedbenefi forfeited otherwise months or within three vested options Exercise of three months vesting for Continued provisions confi and non-solicitation non-compete, respect of2-year Subject to 2009 since January Grants made dentiality dentiality t Payment ofvestedbenefi ts t Payment ofvestedbenefi ts which thegrantwasmade until thelastdayofyearin in continuousandactiveservice met andiftheexecutiveremains Full payoutifperformancecriteria forfeited otherwise years or within three vested options Exercise of years vesting forthree Continued 2009 before January Grants made active serviceinplanyear performance andproratedon on corporateandindividual Entitled toabonusbased matched DSUs including thevestedcompany- Payment ofallvestedunits, ts ts was made which thegrant of theyearin until thelastday active service continuous and remains in the executive only applyif above conditions Since 2011,the forfeited otherwise years or within three vested options Exercise of years vesting forthree Continued provisions confi and non-solicitation non-compete, respect of2-year Subject to 2009 since January Grants made dentiality dentiality t Payment ofvestedbenefi ts t Payment ofvestedbenefi ts cer, otherthantheconditionsprovided fi ts is subject to certain non-compete, non-solicitation and tsissubjecttocertainnon-compete,non-solicitation and options conventional vesting of Immediate 2008 prior toMarch4, Grants made Change inControl reason withintwoyearsofthe without causeorresignsforgood only ifparticipantisterminated immediate vestingwouldoccur If propersubstituteisgranted, No specifi company-matched DSUs Immediate vestingofunvested cpoiinForfeits cprovision of Control the Change two yearsof reason within for good or resigns without cause terminated participant is occur onlyif vesting would immediate is granted, substitute If proper 2008 since March4, Grants made t Payment ts t Payment of ts FOR CAUSE TERMINATION cancelled options are All stock are forfeited benefi except forSRS benefi of vested cancelled All RSUsare the plan eligibility to matched DSUs company- the vested including vested units, Payment ofall vested benefi ts which tswhich ts, ts ts

67 CN MANAGEMENT INFORMATION CIRCULAR 68 CN MANAGEMENT INFORMATION CIRCULAR to Canadiandollarsusingthefollowingcurrencyexchangerates: Compensation disclosedinthesection“StatementofExecutiveCompensation”thatispaidU.S.dollarswasconverted Currency ExchangeInformation AnNEOwouldbeeligibletoimmediatevestingoftheunvestedcompany-matched deferredshareunitsallocatedtoanexecutiv (3) NEOswouldbeeligibletoimmediatevestingfollowingachangeofcontrolforoptionsgrantedin2008.Thevalueshownise (2) AnNEOwouldbeeligibletoimmediatevestingonlyifnopropersubstituteisgranted,ortheexecutiveterminatedwi (1) CHANGE OFCONTROL December 31,2011. The followingtableshowstheincrementalbenefi Change ofControl plans underwhichtheyweregranted,asdescribedinthesummaryTermination andChangeofControlBenefi amounts wouldbepayable.Share-basedawards,option-basedawardsandotherbenefi On December31,2011,Mr. RuestwastheonlyNEOeligibleforretirement.HadheretiredonDecember31,2011,noincremental Retirement Control Benefi treated asperthetermsofplansunderwhichtheyweregranted,describedinsummaryTermination andChangeof requirements. Noincrementalamountswouldbepayable.Share-basedawards,option-basedawardsandotherbenefi In theeventofaninvoluntarytermination,NEOwouldreceiveaseveranceamountgenerallyinlinewithapplicablelegal Involuntary Termination enFn 2,8 325,481 464,972 258,942 0 464,972 0 258,942 Option-based awards–Value vestedduringtheyear • 0 Termination scenarios–incrementalcosts • 325,481 Non-equity incentiveplancompensation–Value earned during theyear • Market valueofshare-basedawardsthathavenotvested • 0 Value ofunexercisedin-the-moneyoptions • • Pension value 464,972 Annual incentivebonusplan • 0 464,972 Allothercompensation • • Salary 0 0 0 0 Sean Finn Jean-Jacques Ruest Keith E.Creel Luc Jobin Claude Mongeau NAME multiplied bytheclosingsharepriceofcommonsharesonDecember31,2011(C$80.15). (see page62,section“DeferredCompensationPlans”foradescriptionoftheVoluntary IncentiveDeferralPlan).Thevalueshow cause orresignsforgoodreasonwithintwoyearsofthechangecontrol. dollar denominatedoptions.For stockoptionsgrantedsinceMarch4,2008,immediatevestingwouldoccuronlyifnopropersubs difference betweentheclosingpriceofcommonsharesonDecember31,2011andexerciseprice,convertedusingDece change ofcontrol. tstableonpage67. ts that NEOs would have been entitled to had there been a change of control on tsthatNEOswouldhavebeenentitledtohadthereachangeofcontrolon SHARE UNITS RESTRICTED (C$) 1 2 (3) (2) (1) eebr3 eebr3,21: 1.0170 January25,2007 • June11,2007 December31,2011: • January 24,2008 • January 26,2009 • June1, 2009 • January 28,2010 • Actual vestingdateofthegrantsmadeon: 0.9891 ActualrateUS$1= C$X December 31 1.0170 2011: December31,2011: When bonusisearned(i.e.December31) Average rateduringtheyear Exchange rateused 1,3 118,838 0 118,838 OPTIONS STOCK (C$) thout cause or resigns for good reason within two years of the thout causeorresignsforgoodreasonwithintwoyearsofthe ts will be treated as per the terms of the tswillbetreatedasperthetermsof qual to the number of options that would vest multiplied by the qual tothenumberofoptionsthatwouldvestmultipliedby n is equal to the number of deferred share units that would vest n isequaltothenumberofdeferredshareunitsthatwouldvest e following the deferral of compensation in previous years e followingthedeferralofcompensationinpreviousyears titute is granted, or if the executive is terminated without titute isgranted,oriftheexecutiveterminatedwithout mber 31, 2011 (US$1 = C$1.0170) exchange rate for U.S. mber 31,2011(US$1=C$1.0170)exchangerateforU.S. aur 5 01 0.9976 0.9783 0.9946 January 25,2011: 0.9757 0.9953 June 11,2011: January 24,2011: 1.0011 January 26,2011: June 1,2011: January 28,2011: eebr3,20: 1.0510 0.9946 December 31,2009: 1.1420 December 31,2010: 1.0299 1.0510 0.9946 December 31,2009: December 31,2010: 2009: 2010: SHARE UNITS DEFERRED (C$) ts table on page 67. tstableonpage67. ts will be tswillbe TOTAL (C$) offi 12 monthsendingSeptember30, 2012.Thedirectorsand December 31,2011wasapproximately C$143,500forthe such excessliabilityinsurancein thefi C$25,000,000 inexcessofthe above. Thepremiumpaidfor insurance fornon-indemnifi The Companyalsocarriesexcessdirectorsandoffi C$1,647,121 forthe12monthsendingSeptember30,2012. fi incurred bytheminsuchcapacity. Thepremiumpaidinthe and offi C$1,000,000 toC$2,500,000,fortheprotectionofdirectors with adeductibletotheCompanywhichvariesfrom insurance intheannualaggregateamountofC$200,000,000, The Companyhaspurchased,atitsexpense,groupliability Directors’ andOffi or anyofitsaffi has materiallyaffectedorwouldaffecttheCompany completed fi since thecommencementofCompany’smostrecently of anyinformedpersonorproposeddirectorintransaction Company, anyproposeddirectororassociateaffi interest, directorindirect,ofanyinformedpersonthe The managementoftheCompanyisnotawareanymaterial Others inMaterialTransactions Interest ofInformedPersons and of theCompanyorotherwise. entered intoinconnectionwiththepurchaseofcommonshares employees oftheCompanyanditssubsidiaries,whether indebtedness ofcurrentandformerdirectors,offi As ofFebruary 29,2012,therewasnooutstanding Executive Offi Indebtedness ofDirectorsand Incentive Plan. The tablebelowindicates,asatDecember31,2011,certaininformationwithrespecttotheCompany’sManagementLong-Term Securities AuthorizedforIssuanceUnderEquityCompensationPlans OTHER INFORMATION nancial year ending December 31, 2011, was approximately nancialyearendingDecember31,2011,wasapproximately Total by securityholders Equity compensationplansnotapproved by securityholders Equity compensationplansapproved CATEGORY PLAN cersexcessliability insuranceisnotsubjecttoany deductible. cers of the Company and its subsidiaries against liability cersoftheCompanyanditssubsidiariesagainstliability nancialyear, orinanyproposedtransaction,that liatesorsubsidiaries. cers able claims in the amount of ableclaimsintheamountof cers’Insurance nancial year ending nancialyearending cers and cersand cers liability cersliability NUMBER OFSECURITIESTOBE OF OUTSTANDING OPTIONS, WARRANTS ANDRIGHTS WARRANTS ISSUED UPONEXERCISE liate liate ,7,9 08 10,990,999 10,990,999 40.80 40.80 6,872,390 6,872,390 in theInformationCircularforsuchannualmeeting. the CompanynolaterthanDecember14,2012,tobeincluded meeting ofshareholdersmustbereceivedattheheadoffi Shareholder proposalstobeconsideredatthe2013annual Shareholder Proposals March 13,2012 AND CORPORATE SERVICES ANDCHIEFLEGALOFFICER EXECUTIVE VICE-PRESIDENT Sean Finn to theshareholders. the contentsofthisInformationCircularanditssending The BoardofDirectorstheCompanyhasapproved Approval Corporate SecretaryoftheCompany. at www.sec.gov, ormaybeobtainedonrequestfromthe are availableonSEDARatwww.sedar.com andonEDGAR documents andadditionalinformationrelatingtotheCompany its mostrecentlycompletedfi statements andmanagement’sdiscussionanalysisfor information isprovidedintheCompany’scomparativefi annual informationformandfi States andisrequiredtofi The CompanyisareportingissuerinCanadaandtheUnited Availability ofDocuments i i Nil Nil Nil CORPORATE SECRETARY PRICE OFOUTSTANDING OPTIONS, WEIGHTED-AVERAGE EXERCISE WEIGHTED-AVERAGE WARRANTS ANDRIGHTS WARRANTS le various documents, including an levariousdocuments,includingan nancialyear. Copiesofthese (C$) nancial statements. Financial nancialstatements.Financial REFLECTED INTHEFIRSTCOLUMN) EQUITY COMPENSATION PLANS REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER (EXCLUDING SECURITIES NUMBER OFSECURITIES nancial nancial ce of ceof

69 CN MANAGEMENT INFORMATION CIRCULAR 70 CN MANAGEMENT INFORMATION CIRCULAR . ApprovingCN’sstrategy A. following responsibilities: management onsignifi As partofitsstewardshipresponsibility, theBoardadvises as necessary. Meetings oftheBoardareheldatleastninetimesayearand on DelegationofAuthority, asamendedfromtimetotime. matters tomanagementpursuantitsStandingResolutions approval. TheBoardhasdelegatedtheapprovalofcertain committee recommendationsaregenerallysubjecttoBoard is responsiblefor, orasrequiredbyapplicablelaws.Board assign toBoardcommitteesthepriorreviewofanyissuesit legislation andCN’sArticlesBy-laws. TheBoardmay the The Boardapprovesallmattersexpresslyrequiredherein,under the day-to-day operationsinawaythatwillmeetthisobjective. increasing shareholdervalue.Management’sroleistoconduct management ofCN’sbusinessandaffairs,withtheobjective management. TheroleoftheBoardistosupervise The Boardhasclearlydelineateditsroleandtheof MANDATE OFTHEBOARD SCHEDULE “A” – B. • • • • of executivemanagement Assessing andoverseeingthesuccessionplanning Canada BusinessCorporationsAct by management. and monitoringtheimplementationofbusinessplan other things,theopportunitiesandrisksofbusiness, a strategicframeworkwhichtakeintoaccount,among reviewing, onatleastanannualbasis,abusinessplanand adopting astrategicplanningprocess,approvingand of integrityaswellcompetence. retention ofexecutiveswhoexhibit thehigheststandards in placefortherecruitment,training, developmentand taking allreasonablestepstoensure thatprocessesare the short-andlonger-term performanceofCN; and executivemanagementcompensationistiedtoboth ensuring thatanappropriateportionofPresidentandCEO management compensation; approving annuallyPresidentandCEOexecutive President andCEO’scorporategoalsobjectives Board expectationsandfi management performancetakingintoconsideration and monitoringPresidentCEOexecutive “ choosing thePresidentandChiefExecutiveOffi President andCEO cant business issues and has the cantbusinessissuesandhasthe ”), appointing executive management ”), appointingexecutivemanagement xed objectives, approving the xedobjectives,approvingthe and other applicable and otherapplicable cer (the cer(the C. D. • • • • • • • • Monitoring CorporateGovernanceissues • Monitoring fi • • or withthenon-managementdirectorsasagroup. parties tocommunicatedirectlywiththeBoardChair 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 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 a cultureofintegritythroughoutCN; integrity ofmanagementandthatcreates taking allreasonablemeasurestosatisfyitselfasthe favour effectivedecision-making; monitoring thesizeandcompositionofBoardto (i) information systems,includingbyoverseeing: and procedures,internalcontrolsmanagement and fi monitoring thequalityandintegrityofCN’saccounting (iv) (iii) (ii) monitoring CN’sinvestorrelations programs. adopting communicationsand disclosure policiesand of CN’sbusiness; in placetoidentify, assessandmanagetheprincipalrisks ensuring thatanappropriateriskassessmentprocessis the integrityandqualityofCN’sfi appropriateness oftheirdisclosure; statements andotherfi safety andsecurity); requirements (includingthoserelatedtoenvironment, CN’s compliancewithapplicablelegalandregulatory of CN’sexternalauditors;and the performanceofCN’sinternalauditfunctionand auditors’ independenceandqualifi the reviewofAuditCommitteeonexternal nancial reporting systems, disclosure controls nancialreportingsystems,disclosurecontrols nancial mattersandinternalcontrols llingBoardvacancies; nancial information and the nancialinformationandthe nancialoffi nancial nancial cations; cers and ensuring cersandensuring cers, other cers,other E. .F. The Boardannuallyreviewstheadequacyofitsmandate. CEO orothercorporateoffi available toprovideadviceandcounselthePresident all meetingmaterialsinadvance.Theyarealsoexpectedtobe and activelyparticipateinsuchmeetings.Theyshouldreview committees onwhichtheysitandtorigorouslypreparefor expected toattendthemeetingsofBoardand professionalism indischargingtheirresponsibilities.Theyare Board membersareexpectedtodemonstrateahighlevelof including onlyIndependentdirectorsisheldregularly. directors whoarenotIndependent,anexecutivesession the chairmanshipofBoardChair. Ifsuchgroupincludes Board meetingwithoutthepresenceofmanagementandunder The non-executiveBoardmembersmeetbeforeorafterevery • • Monitoring Pension Fund matters • Monitoring environmental,safetyandsecuritymatters of CN’sPension Trust Funds. approving theannualbudgetofInvestmentDivision Trust Funds plan offeredoradministeredbyCN(the“ connection withanewpensionplanoranyother Funds oranyotherpensiontrustfundestablishedin policies oftheCanadianNationalRailwayPension Trust fund policiesandpractices,includingtheinvestment monitoring andreviewing,asappropriate,CN’spension environmental, safetyandsecuritypoliciespractices. monitoring andreviewing,asappropriate,CN’s ”); cersofCNuponrequest. CN’s Pension

71 CN MANAGEMENT INFORMATION CIRCULAR 72 CN MANAGEMENT INFORMATION CIRCULAR to beexhaustive. committee butarenotmeant on theactivitiesofeach These reportsprovidedetails as ofDecember31,2011. of eachBoardcommittee The followingarereports OF THECOMMITTEES SCHEDULE “B”–REPORTS • • • • • • • • • Financial Information with itsmandate: Committee, inaccordance In 2011,theAudit J.E. O’Connor, R.Pace Members: D.Losier(Chair),H.J.Bolton,D.J.Carty, V.M. Kempston Darkes, Report oftheAuditCommittee 2011 HIGHLIGHTS reporting issues; of thefi connection withthe preparation re viewedjudgments madein issuers andforeignissuers; convergence toIFRSforU.S. thereto, includingthepotential and anyproposedchanges and reportingpractices, policies, underlyingassumptions critical accountingprinciplesand disclosure oftheCompany’s quality, appropriatenessand auditors andmanagement,the reviewed, withtheexternal applicable legislation; of fi management’s certifi reviewed thecomplianceof forth anysignifi external auditorssetting the internalauditorsor prepared bymanagement, communications materials reviewed analysisand Information Circular; in the2011Management other informationappearing Audit CommitteeReportand reviewed andapproved Board approval; and otherreportsrequiring Annual InformationForm contained inthe2010 reviewed fi those ofothermajorrailroads; benchmarked quarterlyresultsto fi the internalcontrolsover the Company, aswell fi auditors ontheconsolidated auditors’ reportsoftheexternal reviewed theindependent the Company; the earningspressreleasesof discussion andanalysis quarterly results,management’s the 2010annualand2011 reviewed andapproved nancialreporting; nancialstatementsof nancial reports with nancialreportswith nancial statements, if nancialstatements, if nancial information nancialinformation cantfi cation cation nancial nancial Internal Auditors • • • • • • • • • External Auditors • • • employment benefi pension plansandotherpost in AccountingforCN’s and management,changes reviewed withexternalauditors responsible offi the independentauditorsand for CN’spensionplanswith reviewed fi Progress reports; reviewed CapitalExpenditure employees or former employees employees orformeremployees and reviewedhiring policiesfor confi from theexternal auditors reviewed theformalstatement and regulations; accordance withapplicablelaws auditors totheCompany, in audit servicesbytheexternal the disclosureofpermittednon- and pre-approvedoversaw are prohibitedfromproviding, services theexternalauditors determined whichnon-audit external auditors; services providedbythe all audit,reviewandattest oversaw thedisclosureof discussed, approvedand of theexternalauditors; performance andindependence monitored thequalifi evaluated, remuneratedand external auditors; engagement oftheCompany’s the appointmentandtermsof recommended totheBoard results oftheexternalaudit; reviewed andapprovedthe the Chief, InternalAudit. held in-camerameetingswith members; and and thecompensationofits responsibilities, staffi function’s performance,its monitored theinternalaudit internal auditplan; reviewed andapprovedthe methods; accepted accountingprinciples effect ofalternativegenerally any, includinganalysesofthe rming their independence rmingtheirindependence nancial statements nancialstatements cers;and ts. ng, budget ng,budget cations, cations, • Risk Management • of theAuditCommittee. Submitted bythe members • Other • • Committee Performance • • • Internal Control • management; and information technologyrisk of fi insurance coverage,delegation including theCompany’s management policies, risk assessmentand reviewed theCompany’s external auditors. held in-camerameetingswith depreciation. management andasset repurchase programs,revenue the implementationofshare the declarationofdividends, the Boardwithrespectto made recommendationsto the committeefor2012. a forward-lookingagendafor reviewed andapproved the AuditCommittee;and to evaluatetheperformanceof reviewed theprocessesinplace Corporate DisclosureCommittee. reviewed minutesofthe and accounting orauditingmatters; employee concernsregarding controls orauditingmatters accounting, internalaccounting by theCompanyregarding treatment ofcomplaintsreceived for thereceipt,retentionand reviewed proceduresestablished internal control; procedures andsystemsof disclosure controlsand effectiveness oftheCompany’s assessing theadequacyand received management’sreport and regulatoryrequirements. compliance withapplicablelegal oversight oftheCompany’s assisted theBoardwith auditors; and of theCompany’sexternal nancialauthority, and • • • • Financing • • • Financial Policies with itsmandate: Committee, inaccordance In 2011,theFinance McLean,J.E.O’Connor D.G.A. D.J. Carty, G.D.Giffi Baillie(Chair),M.R.Armellino, Members: A.C. Finance Committee Report ofthe 2011 HIGHLIGHTS and LetterofCreditfacilities. of CN’sRevolvingCreditfacility a debttenderofferandrenewal reviewed andrecommended 2.85% Notesdue2021;and due 2016,andUS$400million US$300 million1.45%Notes US$700 million,comprisedof two-tranche debtofferingof securities andapprovedapublic of C$2.5billiondebt aggregate principalamount for theissuanceofan approved ashelfprospectus other documents,aswell offering memorandaand reviewed prospectuses, reviewed Treasury activities; investments andcreditfacilities; capital structure,short-term Company’s capitalexpenditures, liquidity position,includingthe reviewed theCompany’s respect tocreditratingagencies. the Company’sactivitieswith credit ratingsandmonitored reviewed theCompany’s credit; and hedging, investmentand and policiesregardingfi including policiesondividends, to distributionsshareholders, reviewed policieswithrespect the Company; and fi Company’s fi the Boardwithrespectto made recommendationsto nancial matters affecting nancialmattersaffecting nancial policies nancialpolicies n, E.E.Holiday, E.C.Lumley, nancial nancial of theFinanceCommittee. Submitted bythemembers • Other • • • Committee Performance • • • • • Financial Activities to thoseofothermajorrailways. benchmarked quarterlyresults the committeefor2012. a forward-lookingagendafor reviewed andapproved of thecommitteecharter;and performance andtheadequacy assessed committee of theFinanceCommittee; to evaluatetheperformance reviewed theprocessesinplace Pension Plan. voluntary contributiontotheCN to theBoardanadditional reviewed andrecommended Metrolink; and of theKingstonSubdivisionto the Boardsaleofaportion reviewed andrecommendedto reviewed theirreports; or theexternalauditors,and out bytheinternalauditors post-completion auditscarried approved bytheBoardand of signifi oversaw post-completionaudits from investments; as projectedandactualreturns repurchase programs,aswell and leasesofassets,share Calgary LogisticsPark, purchases other expenditures,suchasthe reviewed signifi of credit; guarantees orextension Company, aswellloans, related toindebtednessofthe recommended decisions cant capital projects cantcapitalprojects cant capital and cantcapitaland • • and itsCommittees Composition oftheBoard with itsmandate: Committee, inaccordance Governance andNominating In 2011,theCorporate E.C. Lumley, R.Pace Baillie,D.J.Carty,A.C. E.E.Holiday, McLean(Chair), Members: D.G.A. and NominatingCommittee Report oftheCorporateGovernance • for Directors Continuing Education • Director Compensation • and itsCommittees Performance oftheBoard • • 2011 HIGHLIGHTS and areas of expertise; and areasofexpertise; independence, fi reviewed directors’ and mandate; Committee size,composition the Boardindetermining increase initssizeandassisted including recommendingan composition oftheBoard, reviewed thesizeand for directors. continuing educationprograms Company’s orientationand monitored andreviewedthe non-executive directors. Chair, theCommitteechairsand remuneration oftheBoard recommended totheBoard Circular questionnaires. Management Information and thedevelopmentof Chair evaluationprocess Board, Committee,peerand including reviewingthe Chairs andBoardmembers, Board andCommittee the Board,BoardCommittees, reviewed theperformanceof and updatedevergreenlist. upcoming directorretirements and boardrenewalinlightof reviewed directorsuccession and needs; the Company’scircumstances Board membersinrelationto competencies andskillsofthe directors andassessedthe reviewed criteriaforselecting nancial literacy nancialliteracy • • Initiatives Corporate Governance and Nominating Committee. of theCorporate Governance Submitted bythemembers • • Committee Performance • • • • • • • • best practices; an updatetoincluderecent recommending totheBoard Governance Manual,including the Company’sCorporate led theannualreviewof rules andregulations; in accordancewithapplicable corporate governanceguidelines and monitoreddisclosureof corporate governanceguidelines changes totheCompany’s reviewed andrecommended the committeefor2012. a forward-lookingagendafor reviewed andapproved Nominating Committee;and the CorporateGovernanceand to evaluatetheperformanceof reviewed theprocessesinplace best practices. requirements, aswell monitored legal®ulatory corporate governanceand oversight oftheCompany’s assisted theBoardwith Conduct; and Policy andtheCodeofBusiness update totheCommunications recommending totheBoardan Affairs Program,including Investor RelationsandPublic Communications Policy andthe Corporate Disclosureand monitored theCompany’s Annual Meeting; a dateandlocationforthe recommended totheBoard CN’s Ombudsman; reviewed AnnualReportof Information Circular; reviewed 2011Management reviewed 2010AnnualReport; other regulatoryrequirements; to securitieslaws,disclosureand proposed changesand monitored developments, Utilization Policy; the Company’sAircraft reviewed adherenceto

73 CN MANAGEMENT INFORMATION CIRCULAR 74 CN MANAGEMENT INFORMATION CIRCULAR • Executive Compensation • Management Appointment ofExecutive • • Offi President andChiefExecutive • • • Succession Planning with itsmandate: Committee, inaccordance Resources andCompensation In 2011,theHuman D. Losier, E.C.Lumley, McLean D.G.A. Members: R.Pace Baillie,H.J.Bolton,E.E.Holiday, (Chair),M.R. Armellino, A.C. V.M. Kempston Darkes, Report oftheHumanResourcesandCompensationCommittee 2011 HIGHLIGHTS management’s compensation; to theBoardexecutive performance andrecommended executive management’s reviewed theevaluationof and terminationorretirement. conditions oftheirappointment and approvedtheterms of executivemanagement recommended appointment the PresidentandCEO. objectives inconjunctionwith developed 2012performance members; and approval byIndependentBoard based onthisevaluation,for recommended compensation goals andobjectives performance basedonthose his mid-yearandannual President andCEO, evaluated and objectivesrelevanttothe reviewed corporategoals of outstandingoffi develop andretainthetalent including processestoidentify, by thePresidentandCEO, for managementputintoplace reviewed thesuccessionplan assessment; and reviewed leadershipteam and CEO; including thatofPresident management positions, planning forexecutive place regardingsuccession reviewed themechanismsin cer Compensation cers. • Pension Plans • • Compensation Philosophy • Disclosure Executive Compensation • • • • pension plans; fi reviewed andmonitoredthe of executives. of totaldirectcompensation policy relatingtothepositioning monitored therevisedCompany Company; and longer-term performanceofthe between theshort-and the appropriatebalance shareholder valueandrefl rewards thecreationof philosophy andpolicythat monitored thecompensation Information Circular. in the2011Management compensation forinclusion a reportonexecutive approval bytheBoard produced forreviewand to RSUs and performancetargetsrelated proposed 2012bonustargets reviewed andrecommended vesting outlook;and outlook, aswellRSU closely monitoredbonus Bonus Plan; under theAnnualIncentive performance asmeasured and theCompany’sannual Named ExecutiveOffi reviewed performanceof compensation practices; compensation andreportedon each elementofexecutive examined andreviewed nancial position of CN’s nancialpositionofCN’s cers cers ects ects Committee Performance • • • • Human ResourcesInitiatives • • Compensation Committee. of theHumanResourcesand Submitted bythemembers • • • workforce planning. discussed strategiesfor reviewed and developing talent;and strategies forengagingand reviewed anddiscussed labour andsocialissues; monitored pensionandstrategic negotiation process; closely monitoredlabour of theCN1935Pension Plan. hoc improvementsformembers reviewed andrecommendedad changes; and with regardtoregulatory Pension Plans,amongstothers amendments totheCN reviewed andrecommended for suchservices. approved appropriatefees its responsibilitiesand advisors tohelpitcarry independent compensation retained theserviceof the committeefor2012;and a forward-lookingagendafor reviewed andapproved Compensation Committee; of theHumanResourcesand to evaluatetheperformance reviewed theprocessesinplace • Accounting Accrual • • • • • and SafetyAudits Environmental, Health with itsmandate: Committee, inaccordance Safety andSecurity In 2011,theEnvironment, J.E. O’Connor G.D. Giffi M.R. Armellino,H.J.Bolton, Members: V.M. Kempston Darkes(Chair), and SecurityCommittee Report oftheEnvironment,Safety 2011 HIGHLIGHTS Audit Committee. costs inconjunctionwiththe accrual forenvironmental monitored accounting and securitymatters. reviewed allsignifi consideration; and security issuesaretakeninto environmental, safetyand business plantoascertainthat reviewed theCompany’s Sustainability ActionPlan; reviewed progressof exercising duediligence; ensure thattheCompanyis taking allreasonablestepsto assessments ofcompliance, health andsafetyaudits reviewed environmental, and guidelines; security policies,procedures environmental, safetyand and implementationof oversaw thedevelopment n, D.Losier, cant safety cantsafety and Security Committee. and SecurityCommittee. of theEnvironment,Safety Submitted bythemembers • • Committee Performance • • Other • and Judgments Environmental Investigations the committeefor2012. a forward-lookingagendafor reviewed andapproved Security Committee;and the Environment,Safetyand to evaluatetheperformanceof reviewed theprocessesinplace security initiatives. monitored resultsfromvarious Company; and of importancetothe regulatory developments environmental andsafety reviewed CanadianandU.S. security matters. environmental, safetyand and ordersinrespectof authorities, andalljudgments proceedings bygovernmental complaints, investigationsand basis inrespectofallnotices, obtained reportsonatimely Committee Performance • • Strategic Direction accordance withitsmandate: Planning Committee,in In 2011,theStrategic McLean,C.Mongeau,J.E.O’Connor,D.G.A. R.Pace V.M. Kempston Darkes,D.Losier, E.C.Lumley, H.J. Bolton,D.J.Carty, G.D.Giffi Baillie, Members: M.R.Armellino(Chair),A.C. Planning Committee Report oftheStrategic Planning Committee. members oftheStrategic Submitted bythe • 2011 HIGHLIGHTS operating andcapitalbudgets. business planand2012 including its2012-2014 Company’s strategicdirection, reviewed andapprovedthe fi presentations onstrategicand obtained regularbriefi Planning Committee. performance oftheStrategic in placetoevaluatethe reviewed theprocesses nancialissues;and ngs and ngsand n, E.E.Holiday,

75 CN MANAGEMENT INFORMATION CIRCULAR 76 CN MANAGEMENT INFORMATION CIRCULAR • • • • Investment Division with itsmandate: Trust Funds, inaccordance Committee ofCN’sPension In 2011,theInvestment V.M. Kempston McLean,R.Pace Darkes,D.G.A. Baillie,H.J.Bolton,G.D.Giffi A.C. Members: E.C.Lumley(Chair),M.R.Armellino, Trust Funds Committee ofCN’sPension Report oftheInvestment 2011 HIGHLIGHTS CN InvestmentIncentivePlan. CN InvestmentDivisionandthe the annualbudgetof reviewed andapproved CN InvestmentDivision;and Investment Strategyofthe reviewed andapprovedthe CN’s pensionplans; Policies andProceduresfor Statement ofInvestment reviewed andapprovedthe policies andprocedures; accordance withapplicable CN’s Pension Trust Funds in on investmentofassets advised theInvestmentDivision CN InvestmentDivisionand reviewed theactivitiesof of CN’sPension Trust Funds. of theInvestmentCommittee Submitted bythemembers • Committee Performance CN’s Pension Trust Funds. the InvestmentCommitteeof to evaluatetheperformanceof reviewed theprocessesinplace n, E.E.Holiday, • • sponsorship strategy Developed adonationand accordance withitsmandate: Sponsorships Committee,in In 2011,theDonationsand McLean D.G.A. G.D. Giffi Members: C.Mongeau(Chair), Sponsorships Committee Donations and Report ofthe • • sponsorship requests Approved donationand • 2011 HIGHLIGHTS sponsorships; and budget fordonationsand the 2011and2012 reviewed andapproved of theCompany; sponsorships strategyandgoals the generaldonationsand reviewed andapproved more than $500,000; more than$500,000; Company havingatotalcostof approval sponsorshipsbythe recommended totheBoardfor than $100,000; having atotalcostofmore donations bytheCompany and pre-approvedselected reviewed donationrequests Communities Fund Guidelines. reviewed theCNStronger n, D.Losier, • Committee Performance • • Sponsorships Committee. of theDonationsand Submitted bythemembers Sponsorships Committee. of theDonationsand evaluate theperformance and processesinplaceto reviewed committeemandate employee volunteerprogram. Railroaders intheCommunity reviewed proposaltoexpandCN $100,000; and and donationsofmorethan cost ofmorethan$50,000 sponsorship havingatotal Government Affairsconcerning Vice-President, Publicand reviewed reportsfromthe

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