CONSOLIDATED FREIGHTWAYS INC, DEF 14A, 1994-03-18

CONSOLIDATED FREIGHTWAYS INC
DEF 14A, 1994-03-18
TRUCKING (NO LOCAL)

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[X] Definitive Proxy Statement

[X] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

CONSOLIDATED FREIGHTWAYS, INC.
(Name of Registrant as Specified In Its Charter)

CONSOLIDATED FREIGHTWAYS, INC.
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*

(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing fee is calculated and state how it
was determined.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration No.:

(3) Filing Party:

(4) Date Filed:
<PAGE>

[CONSOLIDATED FREIGHTWAYS, INC. LOGO]

March 18, 1994

Dear Fellow Shareholder:

I am pleased to enclose your proxy statement for Consolidated Freightways'
1994 Annual Meeting of Shareholders, to be held at 10:00 a.m. on April 25, 1994
at the Pan Pacific Hotel in San Francisco. We hope that you will be able to
attend the Annual Meeting in person, but whether or not you plan to attend, I
urge you to sign, date and mail the enclosed WHITE proxy card at your earliest
convenience.

We look forward to reviewing our very successful year with you at the
meeting. Most importantly,

. Our turnaround strategy has been successful and we were profitable for
the first time in four years.

. CF's stock price rose 55% since our last annual meeting.

. Shareholders' equity rose to $623 million at year end.

. Total debt has been reduced by $240 million.

. Emery Worldwide showed substantial improvement, achieving an operating
profit for the first time since we acquired it in 1989.

. Con-Way Transportation Services achieved record operating income, while
introducing innovative new services.

This year, your vote is particularly important. You will see in the
accompanying proxy statement that several shareholder proposals are expected to
be presented at the Annual Meeting. Your Board of Directors urges you to vote
AGAINST these shareholder proposals.

These proposals have been submitted by employees who are or were members of
the International Brotherhood of Teamsters (IBT), and are part of an ongoing,
eighteen-month-old campaign by the IBT to harass your Board and management
through a carefully coordinated and well-financed "Corporate Campaign." This
campaign is aimed at pressuring the Company and its subsidiaries into labor
agreements that we believe would be detrimental to the Company and not in your
interest as a shareholder.

Specifically, the Board believes that the IBT's effort is aimed at assisting
the Teamsters' attempts to organize the Con-Way regional carriers, whose
employees have chosen not to be represented by a union. We believe that the IBT
is also trying to influence industry-wide negotiations presently under way for
a new Master Freight Agreement with our long-haul trucking company, CF
MotorFreight.

The Company believes that shareholders and investors are sufficiently
knowledgeable on issues of corporate governance to make their own decisions
without Teamsters Union direction.

Voting for these proposals will have the effect of encouraging the Teamsters
to continue, and perhaps intensify, their harassment efforts, and could
ultimately endanger the Company's profit restoration. Labor relations should be
conducted at the bargaining table, not at the Annual Meeting. Your Board urges
you to vote AGAINST these shareholder proposals.

We hope you will support us in our efforts.

/s/ D. E. MOFFITT
-----------------

3240 HILLVIEW AVE., PALO ALTO, CA 93404 (415) 494-2900 (415) 858-0536 FAX
<PAGE>

- --------------------------------------------------------------------------------
Notice of Annual Meeting

and

Proxy Statement

Annual Meeting of Shareholders

APRIL 25, 1994

[CONSOLIDATED FREIGHTWAYS, INC. LOGO]

- --------------------------------------------------------------------------------
<PAGE>

[CONSOLIDATED FREIGHTWAYS, INC. LOGO]

3240 HILLVIEW AVE. TELEPHONE: 415-494-2900
PALO ALTO, CA 94304
FAX: 415-813-5311

----------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF CONSOLIDATED FREIGHTWAYS, INC.:

The Annual Meeting of Shareholders of the Company will be held in the Olympic
Ballroom of the Pan Pacific Hotel, 500 Post Street, San Francisco, California,
at 10:00 A.M., Monday, April 25, 1994:

1. To elect four Class III directors for a three-year term.

2. To consider adoption of the Consolidated Freightways, Inc. Equity
Incentive Plan for Non-Employee Directors.

3. To appoint Arthur Andersen & Co. as independent auditors of the Company
and its subsidiaries for the year 1994.

4. To consider and act upon, if properly presented, shareholder proposals,
opposed by management, regarding the Company's classified board of
directors and the 80% voting requirement in the By-laws to change the
board structure.

5. To act on such other matters as may properly come before the meeting or
any adjournments or postponements thereof.

Shareholders of record at the close of business on March 1, 1994, are
entitled to notice of and to vote at the meeting. The list of such shareholders
is held at the office of the Company's stock transfer agent, First Chicago
Trust Company of New York, 14 Wall Street, New York, New York 10005.

PLEASE SIGN, DATE AND MAIL THE ENCLOSED WHITE PROXY IN THE ACCOMPANYING
ENVELOPE AT YOUR EARLIEST CONVENIENCE.

BY ORDER OF THE BOARD OF DIRECTORS

MARYLA R. BOONSTOPPEL
Vice President and Secretary

March 18, 1994
<PAGE>

CONSOLIDATED FREIGHTWAYS, INC.

3240 HILLVIEW AVE
PALO ALTO, CALIFORNIA 94304
TELEPHONE: 415-494-2900
FAX: 415-813-5311

PROXY STATEMENT

March 18, 1994

The Annual Meeting of Shareholders will be held on April 25, 1994.
Shareholders of record at the close of business on March 1, 1994 are entitled
to vote at the meeting. This proxy statement and accompanying proxy have first
been sent to eligible shareholders on or about March 18, 1994.

BOARD OF DIRECTORS' RECOMMENDATIONS

The Board of Directors of the Company is soliciting your proxy for use at the
meeting and any adjournment or postponement of the meeting. The Board
recommends a vote for the election of the nominees for directors described
below, for adoption of the Consolidated Freightways, Inc. Equity Incentive Plan
for Non-Employee Directors, for the appointment of Arthur Andersen & Co. as
independent auditors of the Company, and against the two shareholder proposals
set forth in this proxy statement.

PROXY VOTING PROCEDURES

To be effective, properly signed proxies must be returned to the Company
prior to the meeting. The shares represented by your proxy will be voted in
accordance with your instructions. However, if no instructions are given, your
shares will be voted in accordance with the recommendations of the Board. See
"Other Matters" below for information concerning the voting of proxies if other
matters are properly brought before the meeting.

VOTING REQUIREMENTS

A majority of the votes attributable to all voting shares must be represented
in person or by proxy at the meeting to establish a quorum for action at the
meeting. The four nominees for election of directors who receive the greatest
number of votes cast for the election of directors at the meeting will be
elected directors for a three-year term. Approval of all other matters expected
to come before the meeting, except shareholder proposal No. 2, requires a
favorable vote of the holders of a majority of the voting power represented at
the meeting. It appears that shareholder proposal No. 2 is intended to be a
proposed amendment to a provision in the Company's By-laws. Such amendment
requires the favorable vote of the holders of at least 80% of the then-
outstanding shares of voting stock of the Company.

In the election of directors, broker non-votes will be disregarded and have
no effect on the outcome of the vote. With respect to shareholder proposal No.
2, abstentions and broker non-votes will have the same effect as voting against
the proposal. With respect to the other matters, abstentions from voting will
have the same effect as voting against such matters and broker non-votes will
be disregarded and have no effect on the outcome of the vote.

VOTING SHARES OUTSTANDING

At the close of business on March 1, 1994, the record date for the Annual
Meeting, there were outstanding and entitled to vote 36,117,297 shares of
Common Stock and 967,688 shares of Series B Cumulative Convertible Preferred
Stock ("Series B Preferred Stock"). Each record share of Common Stock has the
right to one non-cumulative vote and each record share of Series B Preferred
Stock has the right to 5.2 non-cumulative votes. Therefore, an aggregate of
41,149,275 votes are eligible to be cast at the meeting.

1
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PROXY VOTING CONVENIENCE

You are encouraged to exercise your right to vote by returning to the Company
a properly executed WHITE proxy in the enclosed envelope, whether or not you
plan to attend the meeting. This will ensure that your votes are cast.

You may revoke or change your proxy at any time prior to its use at the
meeting. There are three ways you may do so: (1) give the Company a written
direction to revoke your proxy; (2) submit a later dated proxy; or (3) attend
the meeting and vote in person.

ATTENDANCE AT THE MEETING

All shareholders are invited to attend the meeting. Due to the limited
seating capacity, persons who are not shareholders may attend only if invited
by the Board of Directors. IF YOU ARE A SHAREHOLDER BUT DO NOT OWN SHARES IN
YOUR NAME, YOU MUST BRING PROOF OF OWNERSHIP (E.G., A CURRENT BROKER'S
STATEMENT) IN ORDER TO BE ADMITTED TO THE MEETING.

ELECTION OF DIRECTORS

The following persons are the nominees of the Board of Directors for election
as Class III directors to serve a three-year term until the 1997 Annual Meeting
of Shareholders and until their successors are duly elected and qualified:
Robert Alpert
Robert Jaunich II
Raymond F. O'Brien
Robert P. Wayman

Unless you withhold authority to vote, the shares represented by the enclosed
proxy will be voted for the election of these Class III nominees. The Board has
no reason to believe that these nominees will be unable or will decline to
serve if elected. However, in the event of the death, disqualification, refusal
or inability of any of them to serve, proxy holders are authorized to vote for
the election of such other person or persons as they determine in their
discretion.

The Company has three classes of directors, each of which is elected for a
three-year term. Four Class I directors will be elected in 1995 and four Class
II directors will be elected in 1996. All directors have previously been
elected by the shareholders, except Messrs. Robert Jaunich II and Robert P.
Wayman who were appointed as Class III directors by the Board of Directors in
1992 and 1994, respectively. Under the Company's retirement policy for
directors at age 72, Mr. John S. Perkins will not be standing for election as a
Class III director and will retire from the Board at the Annual Meeting of
Directors following the Annual Meeting of Shareholders. Mr. John C. Bolinger,
Jr. will also retire from the Board at the Annual Meeting of Directors, unless
the Board takes appropriate steps to enable him to remain on the Board until
his successor is selected. Mr. Perkins and Mr. Bolinger have each served on the
Board for more than 15 years. The Board joins the Company's management in
thanking them for their years of loyal service and valuable advice as directors
of the Company.

2
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CLASS III DIRECTORS

ROBERT ALPERT Director since 1976

Chairman of the Board,
Alpert Corporation,
a financial services and real estate firm

Mr. Alpert is currently Chairman of the Board of Alpert
Corporation, a company formed in 1965. He is also Honorary
Consul for Sweden in Dallas. Mr. Alpert holds directorships
with Aladdin Industries, Inc., Texas Industries, Inc.,
Chaparral Steel Company, The Empire A.B. in Sweden and
M.A.L.E. in Finland, and is an advisory director for I.C.
Deal Companies. Additionally, he is a member of the Advisory
Council for the University of Texas at Austin, College of
Business Administration; a Trustee Emeritus for Colby
College in Maine; and director for the Dallas Foundation for
Health, Education and Research, a public charity. He is also
a member of the Chief Executive Forum, World Business
Council, Young Presidents' Organization and National
Association of Corporate Directors. Mr. Alpert, age 62,
serves as Chairman of the Compensation Committee and as a
member of the Executive and the Finance Committees of the
Company.

[PHOTO]

ROBERT JAUNICH II Director since 1992

Managing Director,
The Fremont Group,
a private investment corporation

Mr. Jaunich joined The Fremont Group (formerly Bechtel
Investments, Inc.), a private investment corporation
managing assets in excess of $4.0 billion, in January 1991
as Managing Director of Direct Investments and member of the
boards of directors for The Fremont Group and Sequoia
Ventures, Inc. Additionally, he is President of Fremont
Capital, Inc., a registered broker-dealer. Prior to joining
The Fremont Group, Mr. Jaunich was Member, Chief Executive
Officer and Executive Vice President of Swiss-based Jacobs
Suchard AG (1986-1990), President of Osborne Computer
Corporation (1983), President of Sara Lee Corporation,
(1978-1982), and Executive Vice President of Memorex
Corporation (1970-1978). Mr. Jaunich is Chairman of Coldwell
Banker Corporation and of Crown Pacific, Ltd. He is also
Chairman of the Board of Control for Petro. He serves as a
trustee of the non-profit National Recreation Foundation and
is a life member of the World Presidents Organization. Mr.
Jaunich, age 54, is a graduate of Wesleyan University and
The Wharton School, University of Pennsylvania. Mr. Jaunich
serves on the Advisory Nominating, the Audit, the Finance
and the Pension and Employee Benefits Committees of the
Company.

[PHOTO]

3
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RAYMOND F. O'BRIEN Director since 1966

Chairman of the Board,
Consolidated Freightways, Inc.

Mr. O'Brien began his career with the Company in 1958 as a
Controller, advancing to Vice President and Treasurer in
1963, Vice President--Finance in 1967, and Executive Vice
President in 1969. From 1973 to 1975, he also served as
President and Chief Executive Officer of Consolidated
Freightways Corporation of Delaware, the Company's principal
motor carrier subsidiary. In 1975 Mr. O'Brien was elected
President of the Company, a post he held until 1980 and
resumed from 1981 to 1986. From 1977 to 1988, he was the
Company's Chief Executive Officer and was reelected to that
position from 1990 to 1991. He has been Chairman of the
Board since 1979. Mr. O'Brien, age 71, is a graduate of the
University of Missouri and the Harvard Advanced Management
Program. He is a director of Transamerica Corporation and
Watkins-Johnson Company. He is also a regent of St. Mary's
College of California. Mr. O'Brien is a former director of
the Charles Armstrong Schools, a former trustee of St.
Mary's College and a former Chairman of the Western Highway
Institute. He has served on several other corporate boards
and executive committees of industry associations and
educational institutions. He is Chairman of the Executive
Committee and a member of the Advisory Nominating Committee
of the Company.

[PHOTO]

ROBERT P. WAYMAN Director since 1994

Executive Vice President,
Finance and Administration,
and Chief Financial Officer,
Hewlett-Packard Company,
a computer-manufacturing company

Mr. Wayman joined Hewlett-Packard Company in 1969. After
serving in several accounting management positions, he was
elected Vice-President and Chief Financial Officer in 1984.
He became a Senior Vice President in 1987 and an Executive
Vice President in 1992. He assumed additional responsibility
for administration in 1992, and was elected to Hewlett-
Packard's Board of Directors in 1993. Mr. Wayman, age 48,
holds a bachelor's degree in science engineering and a
master's degree in business administration from Northwestern
University. He is a member of the Chief Financial Officers
Task Force of the Private Sector Council, the Policy Council
of the Tax Foundation, the Financial Executives Institute,
the Council of Financial Executives of the Conference Board
and the Advisory Board to the Northwestern University School
of Business.

[PHOTO]

4
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CLASS II DIRECTORS

JOHN C. BOLINGER, JR. Director since 1979

Vice Chairman of the Board,
Piedmont Natural Gas Company,
a diversified natural gas company

Mr. Bolinger has been Vice Chairman of Piedmont Natural
Gas Company since 1986. He is a past Chairman of the
University of Tennessee Development Council and currently
serves on the Advisory Council of the University's College
of Business. Mr. Bolinger is a director of Aladdin
Industries, Inc. and Home Federal Savings Bank of Tennessee.
He is also a management consultant and in that capacity has
served as an officer, director or consultant of various
companies. Mr. Bolinger, age 72, holds degrees from the
University of Tennessee and the Harvard Graduate School of
Business. He serves as Chairman of the Advisory Nominating
Committee, and as a member of the Audit and the Pension and
Employee Benefits Committees of the Company.

[PHOTO]

DONALD E. MOFFITT Director 1986-1988
Director since 1991

President and Chief Executive Officer,
Consolidated Freightways, Inc.

Mr. Moffitt was named President and Chief Executive
Officer of the Company in 1991. He joined Consolidated
Freightways Corporation of Delaware, the Company's principal
motor carrier subsidiary, as an accountant in 1955 and
advanced to Vice President--Finance in 1973. In 1975, he
transferred to the Company as Vice President--Finance and
Treasurer and in 1981 was elected Executive Vice President--
Finance and Administration. In 1983 he assumed the
additional duties of President, CF International and Air,
Inc., where he directed the Company's international and air
freight businesses. Mr. Moffitt was elected Vice Chairman of
the Board of the Company in 1986. He retired as an employee
and as Vice Chairman of the Board of Directors in 1988 and
returned to the Company as Executive Vice President--Finance
and Chief Financial Officer in 1990. Mr. Moffitt, age 61,
serves on the Executive Committee of the Board of Directors
of the Highway Users Federation and is a member of the Board
of Directors of the Bay Area Council, the Automotive Safety
Foundation and the American Red Cross. He is a member of the
California Business Roundtable and the Business Advisory
Council of the Northwestern University Transportation
Center. He also serves on the Advisory Council of the
Peninsula Conflict Resolution Center. Mr. Moffitt is a
member of the Advisory Nominating and the Executive
Committees of the Company.

[PHOTO]

5
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RONALD E. POELMAN Director since 1971

Member of the First Quorum of the Seventy, The Church of
Jesus Christ of Latter-day Saints

Mr. Poelman began his career in the transportation
industry in 1952. While still in college, he joined Utah-
Arizona Freight Lines, which was later acquired by the
Company. After receiving his law degree in 1955, he
transferred to the Company where he advanced to Corporate
Secretary in 1959 and Vice President in 1964. He left the
Company in 1978 to render full time service to his church.
Mr. Poelman, age 65, is a graduate of the University of Utah
Law School and the Harvard Advanced Management Program. He
currently serves as Chairman of the Boards of Deseret Trust
Company and Deseret Gymnasium. Mr. Poelman is Chairman of
the Pension and Employee Benefits Committee and a member of
the Charitable Contributions Committee of the Company.

[PHOTO]

ROBERT D. ROGERS Director since 1990

President and Chief Executive Officer,
Texas Industries, Inc.,
a producer of steel, cement, aggregates and concrete

Mr. Rogers joined Texas Industries, Inc., in 1963 as
General Manager/European Operations. In 1964 he was named
Vice President--Finance; in 1968, Vice President--
Operations, and in 1970 he became President and Chief
Executive Officer. Mr. Rogers is also a director of Texas
Industries, Inc. and serves as a member and Chairman of
Chaparral Steel Company's Board of Directors. Mr. Rogers is
a graduate of Yale University and earned an M.B.A from the
Harvard Graduate School of Business. He is a director of the
American Business Conference, British-North American
Committee, Dallas Medical Resource, and North Texas Public
Broadcasting, and is a member of the Executive Board for
Southern Methodist University's School of Business. Mr.
Rogers, age 57, served as Chairman of the Federal Reserve
Bank of Dallas from 1984 to 1986 and was Chairman of the
Greater Dallas Chamber of Commerce from 1986 to 1988. He is
Chairman of the Finance Committee and a member of the
Compensation and the Pension and Employee Benefits
Committees of the Company.

[PHOTO]

6
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CLASS I DIRECTORS

EARL F. CHEIT Director since 1976

Dean Emeritus, Haas School of Business,
University of California at Berkeley

Dr. Cheit has served on the University of California
faculty since 1957. He held a number of administrative
positions, both on and off the campus, including Executive
Vice Chancellor of the University. In 1976 he was named Dean
of the Business School, after serving as Associate Director
and Senior Research Fellow of the Carnegie Council on Policy
Studies in Higher Education. In 1983 he resumed his teaching
career at the University and in 1990 he was again named Dean
of the Business School for the academic year 1990/1991. In
1993 he served as the University's Interim Athletic
Director. Dr. Cheit, age 67, is a member of the Board of
Shaklee Corporation, Meridien Point Properties and a trustee
of Mills College. He is a graduate of the University of
Minnesota, from which he holds B.S., LL.B and Ph.D degrees.
He is the author of numerous books and articles and serves
as a consultant to various public and private organizations.
Dr. Cheit is Chairman of the Charitable Contributions
Committee and serves on the Audit, the Executive and the
Finance Committees of the Company.

[PHOTO]

G. ROBERT EVANS Director since 1990

Chairman of the Board and Chief Executive Officer,
Material Sciences Corporation,
a developer of materials and technologies for emerging
markets

Mr. Evans has been Chairman of the Board and Chief
Executive Officer of Material Sciences Corporation since
1991. His prior business career includes 15 years with
United States Gypsum Company and 13 years with Arcata
Corporation, where he served as President and Chief
Executive Officer. Mr. Evans was President and Chief
Executive Officer of Southwall Technologies, Inc. in 1983
and 1984; of Allsteel Inc. from 1984 to 1987; of Bemrose
Group USA from 1987 to 1990, and of Corporate Finance
Associates Illinois, Inc., from 1990 to 1991. Mr. Evans, age
62, is a graduate of Wagner College with graduate studies at
the University of Pennsylvania and the University of
California at Los Angeles Graduate School of Business. He is
currently a director of Fibreboard Corporation, Elco
Industries, Inc., and the Old Second Bancorp. He is also a
trustee of Wagner College and a member and past Chairman of
the University of Tennessee Development Council. Mr. Evans
is Chairman of the Audit Committee and serves on the
Advisory Nominating and the Compensation Committees of the
Company.

[PHOTO]

7
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GERHARD E. LIENER Director since 1984

Member of the Board of Management,
Daimler-Benz AG, a holding company of a
high technology and motor vehicle group

Dr. Liener has been associated with Daimler-Benz AG of
Stuttgart, Germany, since 1967 when he joined the company as
a Member of the Department responsible for all subsidiaries
and affiliated companies. He was made a Deputy Member of the
Executive Board in 1982, responsible for the New
Subsidiaries and Affiliates Division and was appointed a
full member of the Board in charge of that division in 1984.
When Daimler-Benz reorganized its activities in January of
1987, Dr. Liener became the Management Board member
responsible for the Commercial Vehicles Division. As a
result of further Management Board restructuring in November
1987, Dr. Liener now heads up his company's Finance and
Materials Management. Dr. Liener, age 61, is a director of
Chaparral Steel Company. He received his Doctorate in
Economics at the University of Tuebingen. Earlier he held
scholarships at the University of Madrid and Lausanne
University and in 1958 participated in an advanced business
program sponsored by the University of California at
Berkeley. Dr. Liener is a member of the Board of Directors
of Daimler-Benz North America Corporation, New York,
Mercedes-Benz North America, Inc. and Freightliner Corp.,
Portland, Oregon. Dr. Liener serves on the Charitable
Contributions Committee of the Company.

[PHOTO]

RICHARD B. MADDEN Director since 1992

Chairman and Chief Executive Officer,
Potlatch Corporation, a diversified
forest products company

Mr. Madden has been Chief Executive Officer of Potlatch
Corporation since 1971 and Chairman of the Board since 1977.
He was previously associated with Mobil Oil Corporation
where he served in various management capacities for fifteen
years. Mr. Madden is a director of Pacific Gas and Electric
Company and URS Corporation. He is also a Trustee Emeritus
of the American Enterprise Institute for Public Policy
Research. His civic activities include Vice President,
member of the Board of Governors and Executive Committee of
the San Francisco Symphony Association; Board of Directors
of the Smith-Kettlewell Eye Research Institute; Board of
Trustees of the Corporation of the Fine Arts Museums and the
Fine Arts Museums Foundation of San Francisco; member of the
Executive Committee of the Bay Area Council; and member of
the Business-Higher Education Forum. Mr. Madden, age 64,
holds a B.S. degree in engineering from Princeton
University, a J.D. degree from the University of Michigan,
and an M.B.A. from New York University. He is a member of
the Compensation, the Executive, the Finance and the Pension
and Employee Benefits Committees of the Company.

[PHOTO]

8
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DIRECTOR NOT CONTINUING IN OFFICE

JOHN S. PERKINS Director since 1979

General Partner,
Hampton Properties, L.P.,
a real estate and investment firm

Mr. Perkins has served as General Partner of Hampton
Properties, L.P., since its formation in 1981. From 1978 to
1981 he held the position of President and Chairman of the
Board of the predecessor corporation, Hampton Securities
Company. Prior to that time, Mr. Perkins was associated with
KPMG Peat Marwick, a firm of independent public accountants,
which he joined in 1946 and where he was admitted to
partnership in 1953. He was the Managing Partner of their
San Francisco office from 1966 until his retirement in 1977.
Mr. Perkins, age 72, is a graduate of the University of
Kansas and a certified public accountant. He is a member of
the Audit and the Charitable Contributions Committees of the
Company.

[PHOTO]

9
<PAGE>

BENEFICIAL OWNERSHIP OF STOCK BY DIRECTORS AND EXECUTIVE OFFICERS

The following table shows the beneficial ownership of shares of the Company's
Common Stock and Series B Preferred Stock and of the Company's Depositary
Shares, each representing one-tenth of a share of Series C Conversion Preferred
Stock ("Depositary Shares"), as of January 31, 1994, by the directors, the
executive officers named in the Summary Compensation Table beginning on page
13, and by all directors and executive officers as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
------------------------ ----------------------- ----------
<S> <C> <C>
Robert Alpert........................... 52,050 Common *
0 Series B Preferred
0 Depositary Shares
John C. Bolinger, Jr.................... 5,000 Common *
0 Series B Preferred
0 Depositary Shares
Earl F. Cheit........................... 300 Common *
0 Series B Preferred
0 Depositary Shares
W. Roger Curry(2)....................... 198,423 Common *
81 Series B Preferred
0 Depositary Shares
G. Robert Evans......................... 1,000 Common *
0 Series B Preferred
0 Depositary Shares
Robert Jaunich II....................... 1,500 Common *
0 Series B Preferred
0 Depositary Shares
Robert H. Lawrence(3)................... 263,640 Common *
83 Series B Preferred
0 Depositary Shares
Gerhard E. Liener....................... 0 Common *
0 Series B Preferred
0 Depositary Shares
Richard B. Madden....................... 2,000 Common *
0 Series B Preferred
0 Depositary Shares
Donald E. Moffitt(4).................... 343,521 Common *
0 Series B Preferred
5,000 Depositary Shares
Raymond F. O'Brien(5)................... 264,450 Common *
0 Series B Preferred
0 Depositary Shares
John S. Perkins......................... 4,000 Common *
0 Series B Preferred
0 Depositary Shares
Ronald E. Poelman....................... 1,030 Common *
0 Series B Preferred
0 Depositary Shares
</TABLE>

10
<PAGE>

*Represents holdings of less than one percent.
(1) Represents shares as to which the individual has sole voting and investment
power (or shares such power with his spouse).
(2) Includes 174,782 shares which Mr. Curry has the right to acquire within 60
days of January 31, 1994 through the exercise of options issued under the
Company's stock option plans.
(3) Includes 246,703 shares which Mr. Lawrence has the right to acquire within
60 days of January 31, 1994 through the exercise of options issued under
the Company's stock option plans.
(4) Includes 342,968 shares which Mr. Moffitt has the right to acquire within
60 days of January 31, 1994 through the exercise of options issued under
the Company's stock option plans.
(5) Includes 225,225 shares which Mr. O'Brien has the right to acquire within
60 days of January 31, 1994 through the exercise of options issued under
the Company's stock option plans.
(6) Includes 101,070 shares which Mr. Quesnel has the right to acquire within
60 days of January 31, 1994 through the exercise of options issued under
the Company's stock option plans.
(7) Includes 152,561 shares which Mr. Robertson has the right to acquire within
60 days of January 31, 1994 through the exercise of options issued under
the Company's stock option plans.
(8) Subsequent to January 31, 1994, Mr. Wayman acquired 500 shares of Common
Stock.

INFORMATION ABOUT THE BOARD OF DIRECTORS AND CERTAIN BOARD COMMITTEES

During 1993, the Board of Directors held ten meetings. All directors attended
at least 75% of all meetings of the Board and the Board committees on which
they served, except Dr. Liener who resides in Germany.

The Board of Directors has the following standing committees: Advisory
Nominating Committee, Audit Committee, Charitable Contributions Committee,
Compensation Committee, Executive Committee, Finance Committee, and Pension and
Employee Benefits Committee. As required by Securities and Exchange Commission
regulations, descriptions of the Advisory Nominating, Audit and Compensation
Committees follow:

ADVISORY NOMINATING COMMITTEE: The Advisory Nominating Committee reviews the
qualifications of candidates to serve on the Board of Directors, consults with
the management of the Company concerning potential candidates and recommends to
the Board of Directors nominees for

11
<PAGE>

membership on the Board. Shareholders' proposals for nominees also will be
accepted by the Committee and will be given due consideration for
recommendation to the Board in light of the nominees' qualifications.
Shareholder nominee proposals should be submitted in writing to the Chairman of
the Advisory Nominating Committee in care of the Corporate Secretary. The
members of the Advisory Nominating Committee are Messrs. John C. Bolinger, Jr.-
- -Chairman, G. Robert Evans, Robert Jaunich II, Donald E. Moffitt and Raymond F.
O'Brien. The Committee met once during 1993.

AUDIT COMMITTEE: The Audit Committee recommends independent public
accountants for appointment by the shareholders to perform the audit of the
Company's accounting records and authorizes the performance of services by the
accountants so appointed. The Committee reviews the annual audit of the Company
by the independent public accountants, and, in addition, annually reviews the
results of the examinations of accounting procedures and controls performed by
the Company's internal auditors. The members of the Audit Committee are Messrs.
G. Robert Evans--Chairman, John C. Bolinger, Jr., Earl F. Cheit, Robert Jaunich
II and John S. Perkins. The Committee met four times during 1993.

COMPENSATION COMMITTEE: The Compensation Committee recommends to the Board
the salaries of the executive officers of the Company. The Committee also
oversees the administration of the Company's incentive compensation plans and
the granting of stock options under the Company's Stock Option Plan of 1988.
The members of the Compensation Committee are Messrs. Robert Alpert-- Chairman,
G. Robert Evans, Richard B. Madden and Robert D. Rogers. Mr. Raymond F. O'Brien
served on the Committee during 1993, but resigned as a Committee member on
December 6, 1993. The Committee met four times during 1993.

COMPENSATION OF DIRECTORS

During 1993, directors who were not employees of the Company or its
affiliates were paid an annual retainer of $30,000. An annual fee of $100,000
was established for the Chairman of the Board, who is a non-employee director,
by the Board of Directors effective August 1, 1993. Directors may elect to
defer payment of their fees. Payment of any deferred amount and interest
equivalents accrued thereon will be made in a lump sum or in installments
beginning no later than the year following the director's final year on the
Company's Board. Directors are also provided with certain insurance coverages
and, in addition, are reimbursed for travel expenses incurred in attending
Board and Committee meetings. Upon retirement from the Board, directors with at
least five years of Board service receive retirement benefits in the same
annual amount as the directors' annual retainer being paid at the time of
retirement. Retirement payments continue for the director's number of years of
service as a non-employee director up to a maximum of 20 years.

During 1993, the Compensation Committee of the Board of Directors conducted a
review of current board compensation packages at a selected number of major
American corporations. The Committee then recommended to the Board a new
compensation plan designed to:

. Recognize attendance at Board and Committee meetings and the inherent
responsibilities of Committee Chairmanships;

. Bring director's compensation into the mainstream of current corporate
practice;

. Approximate the Board's current annual cash compensation; and

. Provide long-term potential through restricted stock grants in lieu of a
portion of the existing retirement benefits accrual, subject to
shareholder approval.

Under the new plan, non-employee directors will be paid an annual retainer of
$15,000 and their retirement benefits will be accrued at $15,000 per year. Such
directors will also be paid $1,000 per Board meeting attended and $500 per
committee meeting attended. Chairmen of the Audit, Compensation, Finance and
Pension and Employee Benefits Committees will receive an additional

12
<PAGE>

$3,000 per year and Chairmen of the Advisory Nominating and the Charitable
Contributions Committees will receive an additional $2,000 per year. The
Chairman of the Board, as a non-employee director, will continue to be paid
$100,000 per year. Terms of the annual restricted stock grant are described in
the Equity Incentive Plan for Non-Employee Directors, on pages A-1 through A-8
of this proxy statement. In the event this Plan is not approved by
shareholders, retirement benefits for non-employee directors will continue to
be calculated at $30,000 per year.

COMPENSATION OF EXECUTIVE OFFICERS

I. SUMMARY COMPENSATION TABLE

The following table discloses compensation received by the Company's Chief
Executive Officer and the four next most highly paid executive officers for the
three fiscal years ended December 31, 1993.

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(2) LONG TERM COMPENSATION
----------------- -------------------------
AWARDS PAYOUTS
------------ -----------
SECURITIES
UNDERLYING LONG-TERM
OPTIONS/ INCENTIVE ALL OTHER
NAME AND SALARY BONUS(3) SAR'S PAYOUTS(4) COMPENSATION(5)
PRINCIPAL POSITIONS(S) YEAR $ $ (#) ($) ($)
- ---------------------- ---- -------- -------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald E.
Moffitt 1993 $600,028 $603,028 52,500/0 $ 0 $138,545
President &
Chief 1992 526,202 98,004 0/0 0 133,141
Executive
Officer 1991 484,155 0 145,187/0 0 *
Robert H.
Lawrence 1993 400,036 0 32,500/0 0 10,288
Exec. Vice
President-- 1992 400,036 0 0/0 6,051 11,769
Operations 1991 382,143 0 94,465/0 12,673 *
Robert T.
Robertson 1993 317,148 279,537 72,500/0 0 13,103
Senior Vice
President 1992 302,249 134,111 0/0 3,701 9,419
1991 293,231 6,082 65,573/0 5,957 *
W. Roger
Curry 1993 317,148 380,578 32,500/0 0 56,579
Senior Vice
President 1992 295,239 46,000 0/0 6,392 51,402
1991 289,980 0 69,307/0 15,295 *
Gregory L.
Quesnel 1993 300,040 241,232 92,500/0 0 11,234
Exec. Vice
President & 1992 250,802 47,124 0/0 1,622 6,042
Chief Finan-
cial Offi-
cer 1991 231,150 0 68,495/0 2,139 *
</TABLE>

- --------
*Under applicable rules of the Securities and Exchange Commission, information
is not required for 1991.
(1) Mr. Lawrence is also President and Chief Executive Officer of Consolidated
Freightways Corporation of Delaware, the Company's long-haul trucking
subsidiary. Mr. Robertson is also President and Chief Executive Officer of
Con-Way Transportation Services, Inc., the Company's regional trucking
subsidiary. Mr. Curry is also President and Chief Executive Officer of
Emery Air Freight Corporation, the Company's air freight subsidiary.
(2) There are no amounts of Other Annual Compensation which are required to be
disclosed for 1993. Perquisites and other personal benefits for each named
executive officer were below the lesser of $50,000 or 10% of the total
annual salary and bonus. There were no restricted stock awards in 1991,
1992 or 1993.
(3) The amounts shown in this column reflect payments under the Company's
short-term incentive compensation plans in which all regular, full-time,
non-contractual employees of the Company participate.
(4) The amounts shown in this column reflect the dollar value of units that
have vested in each named executive officer's account under the Company's
Long-Term Incentive Plan in each respective year. Amounts reported may have
been either paid or deferred under the terms of the Plan.

13
<PAGE>

(5) Amounts shown for 1993 in this column include:
(a) Payments by the Company for premiums for taxable group life insurance
on behalf of Messrs. Moffitt, Lawrence, Robertson, Curry, and Quesnel
of $14,658, $6,750, $4,768, $4,768, and $546, respectively.
(b) Long-Term Incentive Plan interest earned and deferred for Messrs.
Robertson, Curry and Quesnel of $227, $42,433 and $140, respectively.
(c) Company contributions to the Thrift and Stock Plan accounts of Messrs.
Lawrence, Robertson, Curry and Quesnel of $3,538 each.
(d) Payments by the Company to Mr. Moffitt under the Supplemental
Retirement Plan and the Excess Benefit Plan totaling $73,517 as a
result of his prior retirement.
(e) Interest earned on deferred compensation accounts above 120% of the
applicable federal rate for Messrs. Moffitt, Robertson, Curry and
Quesnel of $50,370, $4,570, $5,840 and $7,010, respectively.

II. OPTION/SAR GRANTS TABLE

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUES AT ASSUMED ANNUAL GRANT
RATES OF STOCK PRICE DATE
APPRECIATION FOR PRESENT
INDIVIDUAL GRANTS(1) OPTIONS TERM(3) VALUE(4)
-------------------------------------------- -------------------------- --------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OF BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
(#)(2) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($) ($)
---------- ------------ --------- ---------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald E. Moffitt....... 52,500/0 8.08% $14.9375 08/02/03 493,191 1,249,643 321,300
Robert H. Lawrence...... 32,500/0 5.00% $14.9375 08/02/03 305,309 773,712 198,900
Robert T. Robertson..... 32,500/0 5.00% $14.9375 08/02/03 305,309 773,712 198,900
40,000/0 6.15% $19.2500 10/25/03 484,249 1,227,182 315,600
W. Roger Curry.......... 32,500/0 5.00% $14.9375 08/02/03 305,309 773,712 198,900
Gregory L. Quesnel...... 32,500/0 5.00% $14.9375 08/02/03 305,309 773,712 198,900
60,000/0 9.23% $19.2500 10/25/03 726,373 1,840,773 473,400
All Shareholders........ 373,057,175 983,112,851
Named Executives' Gain
as % of All
Shareholder's Gain..... 0.70% 0.75%
</TABLE>
- --------
(1) No SARs were issued in 1993.
(2) All options are exercisable in whole or in part on the first anniversary of
the grant date or earlier upon a change in control of the Company.
(3) The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates prescribed by the Securities and Exchange Commission.
This presentation is not intended to forecast possible future appreciation,
if any, of the Company's Common Stock price. These are unrelated to the
Grant Date Present Value shown in the next column.
(4) Present value based on modified Black-Scholes option pricing model which
includes assumptions for the following variables: (i) option exercise
prices equal the fair market values on the dates of grant; (ii) option term
equals 7.36 years, based on actual option exercises for exercisable options
granted since January, 1990; (iii) volatility equals 0.352; (iv) risk-free
interest rate equals 5.5%; (v) estimated future average dividend yield
equals 1.5%. The dividend assumption presented here is for the purposes of
estimating option values and does not imply any pending change in the
Company's current dividend policy.

14
<PAGE>

The Company's use of this model should not be construed as an endorsement
of its accuracy in valuing options. The Company's executive stock options
are not transferable so the "present value" shown cannot be realized by the
executive. Future compensation resulting from option grants will ultimately
depend on the amount by which the market price of the stock exceeds the
exercise price on the date of exercise.

III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL-YEAR END OPTION/SAR VALUES

The following table provides information on option/SAR exercises in 1993 by
the named officers and the value of such officers' unexercised options/SARs at
December 31, 1993.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END
(#)(2) ($)(2)(3)(4)(5)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
--------------- ------------------ -------------- -------------------
<S> <C> <C> <C> <C>
Donald E. Moffitt....... 8,775(1) $25,777 342,968/52,500 $3,087,818/$456,094
Robert H. Lawrence...... 6,300(1) 19,294 272,464/32,500 2,326,443/282,344
Robert T. Robertson..... 152,869/72,500 1,304,213/457,344
W. Roger Curry.......... 199,201/32,500 1,598,262/282,344
Gregory L. Quesnel...... 101,679/92,500 962,916/544,844
</TABLE>

- --------
(1) Expiration date for these options was December 31, 1993.
(2) Mr. Moffitt has 342,968 exercisable options valued at $3,087,818; 52,500
unexercisable options valued at $456,094; and 0 stock appreciation rights
(SARs). Mr. Lawrence has 246,703 exercisable options valued at $2,054,000;
32,500 unexercisable options valued at $282,344; and 25,761 SARs valued at
$272,443. Mr. Robertson has 152,561 exercisable options valued at
$1,304,213; 72,500 unexercisable options valued at $457,344; and 308 SARs
valued at $0. Mr. Curry has 174,782 exercisable options valued at
$1,343,887; 32,500 unexercisable options valued at $282,344; and 24,419
SARs valued at $254,375. Mr. Quesnel has 101,070 exercisable options valued
at $960,634; 92,500 unexercisable options valued at $544,894; and 609 SARs
valued at $2,282. The value of outstanding SARs was fixed as described in
footnote 5 below when the Company's SAR plan was terminated on March 31,
1990.
(3) Based on the closing stock price of $23.625 on December 31, 1993.
(4) Numbers shown reflect the value of options granted at various times over a
ten-year period.
(5) The Company's Incentive Compensation Stock Appreciation Rights Plan ("SAR
Plan") was terminated on March 31, 1990. Under the SAR plan, selected key
employees were afforded the opportunity to convert cash awards under the
Company's short-term incentive compensation plans into SARs corresponding
in value to the Company's shares of Common Stock. The SARs fluctuated in
value as the price of the Common Stock increased or decreased and earned
amounts equal to dividends declared on the Common Stock. When the SAR Plan
was terminated, the value of all outstanding SARs was fixed as of that
date. Interest equivalents have been paid on outstanding balances credited
to participants since April 1, 1990. Payouts are made in cash and commence
upon a participant's prior election or termination of employment with the
Company.

15
<PAGE>

IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE

There were no Long-Term Incentive Plan awards made to the five named
executive officers in 1993.

CORPORATE GOVERNANCE STATEMENT

The Board of Directors and the management of Consolidated Freightways, Inc.
are committed to shareholder-sensitive corporate governance. Set out below is a
summary of the key elements of the Company's current governance principles:

. The offices of the Chairman of the Board and the Chief Executive Officer
are separate.

. Ten of the thirteen directors are neither present nor former employees of
the Company; the Chief Executive Officer is the only current executive
serving on the Board.

. The Audit and Compensation Committees consist entirely of independent
directors.

. There are no interlocking directorships.

. All common stock shareholders have equal voting rights--one share, one
vote.

. The Company has never repriced stock options.

. The Company's classified board was established and approved by
shareholders in 1985.

. The Company voluntarily eliminated "golden parachutes" in 1990.

. In 1993, the Company amended its Shareholder Rights Plan to provide for
its termination in 1995. Any extension of the Plan or adoption of any
other rights plan must first be approved by shareholders.

. In 1993, directors adopted a new compensation plan, subject to
shareholder approval, which will give independent directors a direct
interest in the Company's attainment of its financial goals through stock
ownership. The plan also recognizes meeting attendance and the inherent
responsibilities of committee chairmanships.

. The Company believes in the value of a diversified board and has retained
an advisory firm to assist it in its goal of achieving greater Board
diversity.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following report was given to the Board of Directors by the Compensation
Committee and is included in the proxy statement to inform shareholders of the
Committee's duties and its rationale for compensation of executives. Neither
the report nor the performance graphs that follow this report is intended to be
used for any other purpose or to be incorporated by reference in any of the
Company's past or future filings with the Securities and Exchange Commission.

To the Board of Directors:

As members of the Compensation Committee of the Board of Directors, it is our
duty to administer the Company's executive compensation program to ensure the
attraction, retention and appropriate reward of executive officers, to motivate
their performance in the achievement of the Company's business objectives, and
to align the interests of executive officers with the long-term interests of
the Company's shareholders. Because the Company's compensation policy is to pay
for performance, each executive's total compensation is based on the
performance of the Company, the executive's business unit, and the executive
individually. Executive compensation consists of three components: base salary,
short-term incentive compensation and long-term incentive compensation. At this
time, the Company has not adopted a formal weighting system for these various
components.

16
<PAGE>

BASE SALARY

The Company strives to pay base salaries that are competitive with those of
other companies in the freight transportation industry, taking into account the
Company's size compared to those companies. The companies used for this
comparison (the "Peer Companies") were selected by the Company's independent
executive compensation consultant and are the same as those included in the
performance graphs that follow this report with the exception of Arkansas Best
and Carolina Freight and the addition of CSX Corporation, Santa Fe Pacific
Corporation, Norfolk Southern Corporation and American President Companies,
Ltd. These exceptions and additions were made on the basis of comparable size.

For 1993, we reviewed base salaries for executive officers against
competitive salary data for officers in similar positions at Peer Companies,
and recommended to the Board of Directors adjustments in base salary to
position base salary for our executives within the second quartile of the peer
group. The salaries for Mr. Donald E. Moffitt, the President and Chief
Executive Officer, and Mr. Gregory L. Quesnel, a named executive, were
consequently adjusted to position them in this second quartile. Increases for
two other named executives were given in order to maintain their base pay
positions relative to their counterparts in the Peer Companies. The Board
unanimously approved the recommentations of the Committee. Mr. Moffitt, the
only member of the Board of Directors who is also an executive officer of the
Company, did not participate in deliberations concerning his own salary.

SHORT-TERM INCENTIVE COMPENSATION

The Committee has delegated to the Chief Executive Officer and other
executive officers the responsibility and authority to design and administer
the Company's short-term incentive plans. These plans provide for annual awards
to regular, full-time, non-contractual employees.

At the end of the year, each major subsidiary develops goals which reflect
its business objectives for the following year. These goals represent
measurable performance objectives based on such criteria as profits, revenue,
expenses and/or service. The parent company goals generally represent a
compilation of the profit goals of the subsidiaries. The final incentive
compensation plans are then incorporated into the Company's business plan for
the ensuing year and presented to the Board of Directors for approval and
adoption.

Upon attainment of the established performance goals, participants, other
than the top five executives, may receive incentive compensation ranging from
5% to 50% of base salary (the participant's "participation factor"), according
to a participant's level of responsibility, with the opportunity to double that
percentage for performance in excess of the stated goals. 18,857 employees were
eligible to participate in the Company's incentive compensation plans in 1993.
The participation factors for the Chief Executive Officer and the four named
executives are 75% and 60% of salary, respectively, again with the opportunity
to double that percentage for extraordinary results.

At the end of the year, short-term incentive payouts for the participants, if
any, are calculated based on the specific, measurable objectives assigned to
the operating unit to which each participant belongs. A partial payout is
generally made in December and the balance early the following year.

In 1993, Con-Way Transportation Services, Inc., Emery Air Freight Corporation
and the parent company exceeded their respective performance objectives, with
Con-Way and Emery each achieving record results. Accordingly, bonuses were paid
to participants in Con-Way, Emery and the parent company. Messrs. Moffitt and
Quesnel earned incentive compensation of 134% of their respective participation
factors, based on the amount by which corporate pre-tax, pre-incentive income
exceeded the minimum target level established at the beginning of the year.
Similarly, Mr. Robert T. Robertson earned incentive compensation of 147% of his
participation factor, based on the amount by which the pre-tax, pre-incentive
income on Con-Way exceeded its minimum target level established at the

17
<PAGE>

beginning of the year; and Mr. W. Roger Curry earned incentive compensation of
200% of his participation factor, based on the amount by which the pre-tax
operating profit of Emery exceeded its minimum target level established at the
beginning of the year. These bonuses are reflected in the Summary Compensation
Table for Compensation of Executive Officers.

In addition to the Company's established incentive compensation plans, which
are based on measurable objectives, the Compensation Committee and Board of
Directors in 1982 granted the Chief Executive Officer the authority to
recommend, from time to time, discretionary incentive awards to designated
employees based on the individual performance of these employees during the
year and/or progress made on achieving strategic or other non-numerical goals.
These payments, of up to 30% of annual compensation, would be in addition to
any incentive earned under the Company's incentive compensation plans. No
discretionary payments were awarded in 1993.

LONG-TERM INCENTIVE COMPENSATION

We believe that executives should have a large stake in the risks and rewards
of long-term ownership of the Company and that executive compensation should
include long-term programs tied directly to the performance of the Company
which place a greater portion of an executive's potential total compensation
"at risk" than is the case for other employees.

The Stock Option Plan of 1988 provides for the granting of options to
purchase shares of the Company's Common Stock to key employees of the Company
and its subsidiaries. During 1993, the Committee, consistent with its view that
stock options tie executive performance to shareholder interests, reviewed with
the Chief Executive Officer each executive's scope of accountability over the
strategic results of the Company based on his or her organizational position,
level of responsibility and subjective performance evaluations. The Company
utilizes a Hay Compensation Group formula for determining the relative ranking
of position values and responsibilities.

The Committee, in determining the number of options granted each year, takes
into consideration the number of options available for grant over the remaining
years of the Plan, dilution after giving effect to severely "underwater"
options, and the anticipated overall performance of the Company. Based on this
evaluation, in 1993 the Committee recommended to the Board that a pool of
500,000 market-priced stock options be awarded to 58 executives. These awards
were effective on the customary August 1 award date.

During 1993, the Company promoted Mr. Quesnel to Executive Vice President.
Consequently in October, a stock option for 60,000 shares was made to Mr.
Quesnel to reflect his increased influence on the Company's results. Similarly,
Mr. Robertson was granted an option to purchase 40,000 shares in recognition of
his extraordinary performance over the past ten years as President of Con-Way.

Under the Long-Term Incentive Plan of 1988 and its predecessor, the Long-Term
Incentive Plan of 1978, key employees of the Company and its subsidiaries,
including the named executives, have previously been awarded growth units
entitling them to certain cash benefits upon such units vesting and
appreciating in value. No awards were granted in 1993.

CEO COMPENSATION

The CEO's salary increase for 1993 was based on a subjective evaluation of
his performance by the Compensation Committee and competitive salary data
provided by the Company's executive compensation consultants.

Mr. Moffitt returned to the employ of the Company in 1990 and was elected
President and Chief Executive Officer in 1991. The initiatives and programs put
in place since his return have resulted in dramatic improvements in the
Company's performance. Some of the key measures of this improvement are set
forth below.

18
<PAGE>

COMPANY PERFORMANCE

<TABLE>
<CAPTION>
CHANGE FROM
1990 1993 1990 TO 1993
-------- -------- ------------
<S> <C> <C> <C>
Net Earnings (Loss)--(in thousands)............ $(40,727) $ 31,607 $ +72,334
Net Margin..................................... -1.0% 0.8% +1.8 pts
Primary Earnings per Share (EPS)............... $ (1.16) $ 0.87 $ +2.03
Return on Equity (ROE)......................... -7% 8% +15 pts
Market Value--(in thousands)................... $411,253 $996,122 142.2%
Long-Term Debt & Capital Leases................ 673,611 408,409 -39.4%
Debt to Total Capital Ratio.................... 54% 40% -14 pts
</TABLE>

ON-GOING REVIEW OF COMPENSATION

The Company has engaged an executive compensation consulting firm to advise
the Committee on various compensation matters. The consulting firm has been
asked to continue its review of the Company's existing executive compensation
programs to determine the extent to which they are compatible with long-term
shareholder objectives, support the future direction of the Company,
differentiate and reward for component company performance, and attract and
retain high caliber talent. The consulting firm has also been asked to make
recommendations for a new long-term incentive plan tied to performance of
component companies and overall corporate performance.

The Committee has not yet developed a policy with respect to amending pay
policies or asking shareholders to vote on "pay for performance" plans in order
to qualify compensation in excess of $1 million a year which may be paid to the
five highest-paid executives for federal tax deductibility. Under current
compensation plans and deferral elections, no executive officer's compensation
subject to the deductibility limit will exceed $1 million in 1994, even if all
performance goals are attained under the Company's short-term incentive plans.
The Compensation Committee intends to consider the matter further when final
regulations on this subject are issued under the Internal Revenue Code. At that
time, the Committee will balance the interests of the Company in maintaining
flexible incentive plans against the possible loss of a tax deduction should
taxable compensation for any of the five highest-paid executives exceed $1
million in future years.

The foregoing report is approved by all members of the Committee.

THE COMPENSATION COMMITTEE

Robert Alpert, Chairman Richard B. Madden
G. Robert Evans Robert D. Rogers

19
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Members of the Committee set forth above are all independent directors of the
Company and have no other relationships with the Company and its subsidiaries.
Mr. Raymond F. O'Brien, Chairman of the Board, served on the Compensation
Committee until December 6, 1993, when he resigned from the Committee. He was
appointed to the Committee in 1992. He is a former executive officer of the
Company, but has not served as an officer since 1991.

A COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN*
CONSOLIDATED FREIGHTWAYS, INC., S & P 500 INDEX, PEER GROUP INDEX

Total Returns with Dividends Reinvested on Pay Date Base 12/31/88 Composite
Market Cap Weighted

<TABLE>
<CAPTION>
Quarter PEER S & P
Ending CNF GROUP 500
- --------- ---- ----- ------
<S> <C> <C> <C>
12/31/93 $ 76 $162 $197
9/30/93 $ 51 $145 $193
6/30/93 $ 52 $124 $188
3/31/93 $ 55 $140 $187

12/31/92 $ 57 $142 $179
9/30/92 $ 43 $117 $171
6/30/92 $ 42 $125 $165
3/31/92 $ 56 $139 $162

12/31/91 $ 50 $122 $166
9/30/91 $ 38 $114 $154
6/30/91 $ 52 $113 $146
3/31/91 $ 53 $109 $146

12/31/90 $ 38 $ 91 $128
9/30/90 $ 43 $ 81 $117
6/30/90 $ 42 $102 $136
3/31/90 $ 52 $116 $128

12/31/89 $ 83 $105 $132
9/30/89 $ 99 $111 $129
6/30/89 $ 89 $ 92 $117
3/31/89 $ 91 $ 92 $107

12/31/88 $100 $100 $100

All Data per Georgeson & Co. 1/20/94

</TABLE>

*Assumes $100 invested on December 31, 1988 in Consolidated Freightways,
Inc., S & P 500 Index and a Peer Group Index, described below, and that any
dividends were reinvested.

The Peer Group Index is a market-capitalization weighted index comprised of
the common stock of the following companies: Airborne Freight Corporation,
Arkansas Best Corporation, Carolina Freight Corporation, Federal Express
Corporation, Roadway Services, Inc., TNT Freightways Corporation and Yellow
Corporation.

A five-year cumulative total shareholder return graph, such as the one above,
may be useful in assessing management's performance over that period of time.
However, a new management team charged with restoring the Company's financial
strength was put in place during 1990 to deal with the problems that arose
following the acquisition of Emery Air Freight Corporation in April, 1989. For
a shareholder today it is far more useful to focus on the Company's performance
since this new management team was installed and addressed the serious
financial and operational issues facing the Company.

20
<PAGE>

The chart to the
right shows total
shareholder returns,
assuming $100 was
invested on December
31, 1990 in Consoli-
dated Freightways,
Inc., the S&P 500
Index, and the Peer
Group Index as de-
fined above, with
any dividends rein-
vested. As this
chart demonstrates,
under direction of
new management, the
stock of the Company
has outperformed the
broad S&P index and
the Peer Group index
over this period of
time.

A COMPARISON OF THREE-YEAR CUMULATIVE TOTAL
SHAREHOLDER RETURN

CONSOLIDATED FREIGHTWAYS, INC., S & P 500 INDEX, PEER
GROUP INDEX

<TABLE>
<CAPTION>
Quarter PEER S & P
Ending CNF GROUP 500
--------- ---- ----- ------
<S> <C> <C> <C>
12/31/93 $200 $178 $154
9/30/93 $134 $159 $151
6/30/93 $137 $136 $147
3/31/93 $145 $154 $146

12/31/92 $150 $156 $140
9/30/92 $113 $129 $134
6/30/92 $111 $137 $129
3/31/92 $147 $153 $127

12/31/91 $132 $124 $130
9/30/91 $100 $125 $120
6/30/91 $137 $124 $114
3/31/91 $139 $120 $114

12/31/90 $100 $100 $100

All Data per Georgeson & Co. 1/20/94

</TABLE>

PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFITS

The following table shows the estimated combined annual benefits payable upon
retirement to full-time and certain part-time non-contractual employees on the
Company's domestic payroll under the Company's Pension and Retirement Plans,
Supplemental Retirement Plan and Excess Benefit Plan (the "Plans").

<TABLE>
<CAPTION>
AVERAGE FINAL TOTAL EARNINGS DURING YEARS OF PLAN PARTICIPATION
HIGHEST FIVE CONSECUTIVE YEARS --------------------------------------------
OF LAST TEN YEARS OF EMPLOYMENT 15 20 25 30 35
----------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000........................ $ 50,588 $ 69,410 $ 88,263 $107,115 $127,115
$300,000........................ 77,558 106,410 135,263 164,115 194,115
$400,000........................ 104,558 143,410 182,263 221,115 261,115
$500,000........................ 131,558 180,410 229,263 278,115 328,115
$600,000........................ 158,558 217,410 276,263 335,115 395,115
$700,000........................ 185,558 254,410 323,263 392,115 462,115
$800,000........................ 212,558 291,410 370,263 449,115 529,115
</TABLE>

The compensation covered under the Plans whose benefits are summarized in the
Pension Plan Table above is the highest five-year average over the last ten
years of employment of the amounts shown in the "Salary" and "Bonus" columns of
the Summary Compensation Table on page 13. The pension benefit is reduced by
the vested amount of the employee's account in the Company's Common Stock Fund.
The Common Stock Fund operates together with the Plans as a "floor/offset"
arrangement. Pension benefits under the Plans are provided first by the value
of shares of the Company's Common Stock Fund, with any remainder being paid
under the Plans. All full-time and certain part-time non-contractual employees
on the Company's domestic payroll participate in the Common Stock Fund. Final
allocations were made at year-end 1993. In 1993, Messrs. Moffitt, Lawrence,
Robertson, Curry, and Quesnel were each allocated 151 shares of Company Common
Stock with a value of $3,564.

The Internal Revenue Code of 1986, as amended, limits the annual benefits
which may be paid from a tax-qualified retirement plan to $118,800. The Company
has adopted the Supplemental Retirement Plan and the Excess Benefit Plan to
provide for payment out of the Company's general funds of benefits calculated
under the Pension and Retirement Plans above that dollar limit.

21
<PAGE>

As of December 31, 1993, Messrs. Moffitt, Lawrence, Robertson, Curry and
Quesnel had 26, 21, 22, 25 and 18 years of Plan participation, respectively.

Retirement benefits shown are payable at or after age 65 in the form of a
single life annuity, using the current level of Social Security benefits to
compute the adjustment for such benefits.

----------------

APPROVAL OF EQUITY INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS

The Board of Directors recommends the adoption of the Equity Incentive Plan
for Non-Employee Directors (the "Plan"). The Plan provides for the issuance of
up to 150,000 shares of the Company's Common Stock through awards of restricted
stock and/or stock options to directors of the Company who are neither officers
nor employees of the Company ("Non-Employee Directors").

The primary purpose of the Plan is to give Non-Employee Directors a direct
interest in the Company's attainment of its financial goals through stock
ownership and thereby to align their interests more closely with the interests
of shareholders of the Company. The text of the Plan is set forth in Appendix A
to the proxy statement. The following is a summary of the Plan and should be
read together with the full Plan text.

If approved, the Plan will be administered by the Compensation Committee of
the Board of Directors (the "Committee"). While the Committee is authorized to
interpret the Plan, prescribe, amend and rescind rules relating to the Plan,
and generally to make such determinations and take such actions it deems
advisable which are not contrary to the express terms of the Plan, the
Committee has no discretion to determine the Non-Employee Directors to receive
awards under the Plan or the timing of the awards or otherwise to alter the
terms of the Plan.

RESTRICTED STOCK AWARDS

The Plan provides for the automatic grant of awards of Common Stock of the
Company to Non-Employee Directors ("Restricted Stock Awards"). Immediately
following approval of the Plan by the shareholders, each Non-Employee Director
will receive a Restricted Stock Award consisting of Common Stock with a fair
market value of $12,500. The awards will be made in lieu of an annual
retirement accrual of $15,000 previously given to Non-Employee Directors.

Following the initial awards, any person first appointed or elected to the
Board who qualifies as a Non-Employee Director immediately following such
appointment or election will receive a Restricted Stock Award, as of the date
of such election or appointment, having a fair market value of $12,500. In
addition, beginning January 1, 1995, and on each January 1 thereafter, each
Non-Employee Director who is a director on that date will receive a Restricted
Stock Award as of that date having a fair market value of $12,500.

For purposes of the Plan, the fair market value of the Company's Common Stock
is deemed to be the grant date composite closing price for such Common Stock on
the New York Stock Exchange ("NYSE"), or if the Common Stock is not traded on
the date of grant, on the immediately preceding trading day. The total number
of shares of Common Stock awarded to an individual Director on each award date
is determined by dividing $12,500 by such fair market value of the Common
Stock.

Generally, shares of Common Stock received pursuant to a Restricted Stock
Award may not be sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of by the Non-Employee Director until five years from the
date of grant. If a Non-Employee Director voluntarily resigns or is removed for
cause as a Board member before completion of the fifth year, the shares of
Common Stock granted pursuant to such Restricted Stock Award will be forfeited.

22
<PAGE>

The restrictions lapse sooner than five years immediately upon (1)
termination of the director's service as a result of death, disability,
retirement or failure to be nominated or elected as a Board member, (2) a
merger or consolidation of the Company in which the Company is not the
surviving corporation, (3) sale of substantially all of the assets of the
Company or acquisition of 50% of the outstanding stock of the Company by
another entity, and (4) a "change in control" of the Company, which is deemed
to have occurred if, during any two year period, the individuals who comprise
the Board at the beginning of the period (along with any successor nominated or
elected by two-thirds of such directors) cease to constitute a majority of the
Board at any time during that period.

During the period in which the stock is restricted, the Non-Employee Director
will have the right to vote and to receive any dividends and payments on such
stock.

STOCK OPTIONS

The Plan also includes a contingent feature providing for automatic grants to
the Non-Employee Directors of options ("Options") to purchase Common Stock at
an exercise price equal to the fair market value of the stock on the date the
Option is granted. No stock options will be granted until the Committee
activates the stock option feature, and specifies the number of shares subject
to an annual option grant to each Non-Employee Director, not to exceed 1,000
shares (the "Annual Amount"). The automatic Option grant provisions of the Plan
are contingent and may never be activated. However, if shareholders approve the
Plan, the Committee will have the ability to activate this contingent feature
of the Plan without further shareholder approval.

If the contingent Option grant feature of the Plan is implemented, an option
to purchase the Annual Amount of shares of Common Stock will be granted (1) on
January 1 of the first year which begins at least six months after such feature
has become effective to each person who is an Non-Employee Director on such
grant date and (2) to other Non-Employee Directors elected or appointed to the
Board after such January 1 date on the date each first becomes a Director of
the Company. On January 1 of each year thereafter, each Non-Employee Director
will be granted an Option to purchase the Annual Amount of shares of Common
Stock.

Each Option granted will be evidenced by a stock option agreement which may
contain such terms and conditions as may be determined by the Committee and not
inconsistent with the Plan. Each Option to be granted under the Plan would vest
and become exercisable as to 1/12 of the shares covered thereby on a monthly
basis such that the option would be fully exercisable one year after its date
of grant. The term of the option will be no longer than ten years from the date
of grant.

Each Option granted pursuant to the Plan would be exercisable only by that
director during his or her lifetime, and the Option would not be transferable
by such director by operation of law or otherwise other than by will or the
laws of descent and distribution.

The exercise price per share of Common Stock covered by each Option would be
equal to the composite closing price for the Common Stock on the NYSE on the
date of grant, or if the Common Stock is not traded on the date of grant, on
the immediately preceding trading day.

SHARES SUBJECT TO THE PLAN

One Hundred Fifty Thousand (150,000) shares of the Company's Common Stock are
authorized for issuance under the Plan. This authorization may be increased
from time to time by approval of the Board and by the shareholders of the
Company. Appropriate adjustments in the number and class of shares subject to
outstanding and future Options and Restricted Stock Awards will be made by the
Committee for stock splits, stock dividends, recapitalizations,
reorganizations, mergers, acquisitions, etc.

23
<PAGE>

Shares of Common Stock which are issued as Restricted Stock Awards, and
Options to purchase Common Stock granted under the Plan, reduce the maximum
number of shares of Common Stock remaining available for issuance under the
Plan. Any shares of Common Stock that are issued as Restricted Stock Awards,
but later forfeited, will not be available for reissuance under the Plan. In
the event that any Option granted under the Plan lapses or otherwise terminates
prior to being fully exercised, any shares of stock allocable to the
unexercised portion of such grant will again be available for future Restricted
Stock Awards or grants of Options under the Plan.

AMENDMENT AND TERMINATION OF THE PLAN

In general, the Board may amend or terminate the Plan without shareholder
approval (unless shareholder approval is required by law). However, no
amendment may be made more than once every six months, other than to comply
with changes in applicable law or regulation. In no event may the dollar value
of the annual Restricted Stock Award be increased from $12,500 to more than
$25,000 per Non-Employee Director, nor may the Annual Amount for Options be
increased to more than 1,000 shares of Common Stock per Non-Employee Director.
Any amendment or modification to the Plan may not affect any Restricted Stock
Award or Option previously granted.

Unless sooner terminated by the Board, the Plan terminates ten years after
the date the Plan is approved by shareholders. No Options or Restricted Stock
Awards may be granted after termination of the Plan.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the federal income tax consequences to the Non-
Employee Directors and the Company.

Restricted Stock--Unless an election is made under Section 83(b) of the
Internal Revenue Code, Non-Employee Directors who receive Restricted Stock
Awards will recognize taxable income as of the date on which the restrictions
on the Common Stock lapse in the amount of the fair market value of the stock
at that time. Non-Employee Directors may elect under Section 83(b) of the Code
to report as taxable income in the year of the Restricted Stock Award an amount
of ordinary income equal to the Common Stock's fair market value at that time.
If such an election is made, the electing Non-Employee Director is not required
thereafter to report any further compensation income upon becoming vested in
the stock covered by the election.

The Company will be entitled to a tax deduction to the extent and in the year
that ordinary income is recognized by the Non-Employee Director. Dividends paid
on Common Stock awarded under the Plan are generally treated as additional
compensation before the restrictions lapse, but are treated as true dividends
after the restrictions lapse (or after a Section 83(b) election). Dividends are
not deductible by the Company.

If a Non-Employee Director forfeits Common Stock received pursuant to a
Restricted Stock Award, and no Section 83(b) election has been made, he or she
will not recognize any income or loss. In addition, if an Non-Employee Director
forfeits Common Stock for which a Section 83(b) election has been made, no loss
or deduction is allowed with respect to the amount previously included in
income as a result of the Section 83(b) election.

Non-Employee Directors will recognize gain or loss upon the disposition of
their stock equal to the difference between (1) the amount realized on such
disposition and (2) the ordinary income recognized with respect to their stock
under the principles set forth above. That gain or loss will be recognized as
long or short term capital gain or loss depending on whether the stock was held
for at least one year.

24
<PAGE>

Stock Options--Generally, a Non-Employee Director will recognize no taxable
income as the result of the grant of an Option. Upon exercise of an Option, a
Non-Employee Director will normally recognize ordinary compensation income for
federal tax purposes equal to the excess of the then fair market value of the
shares over the exercise price. The Company will be entitled to a tax deduction
to the extent and in the year that ordinary income is recognized by the Non-
Employee Director.

Upon a sale of shares acquired pursuant to the exercise of an Option, any
difference between the sale price and the fair market value of the shares on
the date of exercise will be treated as capital gain or loss, and will qualify
for long-term capital gain or loss treatment if the shares have been held for
more than twelve months.

VOTE REQUIRED

Approval of the adoption of the Plan requires the affirmative vote of the
holders of a majority of the voting power represented at the Annual Meeting.
For this purpose, abstentions from voting will have the same effect as a vote
against the proposal, while broker non-votes will be disregarded and have no
effect on the outcome of the vote on the proposal.

The following table illustrates the benefits that would be received in 1994
by the Non-Employee Directors pursuant to the Restricted Stock Awards under the
Plan, assuming the stock value set forth in the footnote. No officer or
employee will receive any benefits under the Plan.

<TABLE>
<CAPTION>
RESTRICTED SHARES OF
STOCK COMMON
NAME AWARD ($) STOCK(1)
---- ---------- ---------
<S> <C> <C>
Per Director......................................... $ 12,500 529
All Non-Employee Directors........................... $137,500 5,819
</TABLE>
- --------

(1) There are currently 11 Non-Employee Directors who will be eligible to
receive benefits under the Plan. The number of shares of Common Stock
granted to each Non-Employee Director pursuant to a Restricted Stock Award
will be determined by dividing $12,500 by the fair market value of the
Company's Common Stock. The fair market value is deemed to be the composite
closing price for such Common Stock on the New York Stock Exchange on the
date of grant. The fair market value of the Common Stock on December 31,
1993 was $23.625 per share, and that value was used for determining the
number of shares of Common Stock in the above table.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION OF THE
EQUITY INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS

--------------------------------------------

APPOINTMENT OF AUDITORS

At last year's annual meeting, shareholders approved the appointment of
Arthur Andersen & Co. as independent public accountants to audit the
consolidated financial statements of the Company for the year ended December
31, 1993. The Board recommends that shareholders vote in favor of the
reappointment of Arthur Andersen & Co. as the Company's Independent auditors
for the year ending December 31, 1994. A representative of the firm will be
present at the Annual Meeting of Shareholders with the opportunity to make a
statement if he or she desires to do so and to respond to questions from
shareholders.

The Company has been informed by Arthur Andersen & Co. that neither the firm
nor any of its members or their associates has any direct financial interest or
material indirect financial interest in the Company or its affiliates.

--------------------------------------------

25
<PAGE>

SHAREHOLDER PROPOSAL NO. 1

A shareholder proponent has stated his intention to present the following
proposal at the 1994 Annual Meeting. The proposal and supporting statement, for
which the Board of Directors and Company accept no responsibility, are set
forth below. The Board opposes this proposal for the reasons stated after such
proposal.

John F. (Jack) Boyle, of 4124 Nichandros Street, Castro Valley, California,
the owner of 2,000 shares of the Company's Common Stock, has submitted the
following resolution for vote by the shareholders.

BE IT RESOLVED: That the stockholders of Consolidated Freightways, Inc. (CF)
urge that the Board of Directors take the necessary steps to declassify the
Board of Directors for the purpose of director elections, which shall be done
in a manner that does not affect the unexpired terms of directors previously
elected.

PROPONENT'S SUPPORTING STATEMENT

Staggered board terms don't serve the best interests of CF and its
shareholders.

The Board of CF is divided into three classes serving staggered three-year
terms. This means that it would take three years and three separate votes for
shareholders to replace the whole board.

CF's stated purpose is to provide continuity and prevent manipulative
takeovers. But a staggered board is unnecessary since as a Delaware company,
state law provides ample protection from hostile bidders. "Providing
continuity" really means shareholders can't hold directors accountable in
annual elections.

Only 52.85% of the shareholders supported management's classified board
proposal in 1985, a slim margin reflecting shareholder concern about management
entrenchment. Events have borne this out:

. The board learned of possible insider trading involving the chief
executive officer, other CF employees and a securities firm. The Board
filed a lawsuit, which stated,

CF alleges that defendant . . . and others have conspired and are
continuing to conspire to obtain and trade on inside information from
CF.

CF has taken the deposition of Defendant and others. The information
discovered during those depositions supports its allegations . . .

In 1992 the court ruled that the board brought the suit to the wrong
forum. Rather than bringing it to the proper forum, the Company did
nothing.

. The company's own chairman sold 32,500 shares of CF stock at $36.75 a
share, a value of $1,194,375.00 days before the announced takeover of
Emery in February 1989. Following the takeover, CF stock slid by more
than 50%.

. In 1993, the board approved an incentive plan for its Emery division
diverting most Emery profits to a management bonus pool. But the board
failed to disclose this plan until months after company executives openly
trumpeted Emery's newfound profitability. Many investors purchased CF
stock during this period of optimistic reports. When the plan was
disclosed publicly, CF stock value declined by nearly 20%, or more than
$113 million in market value.

. The Board's management of Emery and its important Express Mail contract
with the U.S. Postal Service remains troubled. The U.S. Justice
Department opened a fraud probe. Congress asked its General Accounting
Office to review the big government contract settled outside the normal
open-bidding process. The USPS also required a remedial ethics policy
special for Emery.

. Between 1990 and 1992 the Board oversaw an increase in executive
compensation to the top five executives of 76% even though the stock
declined by nearly 30%.

26
<PAGE>

Generally, shareholders have grown hostile to classified boards, rejecting
three of the four management proposals to classify a board in 1992, and
overturning a staggered board at Martin Marietta in 1993, according to the
Investor Responsibility Research Center.

For the reasons outlined above, you are encouraged to vote FOR this proposal.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:

This advisory proposal is sponsored by an employee of a Company subsidiary
who is a member of the International Brotherhood of Teamsters. It is virtually
identical to a proposal sponsored at the Company's 1993 Annual Meeting by
another member of the Teamsters Union. Despite an active solicitation conducted
and financed by the Teamsters in favor of last year's proposal, the Company's
shareholders defeated that proposal by a substantial margin.

The Company believes that this proposal, together with the proposal on page
28 of this proxy statement sponsored by another member of the Teamsters Union,
is made in furtherance of the Teamsters' continuing efforts to harass and
pressure the Company and its subsidiaries in connection with various labor-
management matters. For example, The Journal of Commerce reported on November
30, 1993: "Seeking to flex their muscles prior to critical contract
negotiations, Teamsters union activists are working to place shareholder
resolutions on ballots of the three largest unionized trucking companies for
consideration at their annual meetings next April." The Company and two other
corporations, whose subsidiaries are currently in joint contract negotiations
with the Teamsters Union, are the identified targets of these proposals.

The Company believes that shareholders' support of this proposal will
encourage and prolong the eighteen month-old effort by the Teamsters to use
corporate governance and other corporate campaign tactics to harass and
pressure the Company or its subsidiaries into entering into labor agreements
that are contrary to the interest of the Company's shareholders.

The proponent's supporting statement appears designed to attack the Company
and its management, rather than address the issue of a classified Board on its
merits. While the Company believes that the proponent's supporting statement is
replete with inaccurate statements and inferences, we see no productive purpose
in using this proxy statement to respond to these allegations. Instead, we will
address the issue of a classified Board on its merits.

We believe the proposal is not in the best interests of the Company or its
shareholders for a number of reasons.

In 1985, the Company's shareholders considered and approved an amendment to
the Company's Certificate of Incorporation to provide for the classification of
the Board of Directors into three equal or nearly equal classes, each to serve
for terms of three years, with one class being elected each year.

The Board of Directors firmly believes that classification gives the Board a
greater continuity of experience, since at any one time approximately one third
of the Board will be in its third year of service. In addition, the Board of
Directors believes that a classified Board serves as an obstacle to any sudden
and disruptive attempts to obtain control of the Company. For example,
throughout the 1980s there were a number of attempts by various individuals and
entities to acquire significant minority positions in certain companies with
the intent of obtaining actual control of the companies by electing their own
slate of directors, or of achieving some other goal, such as the repurchase of
their shares at a premium, by threatening to obtain such control. These
insurgents often threaten to elect a company's entire board of directors
through a proxy contest or otherwise, even though they do not own a majority of
the company's outstanding shares entitled to vote. The Company's classified
Board may discourage such purchases because its provisions operate to delay the
purchaser's ability to obtain control of the Board in a relatively short period
of time. The delay arises because, at a minimum, two successive annual

27
<PAGE>

meetings are required in order to elect a majority of the Board of Directors.
For this reason, a person seeking to acquire control of the Company also is
encouraged to initiate such action through arm's length negotiations with
management and the Board of Directors, who are in a position to negotiate a
transaction that is fair to all of the Company's shareholders.

For these reasons, approximately half of the Fortune 500 companies provide
for the staggered election of directors. Statistics compiled by the Investor
Responsibility Research Center, Inc. show that shareholders of public companies
have supported the use of classified boards by a substantial margin.

Approval of this advisory proposal requires the favorable vote of the holders
of a majority of the voting power represented at the meeting. If approved, the
proposal would serve as a recommendation to the Board of Directors to take the
necessary steps to eliminate the classified Board. Such steps would require the
repeal of the classified board provision in the Company's Certificate of
Incorporation, which would require approval by the Board of Directors and, in
accordance with the terms of the Certificate of Incorporation approved by the
Company's shareholders in 1985, the favorable vote, at a future shareholders'
meeting, of the holders of at least 80% of the then-outstanding shares of
voting stock of the Company.

As stated above, the Company's shareholders last year considered a virtually
identical proposal, and voted against it by a substantial margin.

THE BOARD OF DIRECTORS BELIEVES IT IS IN THE INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS TO REJECT THE PROPOSAL AND RECOMMENDS A VOTE AGAINST THE
SHAREHOLDER PROPOSAL.

SHAREHOLDER PROPOSAL NO. 2

The Company has been advised that Larry E. Ellison, who also is an employee
of a Company subsidiary and a member of the Teamsters Union, intends to submit
the following proposal for a vote at the meeting:

RESOLVED: That the Board of Directors take the necessary steps to remove the
by-law requirement that 80% of the outstanding shares must be voted to change
the structure of the Board.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:

The Company believes that this proposal, like the proposal on pages 26-27 of
this proxy statement, is made in furtherance of the Teamsters' continuing
efforts to harass and pressure the Company and its subsidiaries in connection
with various labor-management matters. In this regard, we refer to the quote
from The Journal of Commerce cited on page 27 of this proxy statement. The
Company believes that shareholder support of this proposal will only encourage
and prolong the eighteen month-old effort by the Teamsters to use corporate
governance and other corporate campaign tactics to harass and pressure the
Company or its subsidiaries into entering into labor agreements that are
contrary to the interests of the Company's shareholders.

We believe that the proposal is not in the best interests of the Company or
its shareholders.

In 1985, the Company's shareholders considered and approved an amendment to
the Company's Certificate of Incorporation which classified the Board of
Directors and provided that the classified Board provision could not be
modified or repealed without the favorable vote, at a shareholders' meeting, of
at least 80% of the then-outstanding shares of voting stock of the Company. The
Company believes that the 80% vote requirement was approved by shareholders in
order to ensure that the benefits recognized by shareholders in voting for the
classification of the Board could not be eliminated unless the holders of at
least 80% of the then-outstanding shares thought it was beneficial to do so.

28
<PAGE>

It appears that this proposal is intended to be a proposed amendment to a
provision in the Company's By-laws. Such By-law amendment requires the
favorable vote of the holders of at least 80% of the then-outstanding shares of
voting stock of the Company. In light of the provisions in the Company's
Certificate of Incorporation discussed above, even if this By-law amendment is
approved, the Board is not empowered to declassify the Board, make other
changes in the structure of the Board as provided for in the Certificate of
Incorporation or eliminate the 80% vote requirement, without an amendment to
the Certificate of Incorporation. Such an amendment to the Certificate of
Incorporation would require the favorable vote, at a future shareholders'
meeting, of the holders of at least 80% of the then-outstanding shares of
voting stock of the Company. In addition, under applicable provisions of
Delaware law (the Company's state of incorporation), shareholders cannot amend
the Certificate of Incorporation unless such proposed amendment is first
approved by the Company's Board of Directors.

THE BOARD OF DIRECTORS BELIEVES IT IS IN THE INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS TO REJECT THE PROPOSAL AND RECOMMENDS A VOTE AGAINST THE
SHAREHOLDER PROPOSAL.

--------------------------------------------

PRINCIPAL SHAREHOLDERS

According to information furnished to the Company as of December 31, 1993,
the only persons known to the Company to own beneficially an interest in 5% or
more of the shares of Common Stock or Series B Preferred Stock are as follows:

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------------------ ---------------------- --------
<S> <C> <C>
T. Rowe Price Associates, Inc. 8,590 Common(1) 0.02%
And T. Rowe Price Trust Company......... 843,382 Preferred(1) 8.7%
100 East Pratt Street
Baltimore, MD 21202
FMR Corp................................. 2,010,213 Common(2) 5.63%
82 Devonshire Street
Boston, MA 02109
The Capital Group, Inc................... 1,967,360 Common(3) 5.45%
333 South Hope Street
Los Angeles, CA 90071
State of Wisconsin Investment Board...... 3,348,600 Common(4) 9.38%
P.O. Box 7842
Madison, WI 53707
</TABLE>

- --------
(1) T. Rowe Price Associates, Inc. ("Price Associates") has sole voting power
over 6,800 shares, shared voting power over 4,385,586 shares, sole
dispositive power over 8,590 shares and shared dispositive power over
4,385,586 shares. T. Rowe Price Trust Company, the trustee under the
Company's Thrift and Stock Plan ("Trust Company"), has sole voting power
over 0 shares, shared voting power over 4,385,586 shares, sole dispositive
power over 0 shares and shared dispositive power over 4,385,536 shares.

These holdings include 8,590 shares of Common Stock and 843,382 shares of
Preferred Stock (which Preferred Stock is held pursuant to the Consolidated
Freightways, Inc. Thrift and Stock Plan). Each record share of Preferred
Stock has the right to 5.2 noncumulative votes on each matter submitted to
the meeting. The Preferred Stock is convertible at the trustee's option
under certain circumstances into four shares of Common Stock for each share
of Preferred Stock. On a fully converted basis, these holdings represent
8.7% of the Common Stock and 11.00% of the voting power.

Price Associates serves as investment adviser with shared power to vote
the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates and the Trust Company are
deemed to be beneficial owners of the Common Stock and Preferred

29
<PAGE>

Stock which has not been allocated to participant's accounts under the
Thrift and Stock Plan. However, Price Associates and the Trust Company
expressly disclaim that they are, in fact, the beneficial owners of such
securities.
(2) FMR Corp., through its subsidiary Fidelity Management & Research Company,
has sole voting power over 0 shares, shared voting power over 0 shares,
sole dispositive power over 2,010,213 shares and shared dispositive power
over 0 shares. FMR Corp., through its subsidiary Fidelity Management Trust
Company, has sole voting power over 59,668 shares and shared voting power,
sole dispositive power and shared dispositive power over 0 shares.
According to its most recent Schedule 13G, FMR Corp. also holds 1,096,900
Depositary Shares, each representing one-tenth of a share of Series C
Conversion Preferred Stock. Each Depository Share will automatically
convert into one share of Common Stock, plus unpaid dividends in the form
of cash or additional common stock, on March 15, 1995 or earlier at the
option of the Company.

(3) The Capital Group, Inc., through its subsidiaries, has sole voting power
over 221,030 shares, shared voting power over 0 shares, sole dispositive
power over 1,967,360 shares and shared dispositive power over 0 shares.
Certain operating subsidiaries of the Capital Group, Inc., exercised
investment discretion over various institutional accounts which held as of
December 31, 1993, 1,967,360 shares of Common Stock. Capital Guardian Trust
Company, a bank, and one of such operating companies, exercised investment
discretion over 429,360 of such shares. Capital Research and Management
Company and Capital International, Inc., registered investment advisers,
had investment discretion with respect to 1,453,000 and 85,000,
respectively, of such shares.
(4) State of Wisconsin Investment Board has sole voting power over 3,348,600
shares, shared voting power over 0 shares, sole dispositive power over
3,348,600 shares and shared dispositive power over 0 shares.

COMPLIANCE WITH THE EXCHANGE ACT

The Securities Exchange Act of 1934 requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. The rules also require executive officers and directors to file
annual reports with the Commission disclosing (1) any exempt transactions which
occurred during the last fiscal year that were not previously reported and (2)
any currently reportable transactions for which executive officers and
directors should have made filings (but did not) for the last two years.

By Commission regulation, they are also required to furnish the Company with
copies of all such filings. Based solely on its review of the copies of filings
received, and/or written representations made, the Company believes that all
filing requirements applicable to its executive officers, directors, and
greater than ten percent beneficial owners were complied with in 1993.

--------------------------------------------

CERTAIN LITIGATION

On January 31, 1994, Timothy J. Buban, an individual who is an employee of a
Company subsidiary and a member of the International Brotherhood of Teamsters
(the "IBT"), filed a purported class action in the United States District Court
for the Northern District of California in which Raymond F. O'Brien, the
Company's Chairman of the Board, and an executive with a Company subsidiary,
were named defendants. On March 10, 1994, the plaintiff dismissed the executive
of the Company's subsidiary from the action. The complaint alleges that the
defendant violated Rules 10b-5 and 14e-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and is liable under Section 20A of the
Exchange Act, in connection with sales of shares of the Company's Common Stock
in early February 1989, prior to the time the Company entered into and publicly
announced an agreement to acquire Emery Air Freight Corporation. The class
action is asserted on behalf of persons who purchased

30
<PAGE>

the Company's Common Stock between February 3, 1989 and February 10, 1989. The
Company is not a party to the lawsuit. The plaintiff alleges that he purchased
2.84 shares of the Company's Common Stock for a total of $100 on February 9,
1989. The defendant has advised the Company that he believes the allegations
are entirely without merit and that he intends to defend against these
allegations vigorously. The defendant also has advised the Company that he
believes this lawsuit is part of the continuing corporate campaign being waged
against the Company and its management by the IBT for the purpose of harassing
and pressuring the Company and its subsidiaries in connection with various
labor-management matters. The defendant intends to file a motion to dismiss the
Complaint in the near future.

--------------------------------------------

FUTURE SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the Company's 1995
Annual Meeting of Shareholders must be received by the Company by November 18,
1994, for inclusion in the proxy statement and form of proxy relating to that
meeting.

--------------------------------------------

OTHER MATTERS

The Company will furnish to interested shareholders, free of charge, a copy
of its 1993 Annual Report to the Securities and Exchange Commission on Form 10-
K. The report will be available for mailing after April 11, 1994. Please direct
your written request to the Corporate Secretary, Consolidated Freightways,
Inc., 3240 Hillview Avenue, Palo Alto, CA 94304.

Your Board knows of no other business that will come before the meeting,
except that the Company has been informed that a shareholder intends to present
a proposal relating to confidential voting that was excluded from this proxy
statement in accordance with the applicable provisions of Rule 14a-8 of the
Securities Exchange Act of 1934. If such proposal is properly brought before
the meeting, it is intended that the proxy holders will use their discretionary
authority to vote the proxies against such proposal. If any other matters are
properly brought before the meeting, it is intended that the proxies will be
voted in accordance with the best judgment of the proxy holders.

--------------------------------------------

The expense of proxy solicitation will be borne by the Company. The
solicitation is being made by mail and may also be made by telephone,
telegraph, facsimile, or personally by directors, officers, and regular
employees of the Company who will receive no extra compensation for their
services. In addition, the Company has engaged the services of Georgeson &
Company, Inc., New York, New York, to assist in the solicitation of proxies at
a fee of $7,500, plus expenses. The Company has also engaged Chemical Bank to
act as inspector of elections. The Company will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy material to beneficial owners of the
Company's voting stock.

YOU ARE RESPECTFULLY REQUESTED TO EXERCISE YOUR RIGHT TO VOTE BY SIGNING AND
DATING THE ENCLOSED WHITE PROXY AND RETURNING IT IN THE ENVELOPE ENCLOSED FOR
YOUR CONVENIENCE.

BY ORDER OF THE BOARD OF DIRECTORS

MARYLA R. BOONSTOPPEL
Vice President and Secretary

March 18, 1994

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APPENDIX A

CONSOLIDATED FREIGHTWAYS, INC.
EQUITY INCENTIVE PLAN
FOR NON-EMPLOYEE DIRECTORS

SECTION 1

INTRODUCTION

1.1 Establishment. Consolidated Freightways, Inc., a Delaware corporation
(the "Company"), hereby establishes the Consolidated Freightways, Inc. Equity
Incentive Plan for Non-Employee Directors (the "Plan") for those directors
("Directors") of the Company who are neither officers nor employees of the
Company. The Plan provides for the grant of restricted stock awards and stock
options to Directors of the Company.

1.2 Purposes. The purposes of the Plan are to encourage the Directors to own
shares of the Company's stock and thereby to align their interests more closely
with the interests of the other stockholders of the Company, to encourage the
highest level of Director performance by providing the Directors with a direct
interest in the Company's attainment of its financial goals, and to provide a
financial incentive that will help attract and retain the most qualified
Directors.

1.3 Effective Date. The Effective Date of the Plan (the "Effective Date")
shall be the date the Plan is approved by stockholders of the Company. This
Plan and each award granted hereunder is conditioned on approval of the Plan by
the Company's stockholders at the 1994 Annual Meeting of Stockholders in
accordance with the requirements of Rule 16b-3 and the NYSE (as defined below).

SECTION 2

DEFINITIONS

2.1 Definitions. The following terms shall have the meanings set forth below:

(a) "Board" means the Board of Directors of the Company.

(b) "Committee" means a committee consisting of members of the Board who
are empowered hereunder to take actions in the administration of the Plan.
The Committee shall be so constituted at all times as to permit the Plan to
comply with Rule 16b-3 ("Rule 16b-3") promulgated under the Securities
Exchange Act of 1934 (the "1934 Act"). Members of the Committee shall be
appointed from time to time by the Board, shall serve at the pleasure of
the Board and may resign at any time upon written notice to the Board.

(c) "Director" means a member of the Board who is neither an officer nor
an employee of the Company. For purposes of the Plan, an employee is an
individual whose wages are subject to the withholding of federal income tax
under Section 3401 of the Internal Revenue Code, and an officer is an
individual elected or appointed by the Board or chosen in such other manner
as may be prescribed in the bylaws of the Company to serve as such.

(d) "Fair Market Value" means the closing price of the Stock as reported
on The New York Stock Exchange ("NYSE") Composite Tape on a particular
date. If there are no Stock transactions on such date, the Fair Market
Value shall be determined as of the immediately preceding date on which
there were Stock transactions on the NYSE. If the Stock is not listed on
the NYSE at the time of an award, the Fair Market Value of the Stock on the
particular date shall be as determined

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by the Committee using a reference comparable to the NYSE, such as the
National Market System of the National Association of Securities Dealers
Automated Quotation System or such other exchange or automated quotation
system on which the Stock is then traded.

(e) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
it may be amended from time to time.

(f) "Option" means an option to purchase Stock granted to a Director
pursuant to Section 7 hereof that is subject to certain restrictions
imposed in accordance with the provisions of the Plan.

(g) "Restricted Stock Award" means an award of Stock granted to a
Director pursuant to Section 6 hereof that is subject to certain
restrictions imposed in accordance with the provisions of the Plan.

(h) "Stock" means the Common Stock, $0.625 par value, of the Company.

2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.

SECTION 3

PLAN ADMINISTRATION

The Committee shall be responsible for the administration of the Plan.
However, subject to the ability of the Board to amend the Plan pursuant to
Section 10 hereof, the Committee shall have no authority, discretion or power
to select the Directors who will receive Restricted Stock Awards or Options,
determine the Restricted Stock Awards or Options to be granted pursuant to the
Plan, the number of shares of Stock to be issued thereunder or the time at
which such Restricted Stock Awards or Options are to be granted (subject in
each case to Section 7 hereof), establish the duration and nature of Restricted
Stock Awards or Options or alter any other terms or conditions specified in the
Plan, except in the sense of administering the Plan subject to the provisions
of the Plan. Subject to the foregoing limitations, the Committee, by majority
action thereof, is authorized to interpret the Plan, prescribe, amend and
rescind rules and regulations relating to the Plan, provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company and make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. No member of the Committee shall be liable for any
action or determination made in good faith. The determinations, interpretations
and other actions of the Committee pursuant to the provisions of the Plan shall
be binding and conclusive for all purposes and on all persons.

SECTION 4

STOCK SUBJECT TO THE PLAN

4.1 Number of Shares. One Hundred Fifty Thousand (150,000) shares of Stock
are authorized for issuance under the Plan in accordance with the provisions of
the Plan and subject to such restrictions or other provisions as the Committee
may from time to time deem necessary. This authorization may be increased from
time to time by approval of the Board and by the stockholders of the Company
if, in the opinion of counsel for the Company, such stockholder approval is
required. Shares of Stock which are issued as Restricted Stock Awards shall be
applied to reduce the maximum number of shares of Stock remaining available for
use under the Plan. In the event that any Option grant hereunder lapses or
otherwise terminates prior to being fully exercised, any shares of Stock
allocable to the unexercised portion of such grant shall again be available for
future Restricted Stock Awards or grants of Options

A-2
<PAGE>

under the Plan. The Company shall at all times during the term of the Plan
retain as authorized and unissued Stock at least the number of shares from time
to time required under the provisions of the Plan, or otherwise assure itself
of its ability to perform its obligations hereunder.

4.2 Effect of Forfeitures and Terminations on Shares Available. Any shares of
Stock that are subject to a Restricted Stock Award and which are forfeited
shall not be available for reissuance under the Plan. In the event that any
Option grant hereunder terminates prior to being fully exercised, the shares of
Stock underlying the unexercised portion of such Option shall again be
available for Restricted Stock Awards or grants of Options under the Plan.

4.3 Adjustment Provisions.

(a) If:

(i) any recapitalization, reclassification, spin-off, split-up or
consolidation of Stock is effected;

(ii) the outstanding shares of Stock are exchanged, in connection with a
merger or consolidation of the Company or a sale by the Company of all or a
part of its assets, for a different number or class of shares of stock or
other securities of the Company or for shares of the stock or other
securities of any other corporation;

(iii) new, different or additional shares or other securities of the
Company or of another company are received by the holders of Stock; or

(iv) any distribution is made to the holders of Stock other than a cash
dividend;

Then the appropriate adjustments will be made to:

(i) the number and class of shares or other securities that may be issued
or transferred pursuant to outstanding Options or Restricted Stock Awards;

(ii) the number and class of shares or other securities available for
issuance under the Plan; and

(iii) the purchase price to be paid per share under outstanding Options.

(b) Upon the dissolution or liquidation of the Company, the Plan shall
terminate, and, except as otherwise provided herein, all Options previously
granted shall terminate on the date of such dissolution or liquidation of the
Company; provided that a Director shall have the right to exercise any Option
held by him (either before or during the Option Period) immediately prior to
such dissolution or liquidation to the full extent not theretofore exercised.

(c) Adjustments under subparagraph (a) of this Section 4.3 shall be made
according to the sole discretion of the Committee, and its decision shall be
binding and conclusive, subject to any legally required approval of the Board
of Directors or of any other entity.

(d) Except as provided in subparagraphs (a) and (b) of this Section 4.3, the
issuance by the Company of shares of capital stock of any class, or securities
convertible into shares of capital stock of any class shall not affect Options
or Restricted Stock Awards hereunder.

4.4 Dividend Payable in Stock of Another Corporation, etc. If the Company
shall at any time pay or make any dividend or other distribution upon the Stock
payable in securities or other property (except money), a proportionate part of
such securities or other property shall be set aside and delivered to any
Director then holding a Restricted Stock Award upon lapse of all restrictions
applicable to such Restricted Stock Award. Prior to the time that any such
securities or other property are delivered to a Director in accordance with the
foregoing, the Director shall, subject to the same forfeiture provisions
applicable to the Restricted Stock Award to which such securities or other
property relates, be the

A-3
<PAGE>

owner of such securities or other property and shall have the right to vote the
securities, receive any dividends payable on such securities and in all other
respects shall be treated as the owner. If securities or other property which
have been set aside by the Company in accordance with this Section are not
delivered to a Director because restrictions applicable to such Restricted
Stock Award do not lapse and such Stock is forfeited, then such securities or
other property shall be forfeited to the Company and shall be dealt with by the
Company as it shall determine in its sole discretion.

4.5 Rights to Subscribe. If the Company shall at any time grant to the
holders of its Stock rights to subscribe pro rata for additional shares thereof
or for any other securities of the Company or of any other corporation, there
shall be reserved with respect to the shares then outstanding pursuant to any
Restricted Stock Award the Stock or other securities which the Director would
have been entitled to subscribe for if immediately prior to such grant the
restrictions applicable to such Restricted Stock Award had lapsed. Upon the
lapse of all restrictions applicable to Stock held pursuant to a Restricted
Stock Award the Director shall be provided the opportunity to subscribe for the
additional shares or other securities issuable with respect to such shares of
Stock.

4.6 General Adjustment Rules. No adjustment or substitution provided for in
this Section 4 shall require the Company to issue a fractional share of Stock,
and the total substitution or adjustment with respect to each Restricted Stock
Award shall be limited by deleting any fractional share. In the case of any
such substitution or adjustment appropriate adjustments shall be made to
Restricted Stock Awards to reflect any such substitution or adjustment.

4.7 Determination by the Committee, etc. Adjustments under this Section 4
shall be made by the Committee, whose determinations with regard thereto shall
be final and binding upon all parties thereto.

SECTION 5

PARTICIPATION

Each Director shall receive Options or Restricted Stock Awards on the terms
and conditions set forth under the Plan. Each Director shall, if required by
the Committee, enter into an agreement with the Company, in such form as the
Committee shall determine and which is consistent with the provisions of the
Plan. In the event of any inconsistency between the provisions of the Plan and
any such agreement entered into hereunder, the provisions of the Plan shall
govern.

SECTION 6

RESTRICTED STOCK AWARDS

6.1 Initial Restricted Stock Awards. Upon the Effective Date of the Plan,
each Director who is then a member of the Board shall receive a Restricted
Stock Award having a value, as determined pursuant to Section 6.3 below, of
$12,500. Thereafter any person first appointed or elected to the Board who
qualifies as a Director immediately following such appointment or election,
shall receive a Restricted Stock Award, as of the date of such election or
appointment having a value determined pursuant to Section 6.3 below, of
$12,500. Grants pursuant to this Section 6.1 are referred to in this Plan as
"Initial Restricted Stock Awards."

6.2 Subsequent Restricted Stock Awards. Beginning January 1, 1995, and on
each January 1 thereafter, each Director who is a Director on that date, shall
receive a Restricted Stock Award as of that date (a "Subsequent Restricted
Stock Award") having a value, determined pursuant to Section 6.3 below, of
$12,500.

A-4
<PAGE>

6.3 Date of Grant, Number of Shares. The Initial Restricted Stock Award shall
be made, as applicable, on (i) the Effective Date or (ii) the date after the
Effective Date that a Director is first elected or appointed as a member of the
Board. Subsequent Restricted Stock Awards shall be made on January 1 of each
year, beginning January 1, 1995. The total number of shares of Stock included
in each such Restricted Stock Award shall be determined by dividing $12,500 by
the Fair Market Value of a share of Stock on the date of grant. In no event
shall the Company be required to issue fractional shares. Whenever under the
terms of this Section 6 a fractional share of Stock would otherwise be required
to be issued, an amount in lieu thereof shall be paid in cash based upon the
Fair Market Value of such fractional share.

6.4 Retention of Award, Termination. If after an Initial Restricted Stock
Award or Subsequent Restricted Stock Award, a Director voluntarily resigns or
is removed for cause as a Board member before completion of the fifth
anniversary of the date of the grant of such Restricted Stock Award, the shares
of Stock granted pursuant to such Restricted Stock Award shall be forfeited.

6.5 Restrictions. Except as otherwise provided in the Plan, shares of Stock
received pursuant to a Restricted Stock Award may not be sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of until the
restrictions applicable to such Stock have lapsed pursuant to Section 6.6.

6.6 Lapse of Restrictions. Restrictions on Stock covered by a Restricted
Stock Award shall lapse upon the fifth anniversary of the date of grant of the
Restricted Stock Award. In addition, all restrictions on Stock covered by a
Restricted Stock Award shall lapse upon any of the following events:

(a) Upon the termination of a Director's service as a Board member as a
result of death, disability, retirement at normal retirement age for
directors, failure to be nominated for election as a director or failure to
be elected by stockholders as a Board member;

(b) In the event that the Company is merged or consolidated with another
corporation (other than a merger or consolidation in which the Company is
the continuing corporation and which does not result in any
reclassification or change of outstanding Stock), or if all or
substantially all of the assets or more than 50% of the outstanding Stock
of the Company is acquired by any other corporation, business entity or
person (other than a sale or conveyance in which the Company continues as a
holding company of an entity or entities that conduct the business or
businesses formerly conducted by the Company), or in case of a
reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company; or

(c) In the event of a change of control of the Company. For purposes of
the Plan, a "change of control" shall be deemed to have occurred if during
any period of two consecutive years (not including any period prior to the
Effective Date), individuals who at the beginning of such period constitute
the Board (and any new director whose election by the Board or whose
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority thereof.

6.7 Privileges of a Stockholder. A Director shall have all voting, dividend,
liquidation and other rights with respect to Stock in accordance with its terms
received by him as a Restricted Stock Award under this Section 6.

6.8 Enforcement of Restrictions. The Committee shall cause a legend to be
placed on the Stock certificates issued pursuant to each Restricted Stock Award
referring to the restrictions imposed in the Plan and, in addition, may in its
sole discretion require one or more of the following methods of enforcing such
restrictions:

(a) Requiring the Director to keep the Stock certificates, duly endorsed,
in the custody of the Company while the restrictions remain in effect; or

A-5
<PAGE>

(b) Requiring that the Stock certificates, duly endorsed, be held in the
custody of a third party while the restrictions remain in effect.

SECTION 7

OPTION GRANTS

7.1 Authorizing Date. The Option grant provisions of the Plan shall not
become operative until that date after the Effective Date on which the
Committee adopts a resolution stating (i) that the Option grant provisions are
thereafter in effect ("Authorizing Date") and (ii) the number of shares of
Stock to be subject to each annual Option grant hereunder ("Annual Amount").

7.2 Initial Option Grants; Subsequent Option Grants. An option to purchase
the Annual Amount of shares of Stock shall be granted ("Initial Option Grant")
(i) on January 1 of the first year which begins at least six months after the
Authorizing Date to each person who is a Director on such grant date and (ii)
to other Directors elected or appointed to the Board after such January 1 date
on the date each first becomes a Director of the Company. Thereafter, on
January 1 of each year, each Director who is a Director on that date shall be
granted an Option to purchase the Annual Amount of shares of Stock ("Subsequent
Option Grant").

7.3 Exercise Price for Options. The exercise price per share of Stock covered
by each Option shall be the Fair Market Value of the Stock on the date the
Option is granted. The exercise price of an Option granted under the Plan shall
be subject to adjustment to the extent provided in Section 4.3 hereof.

7.4 Terms and Conditions of Options. Each Option granted pursuant to the Plan
shall be evidenced by a written stock option agreement executed by the Company
and the Director to whom such Option is granted. The stock option agreement may
contain such other terms, provisions and conditions as may be determined by the
Committee and not inconsistent with the Plan. Each Option granted under the
Plan shall vest and become exercisable as to 1/12 of the shares covered thereby
on a monthly basis such that the option will be fully exercisable one year
after its date of grant.

7.5 Assignability of Options. Each Option granted pursuant to the Plan shall,
during the Director's lifetime, be exercisable only by the Director, and the
Option shall not be transferable by the Director by operation of law or
otherwise other than by will or the laws of descent and distribution.

7.6 Payment upon Exercise. Payment of the exercise price upon exercise of any
Option granted under the Plan shall be made in whole or in part with cash or
cash equivalents (including personal checks).

SECTION 8

RIGHTS OF DIRECTORS

Nothing contained in the Plan or in any Option or Restricted Stock Award
granted under the Plan shall interfere with or limit in any way the right of
the stockholders of the Company to remove any Director from the Board pursuant
to the Certificate of Incorporation or bylaws of the Company, nor confer upon
any Director any right to continue in the service of the Company.

SECTION 9

GENERAL RESTRICTIONS

9.1 Investment Representations. The Company may require any Director to whom
an Option or Restricted Stock Award is granted, as a condition of receiving
such Option or Restricted Stock Award or exercising an Option, to give written
assurances in substance and form satisfactory to the Company

A-6
<PAGE>

and its counsel to the effect that such person is acquiring the Option or Stock
subject to the Restricted Stock Award or Option for his own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems necessary
or appropriate in order to comply with Federal and applicable state securities
laws.

9.2 Compliance with Securities Laws. Each Option or Restricted Stock Award
shall be subject to the requirement that, if at any time counsel to the Company
shall determine that the listing, registration or qualification of the shares
subject to such Option or Restricted Stock Award upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance of shares thereunder, such Restricted Stock Award
or Option may not be accepted or exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.

9.3 Taxes. Each Director shall make appropriate arrangements for the
satisfaction of any applicable federal, state or local income or other tax
withholding requirements applicable to any Restricted Stock Award or Option
granted hereunder. In addition, each Director shall provide the Company with a
copy of any election which such Director may make under Section 83(b) of the
Code with respect to a Restricted Stock Award.

SECTION 10

PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Board may at any time terminate and from time to time may amend or modify
the Plan; provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the stockholders
if stockholder approval is required to enable the Plan to satisfy any
applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable and, provided further that (i) no amendment or modification shall
be made more than once every six months, other than to comport with changes in
the Internal Revenue Code, the Employment Retirement Income Security Act, or
the rules promulgated thereunder, (ii) in no event shall the dollar value under
Section 6 be increased from $12,500 to more than $25,000, and (iii) in no event
will the Annual Amount under Section 7 be increased to more than 1,000 shares
of Stock per Director.

No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options or Restricted Stock Awards theretofore granted
under the Plan without the consent of the Director holding such Options or
Restricted Stock Awards.

SECTION 11

REQUIREMENTS OF LAW

11.1 Requirements of Law. The issuance of stock and the payment of cash
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.

11.2 Federal Securities Law Requirements. Awards granted hereunder shall be
subject to all conditions required under Rule 16b-3 to qualify the Option or
Restricted Stock Award for any exception from the provisions of Section 16(b)
of the 1934 Act available under that Rule. Such conditions shall be set forth
in the agreement with the Director which describes the Option or Restricted
Stock Award.

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<PAGE>

11.3 Governing Law. The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws of the State of California.

SECTION 12

DURATION OF THE PLAN

The Plan shall terminate ten years after the date the Plan is approved by
stockholders of the Company or at such earlier time as may be determined by the
Board, and no Options or Restricted Stock Awards shall be granted after such
termination.

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Appendix Index

Consolidated Freightways, Inc.
1994 Proxy Statement Description of
Page reference omitted graphics

3 Photo of Robert Albert
3 Photo of Robert Jaunich II
4 Photo of Raymond F. O'Brien
4 Photo of Robert P. Wayman
5 Photo of John C. Bolinger
5 Photo of Donald E. Moffitt
6 Photo of Ronald E. Poelman
6 Photo of Robert D. Rogers
7 Photo of Earl F. Cheit
7 Photo of G. Robert Evans
8 Photo of Gerhard E. Liener
8 Photo of Richard B. Madden
9 Photo of John S. Perkins

<PAGE>

LOGO

March 18, 1994

Dear Fellow Employee:

Enclosed is proxy material for the Consolidated Freightways, Inc. Annual
Meeting of Shareholders to be held on April 25, 1994. This material is being
sent to you as a participant in the Consolidated Freightways, Inc. Common Stock
Fund and includes (1) the Company's 1994 Proxy Statement, (2) a card to
instruct Boston Safe Deposit and Trust Company, the Fund trustee, as to how you
wish the shares of Consolidated Freightways, Inc. credited to your account to
be voted, and (3) an envelope to send your instruction card to First Chicago
Trust Company of New York, the Company's stock transfer agent. A copy of our
1993 Annual Report is being sent to you under separate cover.

In order to vote the shares credited to your account, you must complete and
return the enclosed instruction card giving the trustee specific voting
instructions. If you wish, you may sign and return the card without giving
specific voting instructions in which case your shares will be voted as
recommended by the Consolidated Freightways, Inc. Board of Directors. Under the
rules of the Plan, the trustee votes any shares credited to your account for
which it does not receive a signed card in the same manner and proportion as
the shares of stock for which it does receive a valid instruction card.

Your instruction card must be returned directly to First Chicago Trust
Company of New York, the Company's stock transfer agent. It will be treated
confidentially by the transfer agent and the trustee.

THE EXERCISE OF SHAREHOLDER VOTING RIGHTS IS A VERY IMPORTANT FEATURE OF THE
COMMON STOCK FUND BECAUSE IT ALLOWS YOU TO PARTICIPATE DIRECTLY IN THE AFFAIRS
OF THE COMPANY. WE URGE YOU TO EXERCISE YOUR VOTING RIGHTS. IN ORDER FOR THE
TRUSTEE TO COMPLY WITH YOUR INSTRUCTIONS, FIRST CHICAGO TRUST COMPANY OF NEW
YORK MUST RECEIVE YOUR COMPLETED INSTRUCTION CARD NO LATER THAN APRIL 19, 1994.

Sincerely,

LOGO

3240 HILLVIEW AVENUE, PALO ALTO, CA 94304, 415-494-2900
<PAGE>

LOGO

March 18, 1994

Dear Fellow Employee:

Enclosed is proxy material for the Consolidated Freightways, Inc. Annual
Meeting of Shareholders to be held on April 25, 1994. This material is being
sent to you as a participant in the Consolidated Freightways, Inc. Thrift and
Stock Plan and includes (1) the Company's 1994 Proxy Statement, (2) a card to
instruct T. Rowe Price Trust Company, the Plan trustee, as to how you wish the
shares of Consolidated Freightways, Inc. credited to your account to be voted,
(3) if you wish to instruct the Trustee to vote the preferred shares of stock
credited to your account differently than the common shares, a direction form
to instruct the Trustee as to how you wish to vote such preferred shares, and
(4) an envelope to forward your instructions to First Chicago Trust Company of
New York, the Company's stock transfer agent. A copy of our 1993 Annual Report
is being sent to you under separate cover.

In order to vote the shares credited to your account, you must complete and
return the enclosed instruction card giving the trustee specific voting
instructions for the common and preferred shares. If you wish, you may sign and
return the card without giving specific voting instructions and the shares will
be voted as recommended by the Consolidated Freightways, Inc. Board of
Directors. The instruction card will direct the trustee to vote both the common
and preferred shares of stock credited to your account. If you wish to vote the
preferred shares of stock differently than the common shares, you must also
complete the preferred stock direction form and return it to First Chicago
Trust Company of New York with the instruction card. Under the rules of the
Plan, the trustee can vote any shares credited to your account only if you
complete and return the instruction card.

THE EXERCISE OF SHAREHOLDER VOTING RIGHTS IS A VERY IMPORTANT FEATURE OF THE
PLAN BECAUSE IT ALLOWS YOU TO PARTICIPATE DIRECTLY IN THE AFFAIRS OF THE
COMPANY. WE URGE YOU TO EXERCISE YOUR VOTING RIGHTS. IN ORDER FOR THE TRUSTEE
TO COMPLY WITH YOUR INSTRUCTIONS, FIRST CHICAGO TRUST COMPANY OF NEW YORK MUST
RECEIVE YOUR COMPLETED INSTRUCTION CARD NO LATER THAN APRIL 19, 1994.

Sincerely,

LOGO

3240 HILLVIEW AVENUE, PALO ALTO, CA 94304, 415-494-2900
<PAGE>

CONSOLIDATED FREIGHTWAYS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CONSOLIDATED FREIGHTWAYS, INC.

The undersigned appoints E.F. CHEIT, G.R. EVANS, R.E. POELMAN and each of
them, the proxies of the undersigned, with full power of substitution, to vote
the stock of CONSOLIDATED FREIGHTWAYS, INC. which the undersigned may be enti-
tled to vote at the Annual Meeting of Shareholders to be held on Monday, April
25, 1994 at 10:00 A.M. or at any adjournments or postponements thereof. The
proxies are authorized to vote in their discretion upon such other business as
may properly come before the meeting and any and all adjournments or postpone-
ments thereof.

Election of four Class III directors
for a three-year term.
Nominees:
Robert Alpert
Robert Jaunich II
Raymond F. O'Brien
Robert P. Wayman
P R O X Y
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.

PLEASE SIGN THIS CARD ON THE REVERSE SIDE
Please mark your votes as in this example.
5153
----
X
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR ITEMS 2 AND 3 BELOW AND AGAINST ITEMS 4 AND 5 BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
ITEMS 2 AND 3 BELOW.
- --------------------------------------------------------------------------------
FOR
WITHHELD
FOR
AGAINST
ABSTAIN
FOR
AGAINST
ABSTAIN
1. Election of Directors
(see reverse)
2. Approval of Equity Incentive Plan for Non-Employee Directors
3. Approval of Independent Auditors
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5 BELOW.
- --------------------------------------------------------------------------------
FOR
AGAINST
ABSTAIN
4. Shareholder Proposal No. 1 on Declassification of Board of Directors
5. Shareholder Proposal No. 2 on the 80% Vote Requirement in the By-laws to
Change Board Structure
The proxies are hereby authorized to vote in their discretion upon such other
matters as may properly come before the meeting and any adjournments or
postponements thereof. See "Other Matters" in the Consolidated Freightways,
Inc. Proxy Statement dated March 18, 1994.
SIGNATURE(S) _______________________DATE ______________________________________
NOTE: Please sign exactly as name
appears hereon. Joint owners should
each sign. When signing as an
attorney, executor, administrator,
trustee or guardian, please give full
title as such.
<PAGE>

CONSOLIDATED FREIGHTWAYS, INC. COMMON STOCK FUND
DIRECTION OF PARTICIPANT TO TRUSTEE OF
CONSOLIDATED FREIGHTWAYS, INC. COMMON STOCK FUND

The undersigned hereby directs the Trustee of the Consolidated Freightways,
Inc. Common Stock Fund to vote all shares of Consolidated Freightways, Inc.
common stock credited to the individual account of the undersigned under the
Common Stock Fund at the Annual Meeting of Shareholders of Consolidated
Freightways, Inc. to be held on Monday, April 25, 1994 at 10:00 A.M. or at any
adjournments or postponements thereof. The Trustee is hereby directed to autho-
rize the proxies to vote in their discretion upon such other business as may
properly come before the meeting and any and all adjournments or postponements
thereof.

Election of four Class III directors
for a three-year term.
Nominees:
Robert Alpert
Robert Jaunich II
Raymond F. O'Brien
Robert P. Wayman
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO DIRECT THE
TRUSTEE TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.

PLEASE SIGN THIS CARD ON THE REVERSE SIDE
Please mark your votes as in this example.
7897
----
X
THIS DIRECTION CANNOT BE VOTED UNLESS IT IS PROPERLY SIGNED AND RETURNED. IF
PROPERLY SIGNED AND RETURNED, THE TRUSTEE WILL VOTE AS DIRECTED BY THE
UNDERSIGNED OR, IF NO CHOICE IS SPECIFIED, THE TRUSTEE WILL VOTE FOR THE
ELECTION OF DIRECTORS, FOR ITEMS 2 AND 3 BELOW, AND AGAINST ITEMS 4 AND 5 BELOW
AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
ITEMS 2 AND 3 BELOW.
- --------------------------------------------------------------------------------
FOR
WITHHELD
FOR
AGAINST
ABSTAIN
FOR
AGAINST
ABSTAIN
1. Election of Directors
(see reverse)
2. Approval of Equity Incentive Plan for Non-Employee Directors
3. Approval of Independent Auditors
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5 BELOW.
- --------------------------------------------------------------------------------
FOR
AGAINST
ABSTAIN
4. Shareholder Proposal No. 1 on Declassification of Board of Directors
5. Shareholder Proposal No. 2 on the 80% Vote Requirement in the By-Laws to
Change Board Structure
The Trustee is hereby directed to authorize the proxies to vote in their dis-
cretion upon such other business as may properly come before the meeting and
any and all adjournments or postponements thereof. See "Other Matters" in the
Consolidated Freightways, Inc. Proxy Statement dated March 18, 1994.
SIGNATURE(S) _______________________DATE ______________________________________
NOTE: Please sign exactly as name
appears hereon.
<PAGE>

CONSOLIDATED FREIGHTWAYS, INC. TASP FUND

DIRECTION OF PARTICIPANT TO TRUSTEE OF
CONSOLIDATED FREIGHTWAYS, INC. COMMON STOCK FUND

PLEASE SIGN THIS CARD ON THE REVERSE SIDE
Please mark your votes as in this example.
7895
----
X
THIS DIRECTION CANNOT BE VOTED UNLESS IT IS PROPERLY SIGNED AND RETURNED. IF
PROPERLY SIGNED AND RETURNED, THE TRUSTEE WILL VOTE AS DIRECTED BY THE
UNDERSIGNED OR, IF NO CHOICE IS SPECIFIED, THE TRUSTEE WILL VOTE FOR THE
ELECTION OF DIRECTORS, FOR ITEMS 2 AND 3 BELOW, AND AGAINST ITEMS 4 AND 5 BELOW
AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
ITEMS 2 AND 3 BELOW.
- --------------------------------------------------------------------------------
FOR
WITHHELD
FOR
AGAINST
ABSTAIN
FOR
AGAINST
ABSTAIN
1. Election of Directors
(see reverse)
2. Approval of Equity Incentive Plan for Non-Employee Directors
3. Approval of Independent Auditors
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5 BELOW.
- --------------------------------------------------------------------------------
FOR
AGAINST
ABSTAIN
4. Shareholder Proposal No. 1-A on Declassification of Board of Directors
5. Shareholder Proposal No. 2 on the 80% Vote Requirement in the By-Laws to
Change Board Structure
The Trustee is hereby directed to authorize the proxies to vote in their dis-
cretion upon such other business as may properly come before the meeting and
any and all adjournments or postponements thereof. See "Other Matters" in the
Consolidated Freightways, Inc. Proxy Statement dated March 18, 1994.
SIGNATURE(S) _______________________DATE ______________________________________
NOTE: Please sign exactly as name
appears hereon.
<PAGE>

DIRECTION FORM

SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
DIRECTION TO TRUSTEE

(USE ONLY IF YOU WISH TO VOTE PREFERRED SHARES SEPARATELY)

The undersigned hereby directs the Trustee of the Consolidated Freightways,
Inc. Thrift and Stock Plan to vote all shares of Consolidated Freightways, Inc.
preferred stock credited to the individual account of the undersigned under the
Plan at the Annual Meeting of Shareholders of Consolidated Freightways, Inc. to
be held on Monday, April 25, 1994 at 10:00 A.M. or at any adjournments or
postponements thereof.

THIS DIRECTION CANNOT BE VOTED UNLESS IT IS PROPERLY SIGNED AND RETURNED. IF
PROPERLY SIGNED AND RETURNED, THE TRUSTEE WILL VOTE AS DIRECTED BY THE
UNDERSIGNED OR, IF NO CHOICE IS SPECIFIED, THE TRUSTEE WILL VOTE FOR THE
ELECTION OF DIRECTORS, FOR ITEMS 2 AND 3 BELOW, AND AGAINST ITEMS 4 AND 5 BELOW
AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.

1.Election of Four Class III directors for a three-year term.

Nominees: Robert Alpert, Robert Jaunich II, Raymond F. O'Brien and Robert
P. Wayman

[_]Vote FOR all nominees listed above; except vote withheld from the following
nominees (if any):
----------------------------------------------------------------------------
----------------------------------------------------------------------------

[_]Vote WITHHELD from all nominees.

2.Approve Equity Incentive Plan for Non-Employee Directors.
FOR [_] AGAINST [_] ABSTAIN [_]

3.Appointment of Arthur Andersen & Co. as the Company's auditors for the year
1994.
FOR [_] AGAINST [_] ABSTAIN [_]

4.Declassification of Board.
FOR [_] AGAINST [_] ABSTAIN [_]

5.Eliminate 80% Vote Requirement in the By-laws to Change Board Structure.
FOR [_] AGAINST [_] ABSTAIN [_]

The Trustee is hereby directed to authorize the proxies to vote in their
discretion upon such other business as may properly come before the meeting and
any and all adjournments or postponements thereof. See "Other Matters" in the
Consolidated Freightways, Inc. Proxy Statement dated March 18, 1994.
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