CONSOLIDATED FREIGHTWAYS INC, DEF 14A, 1995-03-17

CONSOLIDATED FREIGHTWAYS INC
DEF 14A, 1995-03-17
TRUCKING (NO LOCAL)

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

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

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

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

[_] $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:

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

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] 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:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:
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NOTICE OF ANNUAL MEETING

AND

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

APRIL 24, 1995

[CONSOLIDATED FREIGHTWAYS, INC. LOGO]

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[CONSOLIDATED FREIGHTWAYS, INC. LOGO]

3240 HILLVIEW AVENUE TELEPHONE: 415-494-2900
PALO ALTO, CALIFORNIA 94304

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Monday, April 24, 1995
10:00 A.M., Eastern Time
Du Barry Room, Hotel du Pont, 11th and Market Streets, Wilmington, Delaware

FELLOW SHAREHOLDER:

The Annual Meeting of Shareholders of the Company will be held at 10:00 A.M.,
Eastern Time, on Monday, April 24, 1995, to:

1. Elect four Class I directors for a three-year term.

2. Approve the Company's Amended and Restated Equity Incentive Plan for
Non-Employee Directors.

3. Ratify the appointment of auditors.

4. Act upon two shareholder proposals, if properly presented at the
meeting.

5. Transact any other business properly brought before the meeting.

Shareholders of record at the close of business on March 1, 1995, are
entitled to notice of and to vote at the meeting.

Your vote is important. Whether or not you plan to attend, I urge you to
SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD IN THE ENVELOPE PROVIDED,
in order that as many shares as possible will be represented at the meeting. If
you attend the meeting and prefer to vote in person, you will be able to do so
and your vote at the meeting will revoke any proxy you may submit.

Sincerely,

MARYLA R. BOONSTOPPEL
Vice President and Secretary

March 17, 1995
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Proxy Statement............................................................ 1
Board Of Directors' Recommendations...................................... 1
Proxy Voting Procedures.................................................. 1
Voting Requirements...................................................... 1
Voting Shares Outstanding................................................ 1
Proxy Voting Convenience................................................. 2
Attendance at the Meeting................................................ 2
Election Of Directors...................................................... 2
Stock Ownership By Directors And Executive Officers........................ 10
Information About The Board Of Directors And Certain Board Committees...... 11
Compensation Of Directors.................................................. 12
Compensation Of Executive Officers......................................... 13
I.Summary Compensation Table............................................. 13
II.Option/SAR Grants Table............................................... 14
III.Option/SAR Exercises And Year-End Value Table........................ 15
IV.Long-Term Incentive Plan Awards Table................................. 15
Compensation Committee Report On Executive Compensation.................... 16
Compensation Committee Interlocks And Insider Participation................ 20
A Comparison Of Five-Year Cumulative Total Shareholder Return.............. 20
A Comparison Of Four-Year Cumulative Total Shareholder Return.............. 21
Pension Plan Table......................................................... 22
Approval Of Amended And Restated Equity Incentive Plan For Non-Employee Di-
rectors................................................................... 22
Appointment Of Auditors.................................................... 26
Shareholder Proposal No. 1................................................. 26
Shareholder Proposal No. 2................................................. 28
Principal Shareholders..................................................... 30
Compliance With Section 16 Of The Exchange Act............................. 31
Confidential Voting........................................................ 31
Submission Of Shareholder Proposals........................................ 31
Other Matters.............................................................. 31
Appendix A: Consolidated Freightways, Inc. Amended And Restated Equity
Incentive Plan For Non-Employee Directors................................. A-1
</TABLE>
<PAGE>

CONSOLIDATED FREIGHTWAYS, INC.

3240 HILLVIEW AVENUE
PALO ALTO, CALIFORNIA 94304
TELEPHONE: 415/494-2900

PROXY STATEMENT

March 17, 1995

The Annual Meeting of Shareholders of Consolidated Freightways, Inc. (the
"Company") will be held on April 24, 1995. Shareholders of record at the close
of business on March 1, 1995 will be entitled to vote at the meeting. This
proxy statement and accompanying proxy are first being sent to shareholders on
or about March 17, 1995.

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 the approval of the Amended and Restated Equity Incentive Plan for
Non-Employee Directors, for the appointment of Arthur Andersen LLP as
independent auditors, 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 who receive the greatest number of votes cast for
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, 1995, the record date for the Annual
Meeting, there were outstanding and entitled to vote 36,389,908 shares of
Common Stock and 963,707 shares of Series B Cumulative Convertible Preferred
Stock ("Series B Preferred Stock"). Each share of Common Stock has the right to
one non-cumulative vote and each share of Series B Preferred Stock has the
right to 5.2 non-cumulative votes. Therefore, an aggregate of 41,401,184 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 BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES

The Board of Directors of the Company, pursuant to the By-Laws, has
determined that the number of Directors of the Company shall be thirteen.
Directors are elected by a plurality of the votes cast. Unless you withhold
authority to vote, your proxy will be voted for election of the nominees named
below.

The following persons are the nominees of the Board of Directors for election
as Class I directors to serve for a three-year term until the 1998 Annual
Meeting of Shareholders and until their successors are duly elected and
qualified:
Earl F. Cheit
G. Robert Evans
Gerhard E. Liener
Richard B. Madden

If a nominee becomes unable or unwilling to serve, proxy holders are
authorized to vote for election of such person or persons as shall be
designated by the Board of Directors; however, the management knows of no
reason why any nominee should be unable or unwilling to serve.

The Company has three classes of directors, each of which is elected for a
three-year term. Class II directors will be elected in 1996 and Class III
directors will be elected in 1997. All directors have previously been elected
by the shareholders, except William D. Walsh who was appointed by the Board as
a Class II director in 1994, and Margaret G. Gill who was appointed by the
Board as a Class III director in January 1995.

Under the Company's retirement policy for directors at age 72, Mr. Raymond F.
O'Brien, Chairman of the Board and a Class III director, will retire from the
Board at the Annual Meeting of Directors which will take place subsequent to
the Annual Meeting of Shareholders. Upon his retirement, the number of
authorized directors will be reduced to twelve. Mr. O'Brien has served on the
Board for more than 29 years. The Board joins the Company's management in
thanking him for his years of loyal service and valuable advice as a director
and former Chief Executive Officer of the Company.

2
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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 at
Berkeley 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 68,
is a member of the Board of Shaklee Corporation, Simpson
Manufacturing Co. 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
63, is a graduate of Wagner College with graduate studies at
the University of Pennsylvania and the University of
California at Los Angels Graduate Schools of Business. He is
currently a director of Fibreboard Corporation, Elco
Industries, Inc., and Swift Energy Co. 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, the Charitable Contributions and the
Compensation Committees of the Company.

[PHOTO]

3
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GERHARD E. LIENER Director since 1984

Member of the Board of Management and Chief Financial
Officer,
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 is now responsible for finance and
materials management. Dr. Liener, age 62, 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

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

Mr. Madden was Chief Executive Officer of Potlatch
Corporation from 1971 and Chairman of the Board from 1977
until his retirement in May of 1994. He was previously
associated with Mobil Oil Corporation where he served in
various management capacities for fifteen years. Mr. Madden
is a director of Potlatch Corporation, 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; and member of the Business-Higher Education
Forum. Mr. Madden, age 65, 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]

4
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CLASS II DIRECTORS

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
nationwide, full-service trucking 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 62, 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]

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 66, is a graduate of the University of Utah
Law School and the Harvard Advanced Management Program. He
currently serves as Chairman of the Board of Deseret Trust
Company and of Deseret Gymnasium. Mr. Poelman is Chairman of
the Pension and Employee Benefits Committee and a member of
the Advisory Nominating and the Charitable Contributions
Committees of the Company.

[PHOTO]

5
<PAGE>

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 and
Dallas Medical Resource, and is a member of the Executive
Board for Southern Methodist University's School of
Business. Mr. Rogers, age 58, 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]

WILLIAM D. WALSH Director since 1994

General Partner,
Sequoia Associates,
a private investment firm

Mr. Walsh has been a general partner with Sequoia
Associates since the company was founded in 1982. The firm
has major investments in acquiring or taking positions in
established operating companies. From 1967 to 1982, Mr.
Walsh served as Senior Vice President and Chief
Administrative Officer for the Arcata Corporation of Menlo
Park, California. Prior to that Mr. Walsh was a consultant
for McKinsey & Co. for six years, managing projects
involving acquisitions, organization structure and strategic
planning for major U.S. companies. From 1955 to 1961, Mr.
Walsh served as Assistant U.S. Attorney for the Southern
District of New York and as Counsel to the New York State
Commission of Investigation. Mr. Walsh, age 64, earned his
law degree from Harvard Law School in 1955 and holds a
Bachelor of Arts degree from Fordham University. He
currently serves on the boards of directors for Mike Yurosek
& Son, L.P., Newcourt Credit Group, Inc.; URS Corporation,
BVP, Inc. and the National Education Corporation of Irvine,
California. Mr. Walsh is Chairman of Champion Road Machinery
Limited of Ontario, Canada; Deanco, Inc. of Ithaca, New
York; and the Newell Industrial Corporation of Lowell,
Michigan. He is also a member of the Board of Visitors of
the University of Southern California School of Business, a
Trustee of Fordham University and a member of the Board of
Advisors, Committee on University Resources of Harvard
University. He is a member of the Audit and the Pension and
Employee Benefits Committees of the Company.

[PHOTO]

6
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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 is Chairman of The
Empire A.B. in Sweden and a member of the boards of
directors of Aladdin Industries, Inc., Texas Industries,
Inc., and Chaparral Steel Company. He is an advisory
director for I.C. Deal Companies, Heartland Capital
Partners, Ltd. and Asia Info Services. 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 of the
Dallas Foundation for Health, Education and Research, a
public charity. He is also a member of the Chief Executive
Forum, World Business Council and Young Presidents'
Organization. Mr. Alpert, age 63, serves as Chairman of the
Compensation Committee and is a member of the Executive and
the Finance Committees of the Company.

[PHOTO]

MARGARET G. GILL Director since 1995

Senior Vice President-Legal, External Affairs
and Secretary,
AirTouch Communications,
a wireless communications company

Mrs. Gill joined AirTouch Communications in 1994 following
a 20-year partnership in the law firm of Pillsbury, Madison
& Sutro in San Francisco. From 1983 to 1993, she served as
practice group manager and senior partner for the firm's
corporate and securities group, and as managing partner in
the Menlo Park, California office from 1991 to 1993. Mrs.
Gill earned her law degree in 1965 from Boalt Hall Law
School, University of California at Berkeley, and holds a
Bachelor of Arts degree from Wellesley College. She is a
fellow of the American Bar Foundation, serves on the
advisory board for the Institute for Corporate Counsel and
has served on several committees for the American Bar
Association and the California Bar Association. Mrs. Gill,
age 54, is also a member of the board of directors of the
Episcopal Diocese of California and a trustee and executive
committee member of the San Francisco Ballet. She is a
former director and general counsel for the United Way of
the Bay Area and a past trustee of St. Lukes Hospital
Foundation.

[PHOTO]

7
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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 $5.0 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, Chairman of the Managing General Partner of
Crown Pacific Partners, L.P., and 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 55, is a
graduate of Wesleyan University and The Wharton School,
University of Pennsylvania. Mr. Jaunich is Chairman of the
Advisory Nominating Committee and a member of the Audit, the
Finance and the Pension and Employee Benefits Committees of
the Company.

[PHOTO]

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
nationwide, full-service trucking 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 72, is a
graduate of the University of Missouri and the Harvard
Advanced Management Program. He is a director of
Transamerica Corporation, Watkins-Johnson Company and
Champion Road Machinery Limited of Ontario, Canada. 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]

8
<PAGE>

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 49,
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 Board 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. He is a
member of the Audit, the Charitable Contributions and the
Compensation Committees of the Company

[PHOTO]

9
<PAGE>

STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding beneficial ownership 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, 1995, by
the directors, the five most highly compensated executive officers and by the
directors and executive officers as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS
------------------------ ------------------------ --------
<S> <C> <C>
Robert Alpert.................................... 53,115 Common *
0 Series B Preferred
0 Depositary Shares
Earl F. Cheit.................................... 1,365 Common *
0 Series B Preferred
0 Depositary Shares
W. Roger Curry(3)................................ 230,965 Common *
96 Series B Preferred
0 Depositary Shares
G. Robert Evans.................................. 3,065 Common *
0 Series B Preferred
0 Depositary Shares
Margaret G. Gill................................. 588 Common *
0 Series B Preferred
0 Depositary Shares
Robert Jaunich II................................ 7,565 Common *
0 Series B Preferred
0 Depositary Shares
Gerhard E. Liener................................ 1,065 Common *
0 Series B Preferred
0 Depositary Shares
Richard B. Madden................................ 3,065 Common *
0 Series B Preferred
0 Depositary Shares
Donald E. Moffitt(4)............................. 396,021 Common *
0 Series B Preferred
20,000 Depositary Shares
Raymond F. O'Brien(5)............................ 264,450 Common *
0 Series B Preferred
0 Depositary Shares
Ronald E. Poelman................................ 2,095 Common *
0 Series B Preferred
0 Depositary Shares
Gregory L. Quesnel(6)............................ 145,237 Common *
86 Series B Preferred
0 Depositary Shares
Robert T. Robertson(7)........................... 226,357 Common *
96 Series B Preferred
0 Depositary Shares
</TABLE>

10
<PAGE>

(2) Each Depositary Share automatically converted into one share of Common
Stock, plus unpaid dividends in the form of cash or additional Common
Stock, on March 15, 1995.

(3) The shares shown include 207,282 shares which Mr. Curry has the right to
acquire within 60 days of January 31, 1995 because of vested stock options.

(4) The shares shown include 378,650 shares which Mr. Moffitt has the right to
acquire within 60 days of January 31, 1995 because of vested stock options.

(5) The shares shown include 225,225 shares which Mr. O'Brien has the right to
acquire within 60 days of January 31, 1995 because of vested stock options.

(6) The shares shown include 143,570 shares which Mr. Quesnel has the right to
acquire within 60 days of January 31, 1995 because of vested stock options.

(7) The shares shown include 225,061 shares which Mr. Robertson has the right
to acquire within 60 days of January 31, 1995 because of vested stock
options.

(8) The shares shown include 90,300 shares with Mr. Schmoller has the right to
acquire within 60 days of January 31, 1995 because of vested stock options.

INFORMATION ABOUT THE BOARD OF DIRECTORS AND CERTAIN BOARD COMMITTEES

During 1994, the Board of Directors held 10 meetings. Each director attended
at least 75% of all meetings of the Board and the committees of the Board on
which he or she served.

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. 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 membership on the Board. Shareholders'
proposals for nominees will be given due consideration by the Committee for
recommendation to the Board based on 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

11
<PAGE>

are Messrs. Robert Jaunich II--Chairman, G. Robert Evans, Donald E. Moffitt,
Raymond F. O'Brien and Ronald E. Poelman. The Committee met four times during
1994.

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, Earl F. Cheit, Robert Jaunich II, William D. Walsh
and Robert P. Wayman. The Committee met three times during 1994.

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 short-term and long-term incentive
compensation plans and grants of stock options under the Company's Stock Option
Plan of 1988. The Committee is also responsible for recommending compensation
of non-employee directors. The members of the Compensation Committee are
Messrs. Robert Alpert--Chairman, G. Robert Evans, Richard B. Madden, Robert D.
Rogers and Robert P. Wayman. The Committee met four times during 1994.

COMPENSATION OF DIRECTORS

During 1994, each non-employee director was paid an annual retainer of
$15,000 and a retirement benefit of $15,000 was accrued. Non-employee directors
were also 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 received an additional $3,000 and Chairmen of the Advisory
Nominating and the Charitable Contributions Committees received an additional
$2,000. The Chairman of the Board, who is not an employee of the Company, was
paid $100,000.

Effective January 1, 1995, the annual retainer paid to non-employee directors
was increased from $15,000 to $20,000 and the annual retirement accrual also
was increased to $20,000. Committee meeting fees were increased from $500 to
$750 per meeting attended.

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.

A director of the Company accrues a retirement benefit for each full calendar
month he or she is a non-employee director of the Company in an amount equal to
one-twelfth of the annual cash retainer. The retirement benefit vests when a
director has served on the Board for five years. The amount accrued prior to
1994 was $30,000 per year of service. In 1994, $15,000 in retirement benefits
accrued. Retirement payments continue for the director's number of years of
service as a non-employee director up to a maximum of 20 years, with the
earliest accruals paid first.

A restricted stock grant having a fair market value of $12,500 was made to
each non-employee director following approval of the Equity Incentive Plan for
Non-Employee Directors by shareholders last year and to non-employee directors
who joined the Board following the 1994 Annual Meeting of Shareholders. On
January 1, 1995, in accordance with the terms of the Amended and Restated
Equity Incentive Plan for Non-Employee Directors, an additional restricted
stock grant having a fair market value of $12,500 was made to each non-employee
director serving on the Board at that date. Stock options were granted on
January 1, 1995 to each non-employee director for 2,500 shares of Common Stock
of the Company at an exercise price of $22.375, the fair market value of the
stock on that date. The January 1, 1995 stock option grant is subject to
approval of the Amended and Restated Equity Incentive Plan for Non-Employee
Directors by shareholders at the 1995 Annual Meeting.

12
<PAGE>

COMPENSATION OF EXECUTIVE OFFICERS

I. SUMMARY COMPENSATION TABLE

The following table sets forth the compensation received by the Company's
Chief Executive Officer and the four next most highly paid executive officers
(the "Named Executives") for the three fiscal years ended December 31, 1994.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(3) LONG TERM COMPENSATION
-------------------------------------------------
AWARDS PAYOUTS
------------ -----------
SECURITIES
UNDERLYING LONG-TERM
OPTIONS/ INCENTIVE ALL OTHER
NAME AND SALARY BONUS(4) SAR'S PAYOUTS(5) COMPENSATION(6)
PRINCIPAL POSITION(S) YEAR $ $ (#) ($) ($)
- ----------------------- ---- ----------- ------------------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald E. Moffitt 1994 $ 618,038 $ 561,548 77,000/0 $ 0 $128,177
President & Chief 1993 600,028 603,028 52,500/0 0 138,545
Executive Officer 1992 526,202 98,004 0/0 0 133,141
W. Roger Curry(1) 1994 363,944 419,740 105,375/0 0 93,103
Senior Vice President 1993 317,148 380,578 32,500/0 0 56,579
1992 295,239 46,000 0/0 6,392 51,402
Robert T. Robertson(1) 1994 363,944 357,849 30,375/0 0 30,781
Senior Vice President 1993 317,148 279,537 72,500/0 0 13,103
1992 302,249 134,111 0/0 3,701 9,419
Gregory L. Quesnel 1994 335,126 242,453 30,375/0 0 21,313
Exec. Vice President & 1993 300,040 241,232 92,500/0 0 11,234
Chief Financial Officer 1992 250,802 47,124 0/0 1,622 6,042
Eberhard G.H.
Schmoller(2) 1994 258,762 $ 187,206 22,875/0 0 16,070
Senior Vice President 1993 184,777 122,276 55,900/0 0 8,984
and General Counsel 1992 174,020 0 6,000/0 1,539 6,537
</TABLE>
- --------
(1) Mr. Curry is also President and Chief Executive Officer of CF MotorFreight,
the Company's nationwide, full-service trucking subsidiary. He was
President and Chief Executive Officer of Emery Air Freight Corporation, the
Company's air freight subsidiary, until July 21, 1994. Mr. Robertson is
also President and Chief Executive Officer of Con-Way Transportation
Services, Inc., the Company's regional trucking subsidiary.

(2) Mr. Schmoller was promoted to the position of Senior Vice President and
General Counsel of the Company in October 1993. He was formerly the Vice
President and Corporate Counsel of Emery Air Freight Corporation, the
Company's air freight subsidiary.

(3) There are no amounts of Other Annual Compensation which are required to be
disclosed for 1994. 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 any of
the three years.

(4) 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.

(5) The amounts shown in this column reflect the dollar value of units that
have vested in each Named Executive'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>

(6) Amounts shown for 1994 in this column include:

(a) Payments by the Company for premiums for taxable group life insurance
on behalf of Messrs. Moffitt, Curry, Robertson, Quesnel and Schmoller
of $16,039, $7,205, $4,705, $1,888, and $3,550 respectively.

(b) Long-Term Incentive Plan interest earned and deferred for Messrs.
Curry, Robertson, Quesnel and Schmoller of $56,121, $300, $184 and
$4,155, respectively.

(c) Company contributions to the Thrift and Stock Plan accounts of Messrs.
Curry, Robertson, Quesnel and Schmoller of $2,250 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, Curry, Robertson, Quesnel
and Schmoller of $38,621, $27,527, $23,526, $16,991 and $6,115,
respectively.

II. OPTION/SAR GRANTS TABLE

OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT
DATE
PRESENT
INDIVIDUAL GRANTS(1) VALUE(3)
-------------------------------------------- --------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
(#)(2) FISCAL YEAR ($/SHARE) DATE ($)
---------- ------------ --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Donald E. Moffitt........ 77,000/0 10.45% $22.875 07/25/04 $642,950
W. Roger Curry........... 105,375/0 14.30% $22.875 07/25/04 $879,881
Robert T. Robertson...... 30,375/0 4.12% $22.875 07/25/04 $253,631
Gregory L. Quesnel....... 30,375/0 4.12% $22.875 07/25/04 $253,631
Eberhard G.H. Schmoller
........................ 22,875/0 3.10% $22.875 07/25/04 $191,006
</TABLE>
- --------
(1) No SARs were issued in 1994.
(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) 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 5.5 years, based on actual option exercises for exercisable options
granted since January, 1990; (iii) volatility equals 0.352; (iv) risk-free
interest rate equals 6.8%; and (v) estimated future average dividend yield
equals 2.0%.

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.

14
<PAGE>

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 1994 by
the Named Executives and the value of such officers' unexercised options/SARs
at December 31, 1994.

<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....... 16,818(1) $16,117 378,650/77,000 $3,038,474/0
W. Roger Curry.......... 231,701/105,375 1,678,347/0
Robert T. Robertson..... 225,369/30,375 1,513,966/0
Gregory L. Quesnel...... 50,000 701,813 144,179/30,375 809,016/0
Eberhard G.H. Schmoller. 2,175(1) 6,299 93,384/22,875 429,563/0
</TABLE>
- --------
(1) Expiration date for these options was December 31, 1994.
(2) Mr. Moffitt has 378,650 exercisable options valued at $3,038,474; 77,000
unexercisable options valued at $0; and 0 stock appreciation rights
(SARs). Mr. Curry has 207,282 exercisable options valued at $1,423,972;
105,375 unexercisable options valued at $0; and 24,419 SARs the
appreciation on which is valued at $254,375. Mr. Robertson has 225,061
exercisable options valued at $1,513,966; 30,375 unexercisable options
valued at $0; and 308 SARs the appreciation on which is valued at $0. Mr.
Quesnel has 143,570 exercisable options valued at $806,734; 30,375
unexercisable options valued at $0; and 609 SARs the appreciation on which
is valued at $2,282. Mr. Schmoller has 90,300 exercisable options valued
at $415,381; 22,875 unexercisable options valued at $0; and 3,084 SARs the
appreciation on which is valued at $14,182. 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 $22.375 on December 30, 1994.
(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 credited to outstanding balances of
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.

IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE

There were no Long-Term Incentive Plan awards made to the Named Executives
in 1994.

15
<PAGE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

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. Although the
Company has not adopted a formal weighting system for these components, it has
put a significant portion of total potential compensation for all executives
"at risk" through short term and long term incentive compensation. It is the
Company's policy to tie a greater portion of an executive's total potential
compensation to performance of the Company and its subsidiaries than is the
case for employees generally. In keeping with the general policy of pay for
performance, an even greater portion of the total potential compensation for
the five highest-paid executives named in the Summary Compensation Table on
page 13 ("Named Executives") is tied to performance than is the case for
executives generally.

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 are some of the same as those included in the performance graphs
that follow this report with the addition of several other transportation
companies. These exceptions and additions were made on the basis of comparable
size.

For 1994, we reviewed base salaries for executive officers against
competitive salary data for officers in similar positions at peer companies.
Having determined that executive salaries were generally competitive, the
Committee approved management's proposal to increase the salaries of some of
the executive officers based on individual factors such as increased
responsibilities, performance and competitive salaries. As to the Named
Executives, the increase for Mr. Schmoller for 1994 over 1993 reflects his
promotion to Senior Vice President and General Counsel and the increase for Mr.
Quesnel includes an adjustment to bring his salary more in line with
competitive levels.

The Board unanimously approved the recommendations 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 reviewed and approved by the Committee. The 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. In 1994, the

16
<PAGE>

performance objective for Messrs. Moffitt, Quesnel and Schmoller was based on
pre-tax, pre-incentive income of the parent Company, the performance objective
for Mr. Robertson was based on the pre-tax, pre-incentive income of Con-Way
Transportation Services, Inc., and the performance objective for Mr. Curry was
based on the pre-tax operating profits of Emery Air Freight Corporation.

Upon attainment of the established performance goals, participants, other
than the Named 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. For 1994, the
participation factors for the Chief Executive Officer and the four other Named
Executives were 75% and 60% of salary, respectively, also 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 1994, Con-Way, Emery 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 the Con-Way, Emery and parent
Company incentive compensation plans. As to the Named Executives, Messrs.
Moffitt, Quesnel and Schmoller earned incentive compensation of 119% of their
respective participation factors, under the parent Company plan. Similarly, Mr.
Robertson earned incentive compensation of 179% of his participation factor,
under the Con-Way plan; and Mr. Curry earned incentive compensation of 200% of
his participation factor, under the Emery plan. Although Mr. Curry was elected
the President and Chief Executive Officer of CF MotorFreight in July 1994, he
continued to participate in the incentive compensation plan for Emery, where he
served as President and Chief Executive Officer until July. Bonuses for the
Named Executives are reflected in the Summary Compensation Table for
Compensation of Executive Officers.

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. 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, and currently is the
Company's only long-term compensation program.

In early 1994, at the suggestion of the Committee, the Company engaged an
independent executive compensation consultant to reassess the competitiveness
of the Company's compensation programs for senior management. As part of this
study, the consultant was asked to analyze and compare the Company's base
salaries, annual bonuses and long-term incentive awards with competitive
practices and levels. The consultant concluded that, taken together, the
elements of the Company's compensation package deliver pay opportunity that is
situated well within competitive norms.

As part of the 1994 engagement, the consultant was asked to review various
stock option allocation methodologies and to recommend a formula that is
appropriate for the Company and consistent with practices in comparable
corporations. The allocation formula recommended by the consultant takes into
consideration each executive's organizational position, decision-making
influence and accountability over the strategic results of the Company. After
reviewing information and suggestions provided by the consultant and adjusting
for individual factors, the Committee granted options for approximately 500,000
shares to executives of the Company and its subsidiaries. These awards were
effective July 25, 1994.

17
<PAGE>

The Committee also established that up to the first 4,000 options granted to
each executive in 1994 be deemed Incentive Stock Options ("ISOs") as that term
is used in Section 422 of the Internal Revenue Code of 1986. The use of ISOs,
recommended by the Company's independent compensation consultant, is consistent
with the Company's desire to encourage long term accumulation of Company stock
by executives.

In addition to the above-described pool of "regular" stock option grants, the
Committee also made extraordinary option grants for a total of 225,000 shares
to six executives in 1994 as an additional incentive to improve results and in
recognition of increased responsibilities and/or extraordinary individual
performance. Mr. Curry, a Named Executive, was awarded 75,000 of these shares
in conjunction with his election to the position of President and Chief
Executive Officer of CF MotorFreight. The exercise price of all options granted
in 1994 was equal to the fair market value of the Company's stock on the date
the options were granted.

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 such growth awards were granted in 1994.

CEO COMPENSATION

The Compensation Committee based Mr. Moffitt's salary increase for 1994 on an
evaluation of his performance and the Company's performance (see Company
Performance below) and total shareholder return (see chart on page 21), taking
into consideration competitive salary data provided by the Company's
independent compensation consultant.

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 financial results. During the four years following Mr. Moffitt's
return to the Company (see chart on page 21), the Company's total shareholder
return largely kept pace with that of both the S & P 500 and the Peer Group
Index, and sharply exceeded that of both indexes in the final quarter of 1993,
when Emery returned to profitability. Total shareholder return continued to
exceed these indexes throughout 1994. Some key measures of the Company's
improved financial performance since Mr. Moffitt's return to the Company are
set forth below:

COMPANY PERFORMANCE

<TABLE>
<CAPTION>
CHANGE
FROM
1990 TO
1990 1994 1994
-------- -------- ---------
<S> <C> <C> <C>
Operating Income--(in thousands)................ $ 6,044 $142,234 $+136,190
Net Earnings (Loss)--(in thousands)............. $(40,727) $ 35,710 $ +76,437
Net Margin...................................... (1.0)% 0.8% +1.8 pts
Primary Earnings per Share (EPS)................ $ (1.16) $1.11* $ +2.27
Return on Average Equity (ROE).................. (7)% 9% +16 pts
Market Value--(in thousands).................... $411,253 $967,811 +135%
Long-Term Debt & Capital Leases................. $673,611 $397,857 -41%
Debt to Total Capital Ratio..................... 54% 37% -17 pts
</TABLE>
- --------
* Before an extraordinary charge in 1994 for write-off of intrastate operating
rights equal to $0.15 per share.

18
<PAGE>

For 1994, Mr. Moffitt earned short-term incentive compensation of $561,548,
based on the pre-tax, pre-incentive income objective for the parent Company
established at the beginning of 1994. For 1994, Mr. Moffitt elected to defer
all of his short-term incentive compensation until his retirement from the
Company.

As discussed under "Long-Term Incentive Compensation" on page 17, the
Company's independent executive compensation consultant was specifically asked
to recommend a formula for stock option allocations. Consistent with the
recommended formula, Mr. Moffitt was awarded options for shares having an
aggregate exercise price of approximately three times his annual salary.

POLICY ON DEDUCTIBILITY OF COMPENSATION

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 1995, even if all
performance goals are attained under the Company's short-term incentive plans.
The Compensation Committee intends to consider the matter again later this
year. 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.

COMMITTEE MEMBERSHIP

Mr. Raymond F. O'Brien resigned from the Committee on December 6, 1993. Prior
to resigning, he participated in the deliberations on 1994 salaries and the
1994 incentive compensation plans for the Named Executives. He did not
participate in considerations of option grants made in 1994. Mr. Robert P.
Wayman joined the Committee on April 25, 1994. For 1994 compensation, his
participation was limited to consideration of 1994 stock option grants and a
review of performance under short-term incentive compensation. The foregoing
report is approved by Mr. O'Brien and the current members of the Committee
identified below.

THE COMPENSATION COMMITTEE

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

19
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Members of the Compensation Committee are all independent directors of the
Company and have no other relationships with the Company and its subsidiaries.

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

<TABLE>

[GRAPH APPEARS HERE]

FIVE YEAR
CUMULATIVE
TOTAL SHAREHOLDER
RETURN
<CAPTION>
Measurement Period CONSOLIDATED S&P
(Fiscal Year Covered) FREIGHTWAYS INC. 500 INDEX PEER GROUP
- ------------------- ---------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
4Q89 $100 $100 $100
1Q90 $ 62 $ 97 $111
2Q90 $ 50 $103 $ 97
3Q90 $ 52 $ 89 $ 77
4Q90 $ 46 $ 97 $ 85
1Q91 $ 65 $111 $101
2Q91 $ 63 $111 $105
3Q91 $ 46 $117 $105
4Q91 $ 60 $126 $113
1Q92 $ 68 $123 $129
2Q92 $ 50 $126 $116
3Q92 $ 52 $130 $108
4Q92 $ 69 $136 $133
1Q93 $ 67 $142 $133
2Q93 $ 63 $143 $117
3Q93 $ 62 $146 $138
4Q93 $ 92 $150 $156
1Q94 $103 $144 $155
2Q94 $ 93 $145 $156
3Q94 $ 86 $152 $138
4Q94 $ 88 $152 $137
</TABLE>

* Assumes $100 invested on December 31, 1989 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 consisting 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 which faced the Company at that time.

20
<PAGE>

The chart below shows total shareholder returns, assuming $100 was invested
on December 31, 1990 in Consolidated Freightways, Inc., the S & P 500 Index,
and the Peer Group Index as defined above, with any dividends reinvested. 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 FOUR-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN

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

<TABLE>

[GRAPH APPEARS HERE]

<CAPTION>
Measurement Period CONSOLIDATED S&P
(Covered) FREIGHTWAYS INC. 500 INDEX PEER GROUP
- ------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
4Q90 $100 $100 $100
1Q91 $141 $114 $119
2Q91 $137 $114 $124
3Q91 $100 $121 $124
4Q91 $130 $130 $133
1Q92 $148 $127 $152
2Q92 $109 $130 $136
3Q92 $113 $134 $127
4Q92 $150 $140 $156
1Q93 $146 $146 $156
2Q93 $137 $147 $138
3Q93 $135 $151 $162
4Q93 $200 $155 $184
1Q94 $224 $148 $182
2Q94 $202 $149 $184
3Q94 $187 $157 $162
4Q94 $191 $157 $161
</TABLE>

<PAGE>

PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFITS

The following table illustrates the approximate annual pension that may
become payable to an employee in the higher salary classifications under the
Company's retirement plans.

<TABLE>
<CAPTION>
YEARS OF PLAN PARTICIPATION
--------------------------------------------
AVERAGE FINAL TOTAL EARNINGS DURING
HIGHEST FIVE CONSECUTIVE YEARS
OF LAST TEN YEARS OF EMPLOYMENT 15 20 25 30 35
- ----------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000......................... $ 48,906 $ 67,541 $ 86,177 $104,812 $123,447
$300,000......................... 73,906 102,041 130,177 158,312 186,447
$400,000......................... 98,906 136,541 174,177 211,812 249,447
$500,000......................... 123,906 171,041 218,177 265,312 312,447
$600,000......................... 148,906 205,541 262,177 318,812 375,447
$700,000......................... 173,906 240,041 306,177 372,312 438,447
$800,000......................... 198,906 274,541 350,177 425,812 501,447
</TABLE>

Compensation covered for the Named Executives is the highest five-year
average over the last ten years of employment of the "Salary" and "Bonus" shown
in the Summary Compensation Table on page 13. 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.

Applicable law limits the annual benefits which may be paid from a tax-
qualified retirement plan to $120,000 per year currently, and prevents
qualified pension accruals for compensation in excess of $150,000 per year and
for deferred compensation. The Company has adopted non-qualified plans to
provide for payment out of the Company's general funds of benefits not covered
by the qualified plans. The table above represents total retirement benefits
which may be paid from a combination of qualified and non-qualified plans.

As of December 31, 1994, Messrs. Moffitt, Curry, Robertson, Quesnel and
Schmoller had 27, 26, 23, 19 and 20 years of plan participation, respectively.

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

APPROVAL OF AMENDED AND RESTATED EQUITY INCENTIVE PLAN FOR
NON-EMPLOYEE DIRECTORS

On April 24, 1994, the shareholders approved the Equity Incentive Plan for
Non-Employee Directors (the "Prior Plan"). The Prior Plan provides for the
issuance of the Company's Common Stock through automatic awards of restricted
stock having a fair market value of $12,500 upon first becoming a director of
the Company and on each January 1 thereafter. Participation in the Prior Plan
is limited to directors who are neither officers nor employees of the Company
("Non-Employee Directors").

AMENDED AND RESTATED PLAN

On December 5, 1994 the Board of Directors adopted an amended and restated
plan (the "Plan") which contains the following principal changes from the Prior
Plan: (1) the addition of an automatic grant of stock options for shares of the
Company's Common Stock; (2) the addition of an automatic adjustment in the
number of shares granted as stock options and in the amount used to calculate
the number of shares granted as restricted stock, such adjustment to be based
upon a fraction, the numerator of which is the annual retainer then in effect
and the denominator of which is $20,000, representing the annual cash retainer
currently paid; and (3) an increase in the aggregate number of shares of the
Company's Common Stock available for issuance to Non-Employee Directors from
150,000 to 300,000 shares. The Plan is subject to shareholder approval. If
shareholder approval is

22
<PAGE>

obtained, the Prior Plan will terminate. If shareholder approval is not
obtained, the Prior Plan shall remain in full force and effect and awards will
be made to Non-Employee Directors under the Prior Plan.

Under the Plan, stock options for 2,500 shares will be granted to each Non-
Employee Director upon first becoming a director, and an additional 1,000 will
be granted each year thereafter on January 1, beginning January 1, 1996
(subject in each case to adjustment to reflect any change in the annual cash
retainer, as described above). The exercise price per share will be the fair
market value of the Company's Common Stock on the date of the grant. As
provided in the Plan, stock options for 2,500 shares were granted to 12 Non-
Employee Directors on January 1, 1995 at an option price of $22.375 per share,
the fair market value of the Company's Common Stock on the last preceding
trading day of the stock. The stock options were granted subject to shareholder
approval of the Plan. The stock option grants will be cancelled if shareholder
approval is not obtained.

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 description of the Plan is not intended
to be complete and is qualified in its entirety by the complete text 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"). 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, and each Non-Employee Director who is a director on
January 1 of each year will receive a Restricted Stock Award as of that date
having a fair market value of $12,500. In each case the $12,500 amount is
subject to adjustment to reflect any change in the annual cash retainer, as
described above. Restricted Stock Awards for an aggregate of 6,141 shares were
granted in 1994 under the Prior Plan and Restricted Stock Awards for an
aggregate of 6,696 shares were granted on January 1, 1995 under the Plan
(subject to shareholder approval).

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 (subject to adjustment, as described above)
by such fair market value of the Common Stock. Cash is paid in lieu of
fractional shares resulting from such calculation.

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, at which time any and all restrictions lapse. 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. 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.

The restrictions lapse sooner than five years from the date of grant under
the following circumstances: (1) upon termination of the director's services as
a result of death, disability, retirement or failure to be nominated or elected
as a Board member, (2) upon the occurrence of certain mergers or consolidations
of the Company in which the Company is not the surviving corporation (as
described in the Plan), (3) upon the sale of substantially all of the assets of
the Company or acquisition of 50% of

23
<PAGE>

the outstanding stock of the Company by another entity (as described in the
Plan), and (4) upon a "change in control" of the Company (as described in the
Plan), 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.

STOCK OPTIONS

The Plan also provides for automatic grants to the Non-Employee Directors of
stock 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. The
exercise price per share of Common Stock covered by an Option will 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.

Newly elected or appointed Non-Employee Directors will receive Options for
2,500 shares upon first becoming a director of the Company. Beginning on
January 1, 1996, and on each January 1 thereafter, each Non-Employee Director
will be granted an Option for an additional 1,000 shares. In each case, the
number of shares for which Options will be granted will be subject to
adjustment to reflect any change in the annual cash retainer as described
above.

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. Options will vest and become exercisable at
the rate of 1/12 of the shares covered thereby on a monthly basis. The Option
will 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. During a
director's lifetime, an Option granted pursuant to the Plan will be
exercisable only by the director. The Option will not be transferable by such
director by operation of law or otherwise other than by will or the laws of
descent and distribution.

SHARES SUBJECT TO THE PLAN

Three Hundred Thousand (300,000) shares of the Company's Common Stock are
authorized for issuance under the Plan. An aggregate of 150,000 shares had
been previously authorized under the Prior Plan--the Prior Plan will terminate
if shareholders approve the Plan. The number of shares authorized for issuance
under the Plan 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 to reflect stock splits, stock dividends,
recapitalization, reorganizations, mergers, acquisitions, etc (as described in
the Plan).

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.

ADMINISTRATION

The Plan is administered by the Compensation Committee of the Board of
Directors. 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. However, 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.

24
<PAGE>

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. An 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 will terminate on April 25,
2004. No Options or Restricted Stock Awards may be granted after termination of
the Plan.

FEDERAL 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 a Non-Employee Directors
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 more than one year.

Stock Options--Generally, a Non-Employee Director will not recognize 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 one year.

VOTE REQUIRED

Approval of the Amended and Restated Equity Incentive Plan for Non-Employee
Directors 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.

25
<PAGE>

An aggregate of 6,141 shares were awarded to twelve Non-Employee Directors in
1994 pursuant to Restricted Stock Awards. The following table illustrates the
benefits that will be received in 1995 by the Non-Employee Directors pursuant
to the Restricted Stock Awards and Options under the Plan if approved by
shareholders at the 1995 Annual Meeting of Shareholders. No officer or employee
will receive any benefits under the Plan.

NEW PLAN BENEFITS

<TABLE>
<CAPTION>
RESTRICTED SHARES OF STOCK
STOCK COMMON OPTION TOTAL
NAME AWARD(1) STOCK(1) GRANT(2) SHARES
---- ---------- --------- ------- ------
<S> <C> <C> <C> <C>
Per Non-Employee Director............... $ 12,500 558 2,500 3,058
All Non-Employee Directors.............. $150,000 6,696 30,000 36,696
</TABLE>
- --------
(1) There were 12 Non-Employee Directors eligible to receive benefits under the
Plan on January 1, 1995. The number of shares of Common Stock granted to
each Non-Employee Director on that date pursuant to a Restricted Stock
Award was 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 30,
1994 was $22.375 per share.

(2) This represents the initial stock option grant. On January 1, 1996, each
Non-Employee Director will be granted stock options for 1,000 shares.

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

APPOINTMENT OF AUDITORS

At last year's annual meeting, shareholders approved the appointment of
Arthur Andersen LLP as independent public accountants to audit the consolidated
financial statements of the Company for the year ended December 31, 1994. The
Board recommends that shareholders vote in favor of the reappointment of Arthur
Andersen LLP as the Company's independent auditors for the year ending December
31, 1995. 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 LLP 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.

SHAREHOLDER PROPOSAL NO. 1

The Central Pension Fund of the International Union of Operating Engineers
(Fund), 4115 Chesapeake Street, N.W., Washington, D.C. 20016, the beneficial
holder of 11,033 shares of the Company's Common Stock, has stated its intention
to present the following proposal at the 1995 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.

BE IT RESOLVED: That the stockholders of Consolidated Freightways, Inc. (or
"Company") urge that the Board of Directors take the necessary steps, in
compliance with Delaware state law, to declassify the Board of Directors for
the purpose of Director elections. The Board classification shall be done in a
manner that does not affect the unexpired terms of Directors previously
elected.

26
<PAGE>

PROPONENT'S SUPPORTING STATEMENT

The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. It is our belief that the classification of the
Board of Directors is not in the best interests of the Company and its
shareholders. The elimination of the staggered Board would require each
Director to stand for election annually. This procedure would allow
shareholders an opportunity to annually register their views on the performance
of the Board collectively and each Director individually. Concerns that the
annual election of all Directors would leave the Company without experienced
Board members in the event that all incumbents are voted out is unfounded. If
the owners should choose to replace the entire Board, it would be obvious that
the incumbent Directors' contributions were not valued.

It is our belief that a company's corporate governance procedures and
practices, and the level of management accountability they impose, are related
to the financial performance of a company. We believe sound corporate
governance practices, such as the annual election of all Directors, will impose
the level of management accountability necessary to help ensure that a good
performance record is attainable over the long-term. Regardless of whether a
shareholder believes the current Board or management team is performing
satisfactorily or not, and the shareholder return chart on page 20 of the
Company's 1994 Proxy indicates very poor performance, we believe it is clearly
in the best interest of the Company and its shareholders that a process be in
place which allows shareholders to take a definitive action as owners if they
believe the Board is failing to realize the full potential of the Company's
assets.

A classified Board of Directors protects the incumbency of the Board of
Directors and current management which in turn limits accountability to
stockholders. We believe that allowing shareholders to annually register their
views on the performance of the Board and each Director is one of the best
methods to ensure that our Company will be managed in the best interest of
shareholders.

We urge your support for this proposal.

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

This advisory proposal is virtually identical to proposals made at the
Company's 1993 and 1994 Annual Meetings. Despite an active solicitation
conducted in favor of such proposals, the Company's shareholders defeated such
proposals by substantial margins.

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 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 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 on the average, shareholders of
public companies vote against efforts to declassify boards by a substantial
margin.

The Company is firmly committed to good corporate governance practices. At
the same time, we believe there is no single approach to corporate governance
that suits all companies. The key consideration is whether a company's
corporate governance practices support and promote financial performance in
furtherance of shareholder interests.

As highlighted in the "Company Performance" table contained in the
Compensation Committee Report on Executive Compensation appearing on page 18 of
this proxy statement, the Company's financial results have dramatically
improved since the current management team was installed in 1990.

In addition, during this same four year period, the Company has voluntarily
eliminated "golden parachutes," committed to early termination of its
Shareholder Rights Plan and adopted a confidential voting policy. We believe
that the Company's financial performance over the past four years, together
with its commitment to good corporate governance practices, demonstrate a high
level of management and Board accountability to shareholders.

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 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 in each of the last two years
considered virtually identical proposals and voted against them 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

Larry Ellison, 1687 Via Lucas, San Lorenzo, California 94580, who owns
approximately 300 shares of the Company's Common Stock, has stated his
intention to present the following proposal at the 1995 Annual Meeting. Mr.
Ellison is an employee of a Company subsidiary and a member of the Teamsters
Union. 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.

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

28
<PAGE>

PROPONENT'S SUPPORTING STATEMENT

ELIMINATE THE SUPERMAJORITY REQUIREMENT

CF's board structure includes staggered terms, and board power to increase
the number of board seats and appoint directors to these seats, or to a vacant
seat, without stockholder votes. This means a director could serve nearly three
years without being approved by shareholders. And all of this is protected by
an 80% supermajority voting requirement for change.

Supermajority requirements of any kind are widely opposed. The bi-partisan
National Conference of State Legislatures urged states to ban them. Major
pension funds, including those holding CF stock, declare that supermajority
provisions are not in the best interests of the shareholders.

CF offered no specific justification for the 80% requirement when adopted in
1985 when the board packaged it with its staggered board proposal.

The Investor Responsibility Research Center shows consistently growing
support for proposals eliminating supermajority requirements. Roughly 40% of
shareholders urged the CF to eliminate the supermajority requirement in voting
last year.

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

The Company believes that this proposal is made in furtherance of the
Teamsters' continuing efforts to harass and pressure the Company and its
subsidiaries in an effort to achieve certain labor-related goals that are
contrary to the interests of the Company's shareholders. The Company believes
that shareholder support of this proposal will only encourage and prolong this
two and a half year effort by the Teamsters.

Mr. Ellison presented a virtually identical proposal at last year's Annual
Meeting. Despite an active solicitation conducted and financed by the Teamsters
in favor of Mr. Ellison's proposal, last year the Company's shareholders
defeated his proposal by a substantial margin.

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.

It appears that Mr. Ellison's proposal, like the proposal he presented last
year, 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 provision 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.

29
<PAGE>

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

PRINCIPAL SHAREHOLDERS

According to information furnished to the Company as of December 31, 1994,
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 BENEFICIAL OWNERSHIP OF CLASS
---------------- ---------------------- --------
<S> <C> <C>
T. Rowe Price Associates, Inc. 10,390 Common(1) 0.03%
And T. Rowe Price Trust Company.......... 806,179 Preferred(1) 8.14%
100 East Pratt Street
Baltimore, MD 21202
FMR Corp. ................................ 4,992,013 Common(2) 13.72%
82 Devonshire Street
Boston, MA 02109
Loomis, Sayles & Company, L.P. ........... 2,455,150 Common(3) 6.75%
One Financial Center
Boston, MA 02111
</TABLE>
- --------
(1) T. Rowe Price Associates, Inc. ("Price Associates") has sole voting power
over 7,900 shares, shared voting power over 4,192,130 shares, sole
dispositive power over 10,390 shares and shared dispositive power over
3,224,716 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 4,192,130 shares, sole dispositive
power over 0 shares and shared dispositive power over 3,224,716 shares.

These holdings include 10,390 shares of Common Stock and 806,179 shares
of Series B Preferred Stock (which Preferred Stock is held pursuant to the
Consolidated Freightways, Inc. Thrift and Stock Plan). Each share of Series
B Preferred Stock has the right to 5.2 noncumulative votes on each matter
submitted to the meeting. The Series B Preferred Stock is convertible at
the Trust Company's option under certain circumstances into four shares of
Common Stock for each share of Series B Preferred Stock. On a fully
converted basis, these holdings represent 8.1% of the Common Stock and
10.1% of the voting power.

Price Associates serves as investment advisor with shared power to vote
these 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 Series B Preferred
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 subsidiaries Fidelity Management & Research Company
and Fidelity Management Trust Company, has sole voting power over 92,768
shares, shared voting power over 0 shares, sole dispositive power over
4,992,013 shares and shared dispositive power over 0 shares. According to
its most recent Schedule 13G, these holdings included 1,014,300 Depository
Shares, each of which automatically converted into one share of Common
Stock on March 15, 1995. The record date for the Annual Meeting is March 1,
1995 and, accordingly, the shares of Common Stock issued upon conversion of
the Depositary Shares are not entitled to vote at the Annual Meeting.

(3) Loomis, Sayles & Company, L.P. has sole voting power over 1,365,753 shares,
shared voting power over 30,000 shares, sole dispositive power over 0
shares and shared dispositive power over 2,455,150 shares.

30
<PAGE>

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

COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT

The Company believes that during 1994 its executive officers and directors
have complied with all Section 16 filing requirements.

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

CONFIDENTIAL VOTING

In September 1994, the Board of Directors adopted a confidential voting
policy. Under this policy, all proxies, ballots and voting materials that
identify the votes of specific stockholders will be kept confidential from the
Company except as may be required by law or to assist in the pursuit or defense
of claims or judicial actions, and except in the event of a contested proxy
solicitation. In addition, comments written on proxies, ballots, or other
voting materials, together with the name and address of the commenting
stockholder, will be made available to the Company without reference to the
vote of the stockholder, except where such vote is included in the comment or
disclosure is necessary to understand the comment. Certain vote tabulation
information may also be made available to the Company, provided that the
Company is unable to determine how any particular stockholder voted.

Access to proxies, ballots and other stockholder voting records will be
limited to inspectors of election who are not employees of the Company and to
certain Company employees and agents engaged in the receipt, count and
tabulation of proxies.

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

SUBMISSION OF SHAREHOLDER PROPOSALS

Under the rules of the Securities and Exchange Commission now in effect,
shareholder proposals intended for inclusion in next year's proxy statement
must be directed to the Corporate Secretary, Consolidated Freightways, Inc., at
3240 Hillview Avenue, Palo Alto, California 94304, and must be received by
November 18, 1995.

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

OTHER MATTERS

The Company will furnish to interested shareholders, free of charge, a copy
of its 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The report will be available for mailing after April 10, 1995.
Please direct your written request to the Corporate Secretary, Consolidated
Freightways, Inc., 3240 Hillview Avenue, Palo Alto, California 94304.

Your Board knows of no other matters to be presented at the meeting. If two
proposals that were excluded from this proxy statement in accordance with Rule
14a-8 of the Securities Exchange Act of 1934 are properly brought before the
meeting, it is intended that the proxy holders will use their discretionary
authority to vote the proxies against such proposals. If any other matters come
before the meeting, it is the intention of the proxy holders to vote on such
matters in accordance with their best judgment.

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

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 $10,000, plus expenses. The Company has also

31
<PAGE>

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.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
PLEASE FILL OUT, SIGN, DATE AND RETURN THE ACCOMPANYING WHITE PROXY CARD AS
SOON AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.

BY ORDER OF THE BOARD OF DIRECTORS

MARYLA R. BOONSTOPPEL
Vice President and Secretary

March 17, 1995

32
<PAGE>

APPENDIX A

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

SECTION 1

INTRODUCTION

1.1 Establishment. Consolidated Freightways, Inc., a Delaware corporation
(the "Company"), hereby establishes the Amended and Restated 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, subject to approval by the holders of at least a
majority of the outstanding shares of voting stock of the Company, voting in
person or by proxy at the 1995 Annual Meeting of Stockholders ("Amendment
Approval Date"). Any award granted hereunder in accordance with the amendments
to the Plan hereunder is conditioned on such approval. If the Plan is not so
approved by the stockholders, such awards shall be null and void.

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.

SECTION 2

DEFINITIONS

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

(a) "Annual Cash Retainer" means the then applicable annual cash retainer
payable to a Director for service as a Director.

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

(c) "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.

(d) "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.

(e) "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

A-1
<PAGE>

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.

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

(g) "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.

(h) "Option Amount" means a number of shares of Stock resulting from
multiplying 1,000 by a fraction, the numerator of which is the Annual Cash
Retainer and the denominator of which is $20,000.

(i) "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.

(j) "Restricted Stock Value" as of any grant date shall be a dollar
amount equal to $12,500 on or prior to the Amendment Approval Date and
62.5% of the Annual Cash Retainer thereafter.

(k) "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 Plan is intended to be self-executing pursuant to the terms hereof.
However, any questions concerning interpretation or implementation of the Plan
shall be decided by the Committee. 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, 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.

A-2
<PAGE>

SECTION 4

STOCK SUBJECT TO THE PLAN

4.1 Number of Shares Available Under the Plan. Three Hundred Thousand
(300,000) 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 or which are issued upon exercise of an
Option shall be applied to reduce the maximum number of shares of Stock
remaining available for use 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 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 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 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.

A-3
<PAGE>

(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 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 Determinations 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 and 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.

A-4
<PAGE>

SECTION 6

RESTRICTED STOCK AWARDS

6.1 Initial Restricted Stock Awards. On April 25, 1994, each Director who is
then a member of the Board shall receive a Restricted Stock Award for the
number of shares of Stock determined pursuant to Section 6.3 below. 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, for the number of
shares of Stock determined pursuant to Section 6.3 below.

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, for the number of shares of
Stock determined pursuant to Section 6.3 below, equal to the Restricted Stock
Value.

6.3 Number of Shares Awarded. The number of shares of Stock included in each
such Restricted Stock Award shall be determined by dividing the Restricted
Stock Value 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 Forfeiture of Awards. If 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

A-5
<PAGE>

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 received by him as a
Restricted Stock Award under this Section 6, whether or not restrictions have
lapsed.

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

(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 Initial Option Grants. An Option to purchase such number of shares of
Stock as equals 2.5 times the Option Amount shall be granted (i) on January 1,
1995 to each person who is a Director on that date, subject to and conditioned
upon the approval of shareholders on the Amendment Approval Date as provided in
Section 1.1, and (ii) to other Directors elected or appointed to the Board
after such date on the date each first becomes a Director of the Company,
subject to and conditioned upon shareholder approval as aforesaid if granted
prior to the Amendment Approval Date.

7.2 Subsequent Option Grants. Beginning on January 1, 1996 and on January 1
of each year thereafter, each Director who is a Director on that date shall be
granted an Option to purchase such number of shares of Stock as equals the
Option Amount.

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. The term of each Option shall be ten (10) years from
the date of grant, unless a shorter period is required to comply with any
applicable law, in which case such shorter period shall apply.

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).

A-6
<PAGE>

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 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 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.

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.

A-7
<PAGE>

SECTION 11

REQUIREMENTS OF LAW

11.1 Compliance with 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 Rule 16b-3. Awards and transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
1934 Act. To the extent any provision of the Plan or action by the Board or the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board or the Committee. Moreover,
in the event the Plan does not include a provision required by Rule 16b-3 to be
stated therein in order to qualify the Plan as a formula plan, such provision
(other than one relating to eligibility requirements, or the price and amount
of awards) shall be deemed automatically to be incorporated by reference into
the Plan.

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 first 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.

A-8
<PAGE>

LOGO
RECYCLED PAPER
<PAGE>

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

P The undersigned appoints R. JAUNICH II, D.E. MOFFITT, R.E. POELMAN and each
of them, the proxies of the undersigned, with full power of substitution,
R to vote the stock of CONSOLIDATED FREIGHTWAYS, INC., which the undersigned
may be entitled to vote at the Annual Meeting of Shareholders to be held on
O Monday, April 24, 1995 at 10:00 A.M. or at any adjournments or
postponements thereof. The proxies are authorized to vote in their
X discretion upon such other business as may properly come before the meeting
and any and all adjournments or postponements thereof.
Y

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

Nominees: Earl F. Cheit
G. Robert Evans
Gerhard E. Liener
Richard B. Madden

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
<PAGE>

- --------------------------------------------------------------------------------
Please mark your
[X] votes as in this
example.

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.
- --------------------------------------------------------------------------------
1. Election of FOR WITHHELD
Directors [_] [_]
(see
reverse)

FOR, except vote withheld from the following nominee(s):

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

2. Approval of Amended FOR AGAINST ABSTAIN
and Restated Equity [_] [_] [_]
Incentive Plan for Non-
Employee Directors.

3. Ratify appointment of FOR AGAINST ABSTAIN
Independent Auditors. [_] [_] [_]

- --------------------------------------------------------------------------------
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 17, 1995.

- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST items 4 and 5 below.
- --------------------------------------------------------------------------------
4. Shareholder Proposal No. 1 on FOR AGAINST ABSTAIN
Declassification of Board of [_] [_] [_]
Directors.

5. Shareholder Proposal No. 2 on [_] [_] [_]
the 80% Vote Requirement in the
By-laws to Change Board
Structure.
- --------------------------------------------------------------------------------

DATE: , 1995
- -------------------------------------------

SIGNATURE(S):
- -------------------------------------------

- -------------------------------------------
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>

[LOGO OF CONSOLIDATED FREIGHTWAYS, INC.]

MARYLA R. BOONSTOPPEL
Vice President - Investor Relations
and Corporate Secretary

March 17, 1995

Dear Fellow Employee:

Enclosed is proxy material for the Consolidated Freightways, Inc. Annual
Meeting of Shareholders to be held on April 24, 1995. 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 1995 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 1994 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 terms of the
Plan, the trustee votes the shares of each class of stock credited to your
account for which it does not receive a signed instruction card on a timely
basis in the same manner and proportion as the shares in such class of stock
for which it does receive valid voting instructions on a timely basis.

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
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 18, 1995.

Sincerely,

[SIGNATURE OF MARYLA R. BOONSTOPPEL]

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

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

CONSOLIDATED FREIGHTWAYS, INC. THRIFT AND STOCK PLAN
DIRECTION OF PARTICIPANT TO TRUSTEE OF
CONSOLIDATED FREIGHTWAYS, INC. THRIFT AND STOCK PLAN
(COMMON STOCK AND PREFERRED STOCK)

The undersigned hereby directs the Trustee of the Consolidated Freightways, Inc.
Thrift and Stock Plan to vote all shares of Consolidated Freightways, Inc.
common stock and 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 24, 1995 at 10:00 A.M. or at any
adjournments or postponements thereof. 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.

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

Nominees: Earl F. Cheit
G. Robert Evans
Gerhard E. Liener
Richard B. Madden

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

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

- -------------------------------------------------------------------------------
Please mark your 7895
[X] votes as in this
example.

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.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the election of directors and
FOR items 2 and 3 below.
- --------------------------------------------------------------------------------
1. Election of FOR WITHHELD
Directors [_] [_]
(see reverse)

FOR, except vote withheld from the following nominee(s):

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

2. Approval of Amended FOR AGAINST ABSTAIN
and Restated Equity [_] [_] [_]
Incentive Plan for Non-
Employee Directors.

3. Ratify appointment of [_] [_] [_]
Independent Auditors.

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 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 17, 1995.

SIGNATURE(S) ________________________________ DATE ____________, 1995

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 24, 1995 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 I directors for a three-year term.

Nominees: Earl F. Cheit, G. Robert Evans, Gerhard E. Liener and Richard B.
Madden

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

[_] Vote WITHHELD from all nominees.

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

3. Ratify appointment of Arthur Andersen LLP as the Company's auditors for the
year 1995.
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 17, 1995.

, 1995
------------------------------------------
Signature of Participant Date

------------------------------------------
Name (Please Print)

------------------------------------------
Address (Please Print)

------------------------------------------
City State Zip Code
<PAGE>

[LOGO OF CONSOLIDATED FREIGHTWAYS, INC.]

MARYLA R. BOONSTOPPEL
Vice President - Investor Relations
and Corporate Secretary

March 17, 1995

Dear Fellow Employee:

Enclosed is proxy material for the Consolidated Freightways, Inc. Annual
Meeting of Shareholders to be held on April 24, 1995. This material is being
sent to you as a participant in the Consolidated Freightways, Inc. Common Stock
Fund and includes (1) the Company's 1995 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
1994 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
terms of the Plan, the trustee votes any shares credited to your account for
which it does not receive a signed instruction card on a timely basis in the
same manner and proportion as the shares of stock for which it does receive
valid voting instructions on a timely basis.

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 18, 1995.

Sincerely,

[SIGNATURE OF MARYLA R. BOONSTOPPEL]

3240 HILLVIEW AVENUE, PALO ALTO, CA 94304, 415-494-2900
<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 24, 1995 at 10:00 A.M. or at any adjournments
or postponements thereof. 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.

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

Nominees: Earl F. Cheit
G. Robert Evans
Gerhard E. Liener
Richard B. Madden

PLEASE SIGN THIS CARD ON THE REVERSE SIDE

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

<PAGE>

- -------------------------------------------------------------------------------
Please mark your 7897
[X] votes as in this
example.

FOR, except vote withheld from the following nominee(s):

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

2. Approval of Amended FOR AGAINST ABSTAIN
and Restated Equity [_] [_] [_]
Incentive Plan for Non-
Employee Directors.

3. Ratify appointment of [_] [_] [_]
Independent Auditors.

SIGNATURE(S) ________________________________ DATE ____________, 1995

NOTE: Please sign exactly as name appears hereon.
- -------------------------------------------------------------------------------