<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ROADWAY SERVICES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ROADWAY SERVICES, INC.
1077 GORGE BLVD.
AKRON, OHIO 44310
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
TO BE HELD WEDNESDAY, MAY 10, 1995
------------------
TO THE SHAREHOLDERS:
You are hereby notified that the Annual Meeting of Shareholders of Roadway
Services, Inc., will be held Wednesday, May 10, 1995, at 9:00 a.m. Eastern
Daylight Time, at the Sheraton Suites Hotel, located at 1989 Front Street,
Cuyahoga Falls, Ohio, for the following purposes:
1. To elect eleven directors to the Board of Directors.
Eleven nominees to be presented for election will be George B. Beitzel,
Richard A. Chenoweth, Joseph M. Clapp, Norman C. Harbert, Charles R.
Longsworth, Robert E. Mercer, G. James Roush, Daniel J. Sullivan, William
Sword and Sarah Roush Werner, who are presently members of the Board of
Directors of the Company, and H. Mitchell Watson, Jr.
2. To consider a proposal submitted by a shareholder, if presented at the
meeting, with respect to confidential voting, which the Board opposes as
unnecessary in light of its recently adopted formal Confidential Voting
Policy (as described on page 11).
3. To consider a proposal submitted by a shareholder, if presented at the
meeting, for shareholder ratification of compensation performance goals
for executive officers on an annual basis, which the Board opposes.
4. To ratify the designation of Ernst & Young LLP as the independent
auditors of the Company for 1995.
5. To consider such other business as may be brought before the meeting.
The record of shareholders entitled to notice and to vote at the meeting was
taken as of the close of business on March 24, 1995.
You are invited to attend the meeting, but whether or not you expect to
attend in person, please mark, sign, date and return the enclosed proxy in the
accompanying postage-paid envelope so that your shares will be represented at
the meeting or adjournment thereof.
If you wish to have your vote treated in a confidential manner, please mark
the box "Confidential Vote Requested" on your proxy card.
D. A. WILSON
Secretary
April 10, 1995
------------------
PROXY STATEMENT
This Proxy Statement is furnished to shareholders in connection with the
solicitation by the Board of Directors of Roadway Services, Inc. (the Company)
of proxies to be used at the Annual Meeting of Shareholders to be held
Wednesday, May 10, 1995, at 9:00 a.m. Eastern Daylight Time, at the Sheraton
Suites Hotel, located at 1989 Front Street, Cuyahoga Falls, Ohio, or any
adjournment thereof.
The NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, this PROXY STATEMENT and the
form of PROXY are being mailed to shareholders on April 10, 1995. A copy of the
Company's Annual Report on Form 10-K may be obtained without charge by writing
the Secretary of the Company at the above address.
RECORD DATE AND VOTING REQUIREMENTS
The record of shareholders entitled to vote was taken as of the close of
business on March 24, 1995. At that date, the Company had outstanding and
entitled to vote 39,069,158 shares of common stock without par value. Each share
of common stock entitles the holder to one vote on all matters properly brought
before the meeting, including the election of directors.
The Company has recently adopted a policy relating to proxy voting and
independent tabulation and inspection of elections. The policy provides that the
Company will furnish shareholders the opportunity to request confidential
treatment of their votes. There is a place on the enclosed proxy card for
shareholders to make such an election. If a shareholder so requests confidential
treatment, an independent vote tabulator and the independent inspectors of
election will keep the shareholder's vote permanently confidential and not
disclose the vote to anyone. This policy will be in effect at the Annual
Meeting. Confidential treatment will not apply when disclosure is required by
law or under circumstances such as a proxy contest.
Shares can be voted only if the shareholder is present in person or by
proxy. Whether or not you expect to attend in person, you are encouraged to
return the enclosed proxy. Your vote is important. You may revoke your proxy at
any time prior to the exercise of the powers it confers. The shares represented
by a properly executed proxy card will be voted in the manner directed therein
by the shareholder.
Unless a shareholder requests voting of his shares be withheld for any one
or more of the nominees for director, his shares will be voted by the Proxies
for the election as directors of the eleven nominees.
1
<PAGE> 3
Where a shareholder specifies a choice with respect to any other proposal
set forth in this Proxy Statement, his shares will be voted (or withheld from
voting) in accordance with the instructions given. If no specific instruction is
given, the shares will be voted against Proposal Nos. 2 and 3; for Proposal No.
4; and, in the discretion of the Proxies, on such other business as may properly
come before the meeting. The Board of Directors is not aware of any matter to be
presented for action at the meeting other than those set forth herein.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
meeting. Directors are elected by a plurality of the affirmative votes cast.
Abstentions and "non-votes" are counted as present in determining whether the
quorum requirement is satisfied. A "non-vote" occurs when a broker or other
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal. Abstentions and "non-votes" will be treated as
votes against proposals presented to shareholders other than elections of
directors.
The Board of Directors has designated R. A. Chenoweth, Director; J. M.
Clapp, Director, Chairman and CEO; and D. A. Wilson, Senior Vice
President-Finance and Planning and CFO as Proxies for appointment by
shareholders to represent and vote their shares in accordance with their
directions.
PRINCIPAL HOLDERS OF COMPANY COMMON STOCK ON FEBRUARY 28, 1995
Other than those named in the following table, the Company knows of no
person owning of record or beneficially more than 5% of the outstanding common
stock entitled to vote.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
% OF % OF
NAME AND ADDRESS OF SHARES IN VOTING SHARES OUTSIDE VOTING
BENEFICIAL OWNER VOTING TRUST (a) STOCK VOTING TRUST STOCK
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sarah Roush Werner
P. O. Box 611
Marysville, Washington 98270 2,620,711(b) 6.71 1,052,272(c) 2.69
The GAR Foundation
Robert W. Briggs and
National City Bank, Akron, Trustees
One Cascade Plaza
Akron, Ohio 44308 1,883,218 4.82 837,288 2.14
G. James Roush
P. O. Box 3123
Bellevue, Washington 98009 2,000,000 5.12 97,345(d) 0.25
Other Shareholders 257,037 0.66 731,156 1.87
----------- ------ ------------ ------
Total 6,760,966 17.31 2,718,061 6.95
Roadway Services, Inc. Stock Bonus Plan
National City Bank, Trustee
P. O. Box 5756
Cleveland, Ohio 44101 5,957,631(e) 15.25
Roadway Services, Inc. Stock
Savings and Retirement Income Plan
National City Bank, Trustee
P. O. Box 5756
Cleveland, Ohio 44101 2,276,553(e) 5.83
Invesco PLC
11 Devonshire Square
London, England EC2M 4YR 4,107,141(f) 10.51
FMR Corp.
82 Devonshire St.
Boston, Massachusetts 02109 2,890,262(g) 7.40
- ---------------------------------------------------------------------------------------------------------
<FN>
(a) Pursuant to the terms of the Voting Trust of June 1, 1966, as amended and restated effective
November 1, 1992, and extended for a term ending October 31, 2002, the voting trustees,
R. A. Chenoweth and G. J. Roush, have authority to attend all meetings of the shareholders, to
exercise consents and to vote the shares relative to the election of directors and any other matter
that may be brought before the shareholders; provided that in the case of certain proposals involving
major decisions concerning the Company or its assets, the voting trustees are to request instructions
from each Voting Trust beneficiary and, if such instructions are received, must vote in accordance
with such instructions. Except as set forth in the Voting Trust Agreement, the beneficiaries of the
Voting Trust have an annual noncumulative right to withdraw approximately 5% of the shares deposited
on their behalf. The business address of R. A. Chenoweth is P. O. Box 1500, 50 South Main Street,
Akron, Ohio 44309.
(b) Includes 12,827 shares in the Voting Trust as to which Mrs. Werner may be deemed in law to have
investment power but as to which she disclaims beneficial ownership.
2
<PAGE> 4
(c) Includes 177,680 shares outside the Voting Trust as to which Mrs. Werner has
investment and voting power although she disclaims any beneficial ownership.
(d) Includes 47,908 shares held on behalf of the family of Mr. Roush as to which
he disclaims beneficial ownership.
(e) Pursuant to the terms of the Roadway Services, Inc. Stock Bonus Plan and the
Roadway Services, Inc. Stock Savings and Retirement Income Plan,
participants are entitled to instruct the trustee as to the voting of any
shares allocated to their account(s). The trustee must vote the shares as
directed. The trustee, however, possesses the power to vote all other shares
held in trust by the Plans (including shares for which it does not receive
instructions from participants) in accordance with its discretion absent the
express direction of the respective Plan Administrative Committee. The
Administrative Committee of the Stock Bonus Plan consists of J. M. Clapp,
D. J. Sullivan and D. A. Wilson, and the Administrative Committee of the
Stock Savings and Retirement Income Plan consists of D. C. Brown,
J. D. Cunningham and D. A. Wilson.
(f) Invesco PLC disclaims beneficial ownership of all shares since they are held
pursuant to investment advisory contracts through which voting and
investment powers may be shared with clients. No single client owns more
than 5% of the outstanding common stock of the Company, and ownership is
solely for investment purposes.
(g) Based on information received from FMR Corp., includes 2,862,797 shares
beneficially owned by Fidelity Management & Research Company (Fidelity), a
wholly-owned subsidiary of FMR Corp. and a registered investment adviser,
and 25,165 shares beneficially owned by Fidelity Management Trust Company
(FMTC), a wholly-owned subsidiary of FMR Corp. and a bank. Beneficial
ownership with respect to 2,300 shares is disclaimed. Sole investment power
with respect to all shares is reported to be held by Edward C. Johnson 3d,
Chairman of FMR Corp.; Fidelity and its various Funds; and FMTC. FMR Corp.
reports that it has sole voting power over 23,765 shares and that the shares
held in the Fidelity Funds are voted pursuant to guidelines established by
the Funds.
</TABLE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Code of Regulations of the Company provides that the Board of Directors
shall consist of ten members, except that either the shareholders or the
directors by resolution may change the number at any time. Effective May 10,
1995 the Board of Directors changed the number of members of the Board from ten
to eleven. The Board recommends that the eleven nominees be elected for the
ensuing year and until their successors are elected and qualified. All nominees
have consented to being named and to serve if elected. If any nominees for
director become unavailable, the Proxies will be voted for such substitute
nominees, if any, as may be nominated by the Board.
INFORMATION ABOUT NOMINEES FOR DIRECTORS
The information appearing in the following table, regarding principal
occupation or employment and name and principal business of the corporation or
other organization in which such occupation or employment is carried on, covers
at least the last five years. The period during which each nominee has served as
a director of the Company includes service as a director of Roadway Express.
Except as otherwise noted, each person named in the following table has sole
voting and investment power over the shares beneficially owned.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY % OF
PRINCIPAL OCCUPATION, OWNED AS OF VOTING
NAME OTHER DIRECTORSHIPS AND AGE FEBRUARY 28, 1995 STOCK
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
George B. Beitzel Retired. Senior Vice President and Director of
Director since 1986 International Business Machines Corporation, a
manufacturer of computers and office equipment,
from 1972 to 1987. Director: Bankers Trust New
York Corporation, Computer Task Group,
FlightSafety International, Inc., Phillips
Petroleum Company, Rohm and Haas Company, TIG
Holdings. Chairman, The Colonial Williamsburg
Foundation, and Chairman Emeritus, Amherst
College. Age 66. 7,294(a) 0.02
Richard A. Chenoweth Principal of Buckingham, Doolittle & Burroughs, a
Director since 1980 Legal Professional Association, Akron, Ohio.
Director: First Merit Corporation and First
National Bank of Ohio. Age 69. 3,903(a) 0.01
Joseph M. Clapp Chairman and Chief Executive Officer of the
Director since 1982 Company effective January 1, 1994. Chairman and
President from 1987 to 1993. Mr. Clapp joined
Roadway Express in 1967. Age 58. 84,235(a)(b) 0.22
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES BENEFICIALLY % OF
PRINCIPAL OCCUPATION, OWNED AS OF VOTING
NAME OTHER DIRECTORSHIPS AND AGE FEBRUARY 28, 1995 STOCK
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Norman C. Harbert Chairman and Chief Executive Officer of The Hawk
Director since 1981 Group, a venture capital company investing in
industrial firms, since 1988. Director: Second
National Bank of Warren, New West Eyeworks. Age
61. 4,204 0.01
Charles R. Longsworth Chairman Emeritus of The Colonial Williamsburg
Director since 1989 Foundation, a colonial restoration museum and
hotel complex, since 1994, Chairman in 1992 and
1993 and President and Chief Executive Officer
from 1979 to 1992. Director: Crestar Financial
Corporation, FlightSafety International, Inc.,
Houghton Mifflin Co., Saul Centers, Inc., Virginia
Eastern Shore Corporation. Chairman of the Board
of Trustees, Amherst College. Age 65. 1,887 0.00
Robert E. Mercer Retired. Chairman and Chief Executive Officer of
Director since 1989 The Goodyear Tire & Rubber Company, a manufacturer
of tires and related products, from 1983 through
1988 and Chairman to March 1989. Director: General
Electric Company. Age 71. 722 0.00
G. James Roush (c) Private investor. Bellevue, Washington. Age 67.
Director since 1969 2,097,345(a) 5.37
Daniel J. Sullivan President and Chief Operating Officer of the
Director since 1990 Company effective January 1, 1994;
President-National Carrier Group and Senior Vice
President during 1993; Vice President and
President-National Carrier Group during 1992; Vice
President and Group Executive from July 1990
through 1991 and President of Roadway Package
System through June 1990. Mr. Sullivan joined
Roadway Express in 1972. Age 48. 44,144(b) 0.11
William Sword Chairman of the Board of Wm. Sword & Co.
Director since 1977 Incorporated, investment bankers, since 1976.
General Partner, Morgan Stanley and Co. from 1962
through 1975. Director: American Brands, Inc. from
1976 to 1986. Age 70. 1,887 0.00
H. Mitchell Watson, Jr. President, Sigma Group of America, a consulting
company, Westport, Connecticut, since December
1992; President and Chief Executive Officer, ROLM
Company, an electrical engineering and electronics
company, Norwalk, Connecticut, from 1989 to 1992.
Director: Praxair, Inc. and PlastiLine, Inc.;
Director and President of Helen Keller
International. Member of the Board of Trustees of
the Interdenominational Theology Center at Atlanta
University. Age 57. -0- 0.00
Sarah Roush Werner (c) Private investor. Marysville, Washington. Age 64.
Director since 1979 3,672,983(a) 9.40
- --------------------------------------------------------------------------------
<FN>
(a) Includes shares owned by family members of the nominees as to which
beneficial ownership is disclaimed, as follows: Mr. Beitzel, 1,209 shares;
Mr. Chenoweth, 416 shares; Mr. Clapp, 100 shares; Mr. Roush, 47,908 shares;
and Mrs. Werner, 190,507 shares.
(b) Includes shares held pursuant to the Stock Bonus Plan, the Stock Savings and
Retirement Income Plan and the Employee Stock Ownership Plan as of December
31, 1994, as follows: Mr. Clapp, 26,441 shares and Mr. Sullivan, 10,931
shares.
(c) Mr. Roush and Mrs. Werner are brother and sister.
</TABLE>
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors of the Company has an Audit Committee, a Nominating
Committee, a Compensation Committee, an Executive and Finance Committee and a
Planning Committee.
4
<PAGE> 6
The members of the Audit Committee are G. B. Beitzel, R. A. Chenoweth and C.
R. Longsworth. During 1994, the Committee reviewed the audit plan developed by
the Company's independent auditors and the professional services provided by
them to assure their independence. Additionally, the Audit Committee reviewed
the annual financial statements prepared by management prior to their issuance
and met with the independent auditors to review their opinion on the annual
financial statements and the results of their audit procedures. The Committee
also reviewed, in consultation with the independent auditors and the Company's
Director of Internal Audit, the adequacy of the Company's internal controls.
The members of the Nominating Committee are R. A. Chenoweth, J. M. Clapp and
G. J. Roush. During 1994, the Committee selected nominees to be elected
directors and officers of the Company. Written recommendations for director
nominees to be elected at the 1996 Annual Meeting that are addressed to G. J.
Roush, chairman of the Nominating Committee, at the Company's principal offices
and received before December 11, 1995 will be considered by the Nominating
Committee.
The members of the Compensation Committee are N. C. Harbert, C. R.
Longsworth, G. J. Roush and W. Sword. The Committee recommends compensation for
executive officers of the Company.
The members of the Executive and Finance Committee are G. B. Beitzel, J. M.
Clapp, R. E. Mercer, G. J. Roush, D. J. Sullivan and W. Sword. The Committee
makes recommendations for capital expenditures and other financial matters and
may act for the Board of Directors between its regular meetings.
The members of the Planning Committee are G. B. Beitzel, J. M. Clapp, N. C.
Harbert, R. E. Mercer and D. J. Sullivan. The Committee reviews plans developed
by management for the growth of the Company.
During 1994, the Board met four times. The Compensation Committee and
Nominating Committee each met six times; the Planning Committee met five times;
the Executive and Finance Committee met four times; and the Audit Committee met
three times. Average attendance at the meetings of the Board and the meetings of
all its committees was 99%.
DIRECTOR COMPENSATION
During 1994, all nonemployee directors of the Company were paid an annual
retainer of $21,000 plus (a) an annual retainer of $4,000 for each committee
membership and (b) an additional sum of $1,400 for each meeting of the Board or
a committee, except when held the same day as a meeting of the Board or another
committee, in which case an additional sum of $850 was paid. Additionally, the
chairmen of the Audit Committee and the Compensation Committee were each paid an
annual retainer of $4,000 and all other committee chairmen (except officers of
the Company) were each paid an annual retainer of $3,000. For 1995, the fee
arrangement is essentially the same as in 1994 except that the annual retainer
is $18,000 plus 100 shares of Company common stock and the daily fee for
attendance at a meeting increased by $100.
Four compensation plans were in effect during 1994 for nonemployee
directors. These include the Roadway Services, Inc. 1989 Nonemployee Directors'
Stock Plan (the 1989 Stock Plan); its successor, the Roadway Services, Inc. 1994
Nonemployee Directors' Stock Plan (the 1994 Stock Plan); the Roadway Services,
Inc. Directors' Deferred Fee Plan (the Deferred Fee Plan); and the Roadway
Services, Inc. Retirement Plan for Nonemployee Directors (the Retirement Plan).
THE 1989 STOCK PLAN: During 1994, 266 shares of Company common stock awarded
under the 1989 Stock Plan, which was approved by the shareholders at the Annual
Meeting held in May 1989, were forfeited by each of the nonemployee directors
other than Mr. Mercer and each became entitled to exercise options to purchase
1,064 shares at $30 per share. The 223 shares awarded to Mr. Mercer in 1990 were
forfeited and he became entitled to exercise options to purchase 892 shares at
$36 per share.
THE 1994 STOCK PLAN: The 1994 Stock Plan was approved by the shareholders at
the Annual Meeting held May 11, 1994, and effective that date. The design of the
1994 Stock Plan is essentially the same as the 1989 Stock Plan. Under the 1994
Stock Plan, Mrs. Werner, and Messrs. Beitzel, Chenoweth, Harbert, Longsworth,
Roush and Sword were each awarded 1,887 shares of Company common stock having an
aggregate fair market value at the time of $125,014, with vesting to be phased
in over a five-year period, in tandem with a grant of options to purchase 7,548
shares at a price of $66.25 per share. Since Mr. Mercer, who was first elected a
director in 1990, had one year of remaining participation in the 1989 Stock
Plan, he is not eligible to participate in the 1994 Stock Plan until May 1995.
The shares and option rights are subject to forfeiture and cancellation
according to a formula. Two years after the grant, depending on the fair market
value of a share, either 40% of the shares awarded will vest free of
restrictions and the related option rights will be cancelled, or such option
rights will become exercisable and the related shares will be forfeited.
Thereafter, 20% of such shares or related option rights will become
nonforfeitable or exercisable annually, on the same basis.
THE DEFERRED FEE PLAN: Under the Deferred Fee Plan, any nonemployee director
may elect to defer receipt of all or a portion of the compensation payable to
him or her for services as a member of the Board or any committee thereof.
Amounts deferred may earn interest at a formula rate or be credited in units
equal in value to the average price of shares of Company common stock acquired
by the Roadway Services, Inc. Stock Bonus Plan during the year in which such
amounts are payable. Each credited unit is payable in cash based on the fair
market value of Company common stock at the time of payment. Deferred amounts
will be payable upon termination of service as a director, or on certain earlier
dates, as requested by the director. The Deferred Fee Plan was recently amended
to accommodate the deferral of the dollar equivalent of the shares of common
stock that is part of the director's annual retainer. This portion of deferred
compensation shall be credited as units while in the Plan and shall be paid in
shares of stock at the time of payment. Messrs. Beitzel and Roush participate in
the Deferred Fee Plan under the credited units alternative.
5
<PAGE> 7
THE RETIREMENT PLAN: Under the Retirement Plan, a nonemployee director is
entitled to receive a retirement benefit in annual amounts equal to the annual
retainer in effect during the year of his retirement. Payment of such benefits
will commence upon termination of service as a director. Payments will be made
in quarterly installments for the joint lives of the retired director and his
surviving spouse until the number of such payments equals the total number of
quarters of his service as a director. The Retirement Plan also provides an
additional annual retirement benefit payable in cash equal to the market value
of 200 shares of Company common stock as of December 31 of the year prior to the
year in which the additional benefit is paid. A director must have served a
minimum of five years on the Board in order to receive the additional benefit.
If a director has served at least five years but less than eight years at the
time of his retirement, the additional benefit will be paid annually thereafter
for a period of eight years, limited to the joint lives of the retired director
and his spouse. If a director has served for at least eight years at the time of
his retirement, the additional benefit will be paid annually thereafter until
the number of such payments equals the total number of years of his service as a
director, limited by the joint lives of the retired director and his spouse.
NONEMPLOYEE DIRECTOR CHARITABLE AWARD PROGRAM: As part of its overall
program to promote the mutual interest of the Company and its nonemployee
directors in charitable giving, the Company established, effective May 8, 1991,
a Nonemployee Director Charitable Award Program which is funded by life
insurance policies on the lives of nonemployee directors. Upon the death of a
nonemployee director (or certain other qualifying events), the Company will
donate up to $1 million (or its actuarial equivalent) to one or more qualifying
charitable organizations recommended by the individual director funded entirely
by insurance proceeds. Individual directors derive no financial benefit from
this program since all available deductions for tax purposes accrue solely to
the Company.
EXECUTIVE COMPENSATION AND SHAREHOLDINGS BY EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE: The following table sets forth information
concerning annual and long-term compensation for services rendered to the
Company for 1994, 1993 and 1992 by those persons who were the chief executive
officer and the other four most highly compensated executive officers of the
Company during 1994 (collectively, the Named Officers).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION RESTRICTED STOCK
--------------------- AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (a) (BOOK VALUE SHARES) (b) COMPENSATION (c)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph M. Clapp 1994 $347,308 $260,231 $ 189,819 $ 64,874
Director, Chairman and CEO 1993 325,000 271,104 206,134 60,771
1992 300,000 390,405 272,373 50,377
John P. Chandler (d) 1994 215,000 187,387 31,265 17,654
Vice President- 1993 210,000 159,157 17,689 23,010
Administration and Treasurer 1992
John M. Glenn 1994 170,000 77,850 62,076 15,910
Vice President and General 1993 165,000 64,382 52,160 22,333
Counsel 1992 157,500 100,837 72,748 23,286
Daniel J. Sullivan 1994 322,500 254,866 132,196 37,317
Director, President and COO 1993 300,000 323,276 177,087 40,436
1992 270,000 443,587 305,182 37,715
D. A. Wilson 1994 233,192 134,291 94,933 19,093
Senior Vice President- 1993 225,000 137,368 100,830 24,222
Finance and Planning, 1992 205,000 192,693 133,797 24,004
Secretary and CFO
- --------------------------------------------------------------------------------------------------------------------
<FN>
(a) Reflects incentive compensation earned, less amounts used to purchase Restricted Book Value Shares (RBV Shares)
under the Consolidated Restricted Book Value Shares Plan for Roadway Services, Inc. (RBVS Plan). Amounts used
to purchase RBV Shares are included in the Long-Term Compensation column.
(b) The amounts set forth in this column do not reflect conventional awards of restricted stock, but rather reflect
amounts of compensation otherwise provided to the executive officer that he elected to use for the purchase of
RBV Shares under the RBVS Plan. The amounts include (i) the portion of cash incentive compensation referred to
in footnote (a) above and (ii) the value of certain stock credits awarded under the Roadway Services, Inc.
Long-Term Stock Award Incentive Plan (LTS Plan). RBV Shares are purchased from the Company at book value. Owners
of RBV Shares have the same rights as other holders of Company common stock, including voting and dividend rights.
However, RBV Shares cannot be resold except to the Company and then only at a price equal to book value as of the
year-end preceding repurchase. Book value was $25.76 as of December 31, 1994, $26.60 as of December 31, 1993,
and $25.71 as of December 31, 1992. RBV Shares owned by the Named Officers, including purchases with 1994
compensation, and the aggregate value based upon the book value as of December 31, 1994, are as follows: Mr. Clapp,
57,264 ($1,475,121); Mr. Chandler, 2,402 ($61,876); Mr. Glenn, 10,881 ($280,295); Mr. Sullivan, 32,169 ($828,673);
and Mr. Wilson, 41,541
6
<PAGE> 8
($1,070,096). For additional information about the RBVS Plan see the
Compensation Committee Report on Page 9, and for more information about the
LTS Plan and the stock credits awarded thereunder for 1994, see the
Compensation Committee Report and the Long-Term Incentive Plans Table.
(c) Reflects (i) dividend equivalents earned on stock credits awarded under the
LTS Plan and predecessor plans (Mr. Clapp, $56,518; Mr. Chandler, $9,298;
Mr. Glenn, $7,554; Mr. Sullivan, $28,961; and Mr. Wilson, $10,737); (ii)
Company matching contributions under the Roadway Services, Inc. Stock
Savings and Retirement Income Plan, a voluntary contributory defined
contribution employee benefit plan ($5,250 for each of the Named Officers)
and (iii) allocations under the Roadway Services, Inc. Stock Bonus Plan, a
noncontributory defined contribution employee benefit plan ($3,106 for each
of the Named Officers).
(d) During 1992 Mr. Chandler was the president of Roadway Package System, Inc.
and was not an executive officer of the Company.
</TABLE>
LONG-TERM INCENTIVE PLANS TABLE: The following table sets forth information
concerning long-term incentive plans pursuant to which the Named Officers
received awards for 1994. It reflects stock credits awarded under the LTS Plan,
less supplemental stock credits used to purchase RBV Shares. Supplemental stock
credits are designed to make up for contributions to participants' accounts in
the Company's qualified defined contribution plans that are not allocated to a
participant because of limitations imposed by the Internal Revenue Code. The
value of supplemental stock credits that were used to purchase RBV Shares is
included in the Long-Term Compensation column of the Summary Compensation Table.
Until distribution, dividend equivalents will be credited in shares of the
Company's common stock. Stock credits are distributed as shares in five annual
installments after retirement. Stock credits are fully vested at age 55. For
additional information about the LTS Plan and the valuation of stock credits
awarded thereunder, see the Compensation Committee Report on Pages 8 and 9.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES,
UNITS OR OTHER RIGHTS MINIMUM PERIOD
NAME YEAR (STOCK CREDIT AWARDS) UNTIL MATURATION(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Joseph M. Clapp
Director, Chairman and CEO 1994 6,002 1 Year
John P. Chandler
Vice President - Administration and Treasurer 1994 1,231 1 Year
John M. Glenn
Vice President and General Counsel 1994 795 1 Year
Daniel J. Sullivan
Director, President and COO 1994 2,668 1 Year
D. A. Wilson
Senior Vice President-Finance and Planning, Secretary
and CFO 1994 1,590 1 Year
- ------------------------------------------------------------------------------------------------------------------
<FN>
(a) After December 31, 1995, 50% of an executive officer's basic stock credits awarded under the LTS Plan may be
used to purchase RBV Shares in a number equivalent to the number which could be purchased at book value as of
December 31, 1995.
</TABLE>
ROADWAY SERVICES, INC. PENSION PLAN: The Pension Plan is a noncontributory
qualified employee defined benefit plan. The Plan provides retirement benefits
after normal retirement at age 65 equal to the greater of (a) 1 1/3% of final
five year average compensation or (b) 1 3/4% of final 20 year average
compensation up to $45,000 and 1 1/2% of final 20 year average compensation in
excess of $45,000, times total years of service not to exceed 30. Benefits under
the Pension Plan are not subject to reductions for Social Security benefits or
other offset amounts. The following table shows estimated annual pension
benefits payable as a straight life annuity under various assumptions based on
final 20 year average compensation and years of service. Annual compensation for
computing annual pension benefits includes base salary and incentive
compensation. For the Named Officers, annual compensation represents the sum of
the amounts shown for 1994 in the Salary and Bonus columns of the Summary
Compensation Table, plus that portion of the amount shown in the Long-term
Compensation column that represents incentive compensation used to purchase RBV
Shares.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
ESTIMATED ANNUAL PENSION BENEFITS UPON
RETIREMENT FOR YEARS OF SERVICE INDICATED
AVERAGE ANNUAL COMPENSATION ------------------------------------------------
FOR LAST 20 YEARS OF SERVICE 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ---------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 200,000 46,688 $ 62,250 $ 77,813 $ 93,375
400,000 91,688 122,250 152,813 183,375
600,000 136,688 182,250 227,813 273,375
800,000 181,688 242,250 302,813 363,375
1,000,000 226,688 302,250 377,813 453,375
</TABLE>
7
<PAGE> 9
At normal retirement, the credited years of service and the estimated final
20 year average compensation under the Pension Plan for the Named Officers are:
Mr. Clapp, 30 years and $659,931; Mr. Chandler, 24 1/3 years and $396,888; Mr.
Glenn, 8 1/2 years and $277,749; Mr. Sullivan, 30 years and $915,787; and Mr.
Wilson, 30 years and $539,033. The current estimated annual compensation for the
Named Officers if incentive compensation goals are met would be: Mr. Clapp,
$1,015,000; Mr. Chandler, $405,000; Mr. Glenn, $335,000; Mr. Sullivan, $965,000;
and Mr. Wilson, $585,000.
REPORT OF THE COMPENSATION COMMITTEE ON
1994 EXECUTIVE COMPENSATION
OVERALL PHILOSOPHY AND STRATEGY
Since 1956 a fundamental goal of our company has been to align the interests
of the shareholders and management by making the level of executive compensation
significantly dependent on the areas of importance to shareholders -- corporate
revenue growth, profitability, and stock price appreciation. To this end, the
1994 executive compensation package consisted of four parts: a relatively low
base salary; a potentially generous cash incentive plan tied by formula to
financial results; and two stock plans whose value depends on market price
appreciation and book value growth.
In 1994, Roadway Services officers' base salaries averaged 44% of their
total compensation. Cash incentive compensation and stock credit awards averaged
40% and 16%, respectively.
A general description of the four executive compensation programs follows:
Base Salaries: The Compensation Committee established base salaries for
1994 at a level that it considered to be below market for comparable positions.
In establishing the base salaries, the Compensation Committee, as has been its
practice for many years, considered industry-based comparisons compiled by the
Company and data provided by Towers Perrin, an outside compensation consulting
firm, about companies of comparable size to RSI in transportation as well as
other industries. Industry-based comparisons included companies in the S&P
Trucking index and other large transportation companies, including air and rail
carriers.
In setting compensation for individual executive officers, the Compensation
Committee also took into account evaluations by the Chief Executive Officer, Mr.
Clapp, and the Committee's own view of job performance. Consideration was also
given to maintaining internal equity among members of the executive group in
accordance with their respective responsibilities. Mr. Clapp received a salary
of $347,308, reflecting a 10% voluntary salary reduction during the Teamsters
strike against Roadway Express.
Cash Incentive Compensation: The cash component of 1994 incentive
compensation for all executive officers was determined under the Company's 1994
Officers' Incentive Compensation Plan formula. The plan was similar to those in
prior years. If stipulated targets for 1994 return on equity and revenue were
met, each executive officer would earn an amount of executive compensation
supplementing his relatively low base salary to provide excellent total
compensation.
The target return on equity, pre-tax, was 28%. No bonuses were payable
unless a return of at least 10% was achieved. The revenue target was set at
$4,728,000,000. A penalty factor existed if targeted revenue was not achieved.
As was the case in 1993, Roadway Global Air (RGA) start-up losses incurred
during 1994 were excluded from the formula. However, for Messrs. Clapp, Sullivan
and Wilson, the exclusion of RGA start-up losses was limited to 115% of the
budgeted RGA operating loss. The actual loss at RGA for 1994 exceeded the
maximum exclusion so that their cash incentive compensation was correspondingly
reduced for each by 19%.
Early in 1994 the RSI Board of Directors authorized the Compensation
Committee to appropriately amend the Plan in the event of a strike at Roadway
Express. A 24-day strike did occur and the Plan subsequently was amended to (1)
delete the penalty factor for revenue below target; (2) reduce to 6% the
threshold percentage of shareholders' equity, below which no bonuses would be
payable, from the previous 10% figure; (3) exclude from the formula the
operations of Roadway Express for the second quarter; and (4) exclude the impact
of the settlement with the IRS of the RPS employment tax case. Similar changes
were made in the cash incentive compensation plan for non-officer, RSI
managerial employees.
Return on equity for 1994 was below target. Consequently, bonuses payable,
after all adjustments were 13% below target amounts for all company officers,
except Messrs. Clapp, Sullivan and Wilson, who received bonuses 30% below their
target amounts. Specifically, Mr. Clapp's cash incentive compensation payment
was $427,112 compared to his target amount of $610,000.
Cash incentive bonuses for Messrs. Clapp, Sullivan and Wilson for 1994 were
also below that for 1992 and 1993. Cash incentive bonuses for all other company
officers for 1994 were also below those for 1992 but above those for 1993. This
fluctuation is a strong indication that officer incentive compensation is
closely linked to financial performance of the company.
Stock-Based Compensation: The Company maintains two stock-based incentive
compensation plans that are designed to focus the Company's executive officers
on long-term performance and shareholder value. The Long-Term Stock Award
Incentive Plan provides for annual awards of stock credits, and the Restricted
Book Value Shares Plan affords officers an opportunity to use a portion of their
cash incentive compensation to invest in the Company's common stock.
Long-Term Stock Award Incentive Plan: The Company's 1994 Long-Term Stock
Award Incentive Plan was similar to annual plans that have provided for the
award of stock credits since 1981. The number of stock credits awarded to each
executive officer other than Mr. Clapp was determined by dividing 25% of target
incentive compensation by a formula price of $48.73. The price reflects a 16%
annual increase (less dividends) over a 1991 price of $34 -- the rounded average
market price of the Company's common stock during the six months preceding
October 1990. The formula was designed to provide an incentive for executive
officers to achieve increases in the market price of the common stock in excess
of 16% (less
8
<PAGE> 10
dividends) on a year-to-year basis. Application of the formula does not involve
individual consideration of prior or current award levels. As in prior years,
total compensation for Mr. Clapp reflected a proportionately greater weighting
of stock credits and lesser weighting of the salary component than was the case
with other officers, in order to provide a more direct correlation between
compensation and the long-term performance of the Company's stock. Under the
plan, each stock credit becomes distributable as one share of common stock of
the Company in annual installments following retirement.
Restricted Book Value Shares Plan: Under the Restricted Book Value Shares
Plan, officers may elect to invest up to 25% of their cash incentive
compensation in Company common stock. Shares are sold at a price equal to their
book value at year-end and cannot be resold except to the Company at a price
equal to book value as of the year-end preceding repurchase. Since both
purchases and sales under this plan occur at book value, participants are
motivated to achieve increases in the Company's book value. During 1994, as
shown in the Summary Compensation Table, the Named Offices invested substantial
portions of their incentive compensation in the Company pursuant to this plan.
While the Committee is aware that a small portion of incentive compensation
may not be deductible under the Internal Revenue Code by not qualifying under
sec.162(m), the Committee believes that shareholder interests are better served
if the Committee retains the flexibility to make appropriate decisions
concerning compensation plans as circumstances require, which may be precluded
under the restrictive provisions of shareholder approved plans. Qualification of
the incentive compensation plan under sec.162(m) would sacrifice this
flexibility.
STATUS OF REPORT
The Board of Directors established 1994 compensation for the Company's
executive officers on the basis of recommendations made by its Compensation
Committee. The foregoing report on 1994 executive compensation was provided by
the Compensation Committee and shall not be deemed to be "soliciting material"
or to be "filed" with the Securities and Exchange Commission or subject to
Regulation 14A promulgated by the Commission or Section 18 of the Securities
Exchange Act of 1934. The Compensation Committee is composed entirely of
nonemployee Directors. The names of the Directors who served on the Compensation
Committee during 1994 are set forth below.
N.C. HARBERT; C.R. LONGSWORTH, CHAIRMAN; G.J. ROUSH; W. SWORD
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
shareholder return on the Company's common stock with the S&P Composite 500
Stock Index and the S&P Trucking Index, respectively, for the five-year period
commencing December 31, 1989 through December 31, 1994. The graph assumes that
the value of the investment in the Company's common stock and each index was
$100 at December 31, 1989 and all dividends were reinvested. The comparisons in
this table are required by the SEC and, therefore, are not intended to forecast
or be necessarily indicative of the actual future return on the Company's common
stock.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ROADWAY SERVICES S&P 500 S&P TRUCKING
<S> <C> <C> <C>
1989 100 100 100
1990 94 97 83
1991 154 126 117
1992 173 136 130
1993 156 150 128
1994 151 152 124
</TABLE>
<TABLE>
<CAPTION>
December 31 1989 1990 1991 1992 1993 1994
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Roadway Services $100 $94 $154 $173 $156 $151
S&P 500 $100 $97 $126 $136 $150 $152
S&P Trucking $100 $83 $117 $130 $128 $124
</TABLE>
9
<PAGE> 11
OWNERSHIP OF COMPANY COMMON STOCK BY MANAGEMENT
The following table sets forth the beneficial ownership as of February 28,
1995 of Company common stock by the Named Officers and all executive officers
and directors as a group (excluding G. James Roush and Sarah Roush Werner, whose
beneficial ownership is detailed in the Principal Holders Table on page 2).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
% OF
NAME SHARES(a)(b) VOTING STOCK
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Joseph M. Clapp
Director, Chairman and CEO 84,235(c) 0.22
John P. Chandler
Vice President-Administration and Treasurer 5,900 0.02
John M. Glenn
Vice President and General Counsel 16,538(c) 0.04
Daniel J. Sullivan
Director, President and COO 44,144 0.11
D. A. Wilson
Senior Vice President-Finance and Planning, Secretary and CFO 51,047 0.13
16 Directors and Executive Officers as a group, excluding G. James Roush
and Sarah Roush Werner listed on the "Principal Holders" table on page 2 297,030(c) 0.76
- -------------------------------------------------------------------------------------------------------------
<FN>
(a) Includes shares held pursuant to the Stock Bonus Plan, the Stock Savings and Retirement Income Plan and
the Employee Stock Ownership Plan as of December 31, 1994, as follows: Mr. Clapp, 26,441 shares;
Mr. Chandler, 3,498 shares; Mr. Glenn, 3,557 shares; Mr. Sullivan, 10,931 shares; Mr. Wilson, 9,421 shares;
and all executive officers as a group, 94,780 shares.
(b) Includes RBV Shares held pursuant to the RBVS Plan as of December 31, 1994, as follows: Mr. Clapp, 57,264
shares; Mr. Chandler, 2,402 shares; Mr. Glenn, 10,881 shares; Mr. Sullivan, 32,169 shares; Mr. Wilson,
41,541 shares; and all executive officers as a group, 177,961 shares.
(c) Includes shares owned by family members as to which beneficial ownership is disclaimed, as follows:
Mr. Clapp, 100 shares, Mr. Glenn, 1,000 shares, Mr. Wilson, 5 shares; and all directors and executive
officers as a group, 2,730 shares.
</TABLE>
SHAREHOLDER PROPOSAL
(PROPOSAL NO. 2)
A shareholder has informed the Company that the following proposal will be
presented at the Annual Meeting. The Company disclaims any responsibility for
the content of the proposal and supporting statement, which are presented as
received from the shareholder.
The name of the proponent, address and shareholdings will be furnished by
the Company to any shareholder, orally or in writing as requested, promptly upon
receipt of any request therefor. It is virtually identical to the proposal
submitted by another shareholder last year.
CONFIDENTIAL VOTING
RESOLVED: That the stockholders of Roadway recommend that the Board of Directors
take the necessary steps to adopt and implement a policy of confidential voting
at all meetings of its shareholders; and that this includes the following
provisions:
1. That the voting of all proxies, consents and authorizations be secret,
and that no such document shall be available for examination nor shall
the vote or identity of any shareholder be disclosed except to the
extent necessary to meet the legal requirements, if any, of the
Company's state of incorporation; and
2. That the receipt, certification, and tabulation of such votes shall be
performed by independent election inspectors.
PROPONENT'S STATEMENT IN SUPPORT OF THE PROPOSAL:
Voting can only fairly reflect a voter's conviction when the process is free
of potential coercion. Secret balloting is considered essential to such a
process.
Major institutional investors support confidential voting, including many of
the prominent funds that own sizable shares of Roadway stock.
Protecting confidentiality is important so that shareholders feel free to
oppose management nominees and vote on resolutions without fear of management
intervention.
Money managers can jeopardize business relationships by their voting
positions. The gravity of this problem is demonstrated by the finding by the
Investor Responsibility Research Center's study that a majority of those
surveyed faced resolicitation from company management after they submitted their
proxy.
Some shareholders of the company do business with various firms connected to
incumbent directors. Other shareholders are customers. These connections create
the possibility of pressure.
Employee shareholders at Roadway, who own more than 22% of the stock, are
especially vulnerable.
Last year, management argued that its appointment of three inspectors be
retained. But this system includes a company officer as well as an agent from a
board member's law firm.
10
<PAGE> 12
Many companies are adopting confidential voting policies, including Sears,
Baxter International, Weyerhaeuser, General Signal, Unisys and W. R. Grace.
Shareholders at Avon, Lockheed, and USX enacted confidential voting over
management opposition. At National Intergroup, management tried to get
shareholders to accept limited confidentiality, but 69.9 percent of shares voted
instead in favor of full confidentiality.
For these reasons, we urge you to vote FOR the resolution.
COMPANY'S STATEMENT IN OPPOSITION TO THE PROPOSAL:
THE COMPANY'S BOARD OF DIRECTORS OPPOSES THIS PROPOSAL AND RECOMMENDS A VOTE
AGAINST THE FOREGOING SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
On February 8, 1995 the Board adopted a policy that will permit shareholders
to elect to keep their votes confidential. This change was made after reviewing
policies of many publicly held companies including those named by the proponent.
Corporate governance policy positions of major institutional investors were also
consulted. The policy is as follows.
CONFIDENTIAL VOTING POLICY
It is the policy of the Company that the proxy ballot
and voting process for shareholders' meetings shall provide
the means by which shareholders may expressly elect to have
their votes treated confidentially.
The particular vote of such shareholder shall not be
disclosed except (a) in the event of a proxy or consent
solicitation in opposition to the Company; (b) if disclosure
is necessary to meet legal requirements or where such
information may be necessary to assist in the pursuit or
defense of judicial action; (c) if the shareholder
subsequently requests or permits disclosure of its vote; or
(d) in the event the Company concludes in good faith that a
bona fide dispute exists as to the authenticity of one or more
proxies, ballots or votes, or as to the accuracy of any
tabulation of such proxies, ballots or votes.
The Company shall also engage independent tabulators
and judges of election for the shareholders' meetings. Company
employees and agents assisting in the administration of the
vote, solicitation, receipt and tabulation shall provide
appropriate certification that they will treat shareholder
votes confidentially in accordance with this policy. To ensure
a representative vote or quorum, independent tabulators (who
have signed confidentiality certifications) may, at any time,
inform the Company whether or not a shareholder has voted.
Shareholder comments on proxy cards shall be conveyed
to the Company by the independent tabulators in such a fashion
as to protect a confidential vote.
The Board of Directors believes it is important that it
understand the positions and preferences of its different
shareholders on various issues. After considering the various
and often divergent interests and viewpoints of the
shareholders, the Board must proceed in the best interest of
the Company and all of the shareholders. Accordingly, this
policy shall not be construed so as to prohibit open and
voluntary communication between the Company and its
shareholders as to their voting policies or general
preferences.
The proponent was notified of this action but declined through counsel to
withdraw her own proposal from shareholder consideration. She would have
shareholders adopt a completely unqualified policy notwithstanding that few
companies go so far as to eliminate those exceptions generally thought necessary
to protect the interests of the shareholders as a whole.
For example, all but one of those companies cited by the proponent have
adopted confidential voting with one or more of the same exceptions as those
adopted by this Board. Moreover, the company's position is consonant with those
advocated by major institutional investors.
VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the
outstanding shares present in person or by proxy at the meeting, or adjournment
thereof, is necessary for approval of this Proposal No. 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL NO. 2.
SHAREHOLDER PROPOSAL
(PROPOSAL NO. 3)
A shareholder has informed the Company that the following proposal will be
presented at the Annual Meeting. The Company disclaims any responsibility for
the content of the proposal and supporting statement, which are presented as
received from the shareholder.
The name of the proponent, address and shareholdings will be furnished by
the Company to any shareholder, orally or in writing as requested, promptly upon
receipt of any request therefor.
EXECUTIVE COMPENSATION
RESOLVED: That the shareholders urge that the Board of Directors submit the
compensation performance goals for the top five executives for shareholder
ratification, as required to retain federal tax deductibility for executive
compensation, on an annual basis.
PROPONENT'S STATEMENT IN SUPPORT OF THE PROPOSAL:
Executive compensation at Roadway has cost more than a million dollars for
some managers. Shareholders should be allowed to vote on the formulas that
result in such multi-million dollar pay packages.
11
<PAGE> 13
In 1993, Congress passed a law that compensation over $1 million to any of
the five highest paid officers of the Company is not deductible by the Company
for federal income tax purposes, unless it is performance-based compensation
awarded as part of a compensation plan approved by shareholders. After January
1, 1994, taxable compensation above $1 million will be paid out of the Company's
net, after tax, earnings. Congress' intent in passing this law was to bring
under some control the excesses in executive compensation in recent years.
Roadway can avoid a shareholder vote by forfeiting the tax preference.
Instead, to express its good faith with shareholders, we urge the Board to
submit the compensation performance goals for a vote.
We think an annual vote is important. This gives management a chance to
refine the goals as needed to respond to quickly changing market forces. This
proposal preserves the necessary flexibility in compensation policies. The top
executives of the Company can still be paid over $1 million, but only with
stockholder approval. This resolution simply prevents management from burdening
shareholders with the greater expense of having to pay taxes on these executive
salaries as well as paying the salaries themselves.
COMPANY'S STATEMENT IN OPPOSITION TO THE PROPOSAL:
THE COMPANY'S BOARD OF DIRECTORS OPPOSES THIS PROPOSAL AND RECOMMENDS A VOTE
AGAINST THE FOREGOING SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
The company's overall compensation philosophy and plan is set forth in the
Report of the Compensation Committee on page 8. The Committee's goal is to align
the interests of shareholders and management by making incentive compensation
dependent on profitability and growth.
Management compensation is composed of base salary and performance based
incentive payments. Salaries, based on surveys from independent consultants, are
deliberately set below market and incentive pay is calculated so that superior
returns to the owners of the business will result in above average total
compensation for management.
The transportation business is dynamic and highly competitive, requiring
rapid responses to changing circumstances. The variable nature of the industry
and the nature of Roadway's incentive programs make annual awards highly
variable. For example, in 1994 return on equity was below target and RGA losses
were in excess of the budgeted amounts. As a consequence, Messrs. Clapp and
Sullivan's incentive awards were 30% below target amounts. Further, in 1994 the
industry strike and the RPS settlement substantially affected compensation
programs and warranted adjustments by the Committee.
Total compensation for Messrs. Clapp and Sullivan was less than $1,000,000
each in 1994. It is possible that each could receive compensation in excess of
$1,000,000 in 1995, making the excess subject to loss of the deduction for
corporate federal income taxes.
At this time, the Committee and the Board of Directors believe that
shareholders' interests are best served if the Compensation Committee retains
the flexibility to make appropriate compensation decisions as circumstances
arise rather than be bound by relatively long term stockholder approved plans.
The Committee and the Board of Directors continue to monitor and evaluate
the alternative courses available to assure that compensation practices result
in optimal management performance and shareholder returns.
VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the
outstanding shares present in person or by proxy at the meeting, or adjournment
thereof, is necessary for approval of this Proposal No. 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL NO. 3.
DESIGNATION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 4)
A proposal will be presented at the meeting to ratify the designation of
Ernst & Young LLP as independent auditors of the Company for 1995. Ernst & Young
LLP have been the independent auditors of the Company since 1951.
Representatives of Ernst & Young LLP will be present at the meeting to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the 1996 Annual Meeting must be
received in writing by the Company at its principal offices by December 11,
1995, in order to be included in the Company's Proxy Statement and form of proxy
relating to that meeting. Proposals must comply with federal securities
regulations and Ohio law.
COST OF SOLICITATION
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by regular employees
of the Company by telephone. The Company does not expect to pay any compensation
for the solicitation of proxies, but it may reimburse brokers and other persons
holding stock in their names, or in the names of nominees, for their expenses in
sending proxy material to principals and obtaining their proxies.
April 10, 1995 D. A. Wilson
Secretary
12
<PAGE> 14
ROADWAY SERVICES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS, MAY 10, 1995
P The undersigned hereby appoints R. A. Chenoweth, J. M. Clapp
and D. A. Wilson, or any of them or their substitutes, as Proxies,
R each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of
O common stock of Roadway Services, Inc. held of record by the
undersigned at the close of business on March 24, 1995, at the Annual
X Meeting of Shareholders to be held Wednesday, May 10, 1995, or any
adjournment thereof. In their discretion, the proxies are authorized
Y to vote upon such other business as may properly come before the
meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is
made, this proxy will be voted FOR the election as directors of
the nominees listed, AGAINST the shareholder proposal with respect to
confidential voting, AGAINST the shareholder proposal with respect to
executive compensation, and FOR the ratification of independent
auditors for 1995.
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. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
<PAGE> 15
<TABLE>
<S> <C> <C>
/ X/ PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / Director Nominees: G. B. Beitzel, 2. A shareholder / / / / / /
Directors R. A. Chenoweth, J. M. Clapp, proposal with
N. C. Harbert, C. R. Longsworth, respect to
R. E. Mercer, G. J. Roush, confidential
D. J. Sullivan, W. Sword, voting.
H. Mitchell Watson, Jr., DIRECTORS RECOMMEND A VOTE AGAINST
and S. R. Werner.
For, except vote withheld from the following nominee(s): FOR AGAINST ABSTAIN
3. A shareholder / / / / / /
_____________________________________________________________________ proposal with
respect to
executive
compensation.
DIRECTORS RECOMMEND A VOTE AGAINST
Confidential
Vote
Requested FOR AGAINST ABSTAIN
/ / 4. Ratification / / / / / /
of Ernst &
Young LLP as
independent
auditors.
DIRECTORS RECOMMEND A VOTE FOR
SIGNATURE(S) ___________________________________________________ DATE ________
SIGNATURE(S) ___________________________________________________ DATE ________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. Please mark, sign, date and return the proxy
promptly in the enclosed postage paid envelope.
</TABLE>
<PAGE> 16
[Roadway Services, Inc. letterhead]
April 10, 1995
Dear Shareholder:
As you will note in the enclosed proxy material, the company has adopted a
policy of confidential voting. At the same time, a shareholder has presented
a different proposal for confidential voting for your consideration. The
purpose of this letter is to clear up any confusion as to why you are being
asked to vote AGAINST a confidential voting proposal when we already have a
confidential voting process.
The confidential voting policy which the company has implemented allows you to
choose to have your votes treated confidentially by checking the appropriate
box on the proxy card. In that event, your vote could not be disclosed except
in appropriate circumstances, as described in the enclosed proxy statement.
This is a change made in recognition of the fact that some shareholders may
feel the need for privacy in voting decisions.
On the other hand, the shareholder confidential voting proposal would require
absolute confidentiality, in virtually all circumstances. In our opinion, this
policy would unduly limit open and voluntary communication between the company
and its shareholders as to their voting policies or general preferences. That
is why we are asking you to vote AGAINST the proposal submitted in the proxy.
If you have any questions or require further explanation, please feel free to
contact Mr. Douglas A. Wilson, corporate secretary, at 1-800-752-6503, ext.
2378. We appreciate your support and cooperation in returning your executed
proxy promptly.
Very truly yours,
/s/ Joseph M. Clapp
Joseph M. Clapp
/encs.
<PAGE> 17
[Roadway Services, Inc. letterhead]
April 10, 1995
Dear Shareholder and Fellow Employee:
As you will note in the enclosed proxy material, the companv has adopted a
policy of confidential voting. At the same tfme, a shareholder has presented
a different proposal for confidential voting for your consideration. The
purpose of this letter is to clear up any confusion as to why you are being
asked to vote AGAINST a confidential voting proposal when we already have a
confidential voting process.
The confidential voting policy which the company has implemented allows you to
choose to have your votes treated confidentially by checking the appropriate
box on the proxy card. In that event, your vote could not be disclosed except
in appropriate circumstances, as described in the enclosed proxy statement.
This is a change made in recognition of the fact that some shareholders may
feel the need for privacy in voting decisions.
On the other hand, the shareholder confidential voting proposal would require
absolute confidentiality in virtually all circumstances. In our opinion, this
policy would unduly limit open and voluntary communication between the company
and its shareholders as to their voting policies or general preferences. That
is why we are asking you to vote AGAINST the proposal submitted in the proxy.
As a participant in the company's stock plans, your vote has always essentially
been "confidential" inasmuch as proxy cards are returned to the plan trustee
and the trustee merely forwards a summary of the total votes received to the
company for final tabulation. This same process will continue under the
company's confidential voting process, except that the trustee will forward
the summary total to KeyCorp Shareholder Services.
If you have any questions or require further explanation, please feel free to
contact Doug Wilson, corporate secretary, at 1-800-752-6503, ext. 2378. We
appreciate your support and cooperation in returning your executed proxy
promptly.
Very truly yours,
/s/ Joseph M. Clapp
Joseph M. Clapp
/encs.
<PAGE> 18
[Roadway Services, Inc. letterhead]
April 10, 1995
Dear Institutional Holder:
Last year, a shareholder proposal to adopt confidential voting received a vote
of approximately 27% in favor of the proposal, despite the Board of Directors'
recommendation against it. A similar proposal was submitted by a shareholder
in December 1994 for this year's meeting.
While the company has historically tabulated proxies in house, we recognize
confidential voting in today's business environment as a legitimate corporate
governance issue. Therefore, management recommended a confidential voting
policy to the Board of Directors, which was adopted on February 8, 1995. We
subsequently contacted the shareholder to request that the proposal be
withdrawn, which the shareholder declined to do.
Presently, we have a confidential voting policy in place that permits
shareholders to choose whether they want to have their votes treated
confidentially by checking a box on the proxy card. We believe the policy is
appropriate, as explained by the company's statement of opposition to the
shareholder proposal in the proxy. Of course, your constituents' votes will
remain confidential as they always have been, since the identity of street name
and nominee owners is protected by law.
We therefore request your vote AGAINST the shareholder proposal for
confidential voting. If you have any questions, please feel free to contact
me at 1-800-752-6503, ext. 2378.
Thank you for your continued support.
Very truly yours,
/s/ D. A. Wilson
D. A. Wilson
