YELLOW CORP, DEF 14A, 1994-03-16

YELLOW CORP
DEF 14A, 1994-03-16
TRUCKING (NO LOCAL)

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<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant / /
Filed by a Party other than the Registrant /x/

Check the appropriate box:

/ / Preliminarty Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12

YELLOW CORPORATION
- ---------------------------------------------------------
(Name of Registrant as Specified in its Charter)

MERRILL CORPORATION
- ---------------------------------------------------------

(Name of Person(s) Filing Proxy Statement)Payment of Filing Fee (Check
the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per party to the controvery pursuant to Exchange Act
Rule 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11

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

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

2) Aggregate number of securities to which transaction applies:

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

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

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

4) Proposed maximum aggregate value of transaction:

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

* Set forth the amount on which the filing fee is calculated and state
how it was determined.

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

1) Amount Previously Paid:

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

2) Form, Schedule or Registration Statement No.:

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

3) Filing Party:

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

4) Date Filed:

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<PAGE>

YELLOW CORPORATION
10777 Barkley
Overland Park, Kansas 66211

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

NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 21, 1994

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Yellow
Corporation (the "Company") will be held at the Holiday Inn, 12601 West 95th
Street, Lenexa, Kansas, on April 21, 1994 at 9:30 a.m., Central Daylight Time,
for the following purposes:

I. To elect three Class II directors whose three-year terms shall expire at
the 1997 Annual Meeting of Stockholders of the Company.

II. To approve the appointment of Arthur Andersen & Co. as independent public
accountants of the Company for 1994.

III. To consider and act upon a stockholder proposal, opposed by management
and the Board of Directors, concerning the Company's classified Board of
Directors.

IV. To transact such other business as may properly come before such meeting
or any adjournment thereof.

Information regarding the matters to be acted upon at the Annual Meeting is
contained in the accompanying Proxy Statement.

The close of business on February 22, 1994 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.

WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE COMPLETE, SIGN AND
RETURN THE ACCOMPANYING PROXY SO THAT YOUR SHARES WILL BE REPRESENTED AT THE
MEETING. Return it as promptly as possible in the enclosed envelope. No postage
is required if mailed in the United States.

If you attend the meeting in person, you may revoke your proxy and cast your
vote in person. If you receive more than one proxy because your shares are held
in various names or accounts, each proxy should be completed and returned.

By Order of the Board of Directors:

<TABLE>
<S> <C>
Overland Park, Kansas WILLIAM F. MARTIN, JR.
March 10, 1994 Secretary
</TABLE>
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS

YELLOW CORPORATION
10777 Barkley
Overland Park, Kansas 66211

INTRODUCTION

This statement is furnished in connection with the solicitation by the Board
of Directors of Yellow Corporation (the "Company"), a Delaware corporation, of
proxies for use at the 1994 Annual Meeting of Stockholders of the Company, to be
held at the Holiday Inn, 12601 West 95th Street, Lenexa, Kansas (the Company's
telephone is 913/967-4300; mailing address P.O. Box 7563, Overland Park, Kansas
66207), at 9:30 a.m., Central Daylight Time, on April 21, 1994, and at any and
all adjournments thereof. The Company's Annual Report (including audited
financial statements) for the year ended December 31, 1993 accompanies this
Proxy Statement, Notice of Annual Meeting of Stockholders and form of proxy,
which will be mailed to stockholders on or about March 10, 1994. The Annual
Report is not part of this proxy soliciting material except to the extent
specifically incorporated herein by reference. A copy of the Company's annual
report to the Securities and Exchange Commission on Form 10-K and the quarterly
reports on Form 10-Q may be obtained without charge by writing the Treasurer of
the Company at the above mailing address.

MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING OF THE COMPANY

At the annual meeting, the Company's stockholders will consider and vote upon
(1) the election of three Class II directors whose three-year terms shall expire
at the 1997 Annual Meeting of Stockholders; (2) the approval of the appointment
of Arthur Andersen & Co. as independent public accountants of the Company for
1994; and (3) a stockholder proposal, opposed by management and the Board of
Directors, concerning the Company's classified Board of Directors.

VOTING AND PROXIES

RECORD DATE; VOTING RIGHTS

Stockholders of record as of the close of business on February 22, 1994 will
be entitled to notice of and to vote at the Annual Meeting of Stockholders of
the Company or any adjournment thereof. On such date the Company had outstanding
28,105,848 shares of common stock, par value $1.00 per share ("Common Stock"),
which constitute the Company's only outstanding voting securities. Each share of
Common Stock has one vote. Unless marked to the contrary, proxies received will
be voted (1) for the election to the Board of all nominees to the Board of
Directors; (2) for the approval of the appointment of Arthur Andersen & Co. as
independent public accountants of the Company for 1993; (3) against the
stockholder proposal concerning the Company's classified Board of Directors; and
(4) in the discretion of the Proxy Committee on such other business as may
properly come before the meeting.

A stockholder who has given a proxy may revoke it at any time prior to its
exercise at the meeting by filing with the Secretary of the Company an
instrument revoking it or a duly executed proxy bearing a later date, or by
attending the meeting and voting. Attendance at the meeting does not by itself
constitute revocation of the proxy. The election of directors shall be
determined by a plurality of the votes cast. Determination of the appointment of
Arthur Andersen & Co. as independent public accountants and the stockholder
proposal concerning the Company's classified Board of Directors shall be by a
majority of the votes cast.

Proxies marked as abstaining (including proxies containing broker non-votes)
on any matter to be acted upon by stockholders will be treated as present at the
meeting for purposes of determining a quorum but will not be counted as votes
cast.

SOLICITATION OF PROXIES

The cost of the solicitation will be borne by the Company. In addition to the
use of the mails, proxies may be solicited by the directors, officers and
employees of the Company without additional compensation, by personal interview,
telephone, telegram or otherwise. Arrangements may also be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of
soliciting material to the beneficial owners of Common Stock held of record by
such persons. The Company will reimburse such respective brokers, custodians,
nominees and fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection therewith.

- 1 -
<PAGE>
SUBMISSION OF PROPOSALS BY STOCKHOLDERS

Stockholders' proposals intended to be presented at the 1995 annual meeting
must be received by November 10, 1994 to be eligible for inclusion in the proxy
materials.

PRINCIPAL STOCKHOLDERS

As of December 31, 1993, the persons known to the Company to be beneficial
owners of more than five percent of the Company's outstanding shares of Common
Stock, the number of shares beneficially owned by them and by all executive
officers and directors as a group, and the percent of such shares so owned were:

<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
-------------------- ------------------ -------
<S> <C> <C>
George E. Powell, Jr. .................................................................... 2,427,502(1)(3) 8.6%
10777 Barkley
Overland Park, Kansas
George E. Powell III ..................................................................... 1,859,387(2)(3) 6.6%
10777 Barkley
Overland Park, Kansas
Boatmen's Bancshares, Inc. ............................................................... 3,952,487(4) 14.1%
One Boatmen's Plaza
St. Louis, Missouri
The Capital Group, Inc. .................................................................. 1,878,100(5) 6.7%
333 South Hope Street
Los Angeles, California
Norwest Corporation ...................................................................... 2,648,875(6) 9.4%
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota
All executive officers and directors as a group .......................................... 2,806,702(7) 10.0%
(16 persons)
<FN>
(1) George E. Powell, Jr., Chairman of the Board, had the following voting and
investment powers with respect to such shares: (a) sole voting power, 680,102
shares; (b) shared voting power, 1,713,600 shares; (c) sole investment power,
680,102 shares; and (d) shared investment power, 1,713,600 shares. Mr. Powell,
Jr. disclaims beneficial ownership of 1,808,428 of such shares, 33,800 of which
are owned by his wife, and 1,774,628 of which he holds solely in a fiduciary
capacity.
(2) George E. Powell III, President and Chief Executive Officer, had the
following voting and investment powers with respect to such shares: (a) sole
voting power, 282,913 shares; (b) shared voting power, 1,572,174 shares; (c)
sole investment power, 283,359 shares; and (d) shared investment power,
1,572,174 shares. Mr. Powell III disclaims beneficial ownership of 1,576,474 of
such shares, 1,538,000 of which are owned by a charitable foundation of which he
is one of five directors, 34,174 of which he acts as a custodian for his
children under the Missouri Transfer to Minors Law and 4,300 of which are owned
by his wife.
(3) Beneficial ownership of 1,538,000 of such shares is attributed to both Mr.
Powell, Jr. and Mr. Powell III, because they are two of five directors of The
Powell Family Foundation, a private charitable foundation, which owns the
shares. The other directors of the Foundation are Barbara P. Allen, Marilyn P.
Rinker and Nicholas K. Powell.
(4) According to information provided to the Company, Boatmen's Bancshares,
Inc. had the following voting and investment powers with respect to such shares:
(a) sole voting power, 834,304 shares; (b) shared voting power, 10,482 shares;
(c) sole investment power, none; and (d) shared investment power, 3,799,039
shares. Boatmen's Trust Company, a subsidiary of Boatmen's Bancshares, Inc.,
held 3,372,806 of such shares as trustee under the Company's Paysop, Stock
Sharing, profit-sharing and pension plans. Participants in the Paysop, Stock
Sharing and profit-sharing plans have the right to instruct the trustee as to
the voting of shares held by the plans and as to whether such shares should be
tendered in the event of a tender offer.
</TABLE>

- 2 -
<PAGE>

<TABLE>
<S> <C>
<FN>
(5) According to information provided to the Company, The Capital Group, Inc.
had, through its operating subsidiaries, Capital Guardian Trust Company and
Capital Research and Management Company, the following voting and investment
powers with respect to such shares: (a) sole voting power, 865,600 shares; (b)
shared voting power, none; (c) sole investment power, 1,878,100 shares; and (d)
shared investment power, none.
(6) According to information provided to the Company, Norwest Corporation,
Inc., had, through certain of its subsidiaries, the following voting and
investment powers with respect to such shares: (a) sole voting power, 2,311,925
shares; (b) shared voting power, 22,350 shares; (c) sole investment power,
2,641,925 shares; and (d) shared investment power, 3,450 shares. Norwest
Corporation disclaims beneficial ownership of all shares for the purposes of
Sections 13, 14, or 16 of the Securities Exchange Act of 1934.
(7) This total avoids duplication due to the attribution of beneficial
ownership of 1,538,000 shares to both Mr. Powell, Jr. and Mr. Powell III
referred to in note (3) above. Executive officers' and directors' share
ownership includes: 10,680 shares held in employee stock plans; 3,760 shares
which executive officers had the right to acquire within 60 days of such date
through the exercise of stock options pursuant to the Company's 1983 Stock
Option Incentive Plan; 2,427,502 shares attributed to George E. Powell, Jr., to
which notes (1) and (3), above, apply; 1,859,387 shares attributed to George E.
Powell III, to which notes (2) and (3), above, apply; 200 shares owned by
relatives of other executive officers or directors as to which such executive
officers or directors disclaim beneficial ownership; and 1,538,000 shares owned
by a charitable foundation which duplicate shares referred to in notes (1), (2)
and (3), above, and with respect to which beneficial ownership is disclaimed.
</TABLE>

I. ELECTION OF DIRECTORS

At the meeting, three Class II directors are to be elected to three-year terms
which shall expire at the 1997 Annual Meeting of Stockholders of the Company.
Messrs. McKelvey and LeMay have consented to being named and to serve the full
three-year term if elected. Mr. Duboc, who has reached the normal retirement age
for Company directors, has consented to serve until the Company is able to
locate a qualified replacement. If any nominee should be unable to stand for
election as a director, an event not anticipated, it is intended that the shares
represented by proxies will be voted for the election of such substitute as
management may nominate.

The following tables set forth information with respect to each director and
each nominee for election as a director of the Company. George E. Powell III is
the son of George E. Powell, Jr. No other director or nominee has any family
relationship with any other director or executive officer of the Company.
<TABLE>
<CAPTION>
NAME; PAST SERVICE PRINCIPAL OCCUPATION;
TERM OF OFFICE DIRECTORSHIPS; AGE
- ----------------------------------- --------------------------------------------------------------------------
<S> <C>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS
John C. McKelvey .................. President and Chief Executive Officer of Midwest Research Institute,
Director since 1977 Kansas City, MO (scientific and technical research); 60
Charles A. Duboc .................. Director and President of The Penryn Corporation, Kansas City, MO
Director since 1980 (personal investments), from April 1985 to October 1991; formerly Director
and Chairman of the Board of The Western Casualty and Surety Company, Fort
Scott, KS (insurance); Director of Puritan-Bennett Corporation; 71
Ronald T. LeMay.................... Director, President and Chief Operating Officer, Long Distance Division,
Sprint Corporation (telecommunications) (since October 1989); formerly
Executive Vice President, Corporate Affairs of United Telecommunications,
Inc. and Executive Vice President, Staff of U.S. Sprint Corporation;
Director of The Mercantile Bank of Kansas and Missouri; 48

- 3 -
<PAGE>

<TABLE>
<CAPTION>
NAME; PAST SERVICE PRINCIPAL OCCUPATION;
TERM OF OFFICE DIRECTORSHIPS; AGE
- ----------------------------------- --------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE
<S> <C>
M. Reid Armstrong ................. President of Yellow Freight System, Inc. ("Yellow"), the Company's
Director since 1992 principal operating subsidiary (since May 1992); Executive Vice President
Term expires 1995 of the Company and of Yellow (December 1991 - May 1992); Senior Vice
President (prior to December 1991); 56
David H. Hughes ................... Director (Vice Chairman 1986-1990) and formerly President and Chief
Director since 1973 Operating Officer of Hallmark Cards, Inc., Kansas City, MO (greeting
Term expires 1995 cards); Director of Western Resources, Inc.; 65
George E. Powell, Jr. ............. Chairman of the Board (formerly also Chief Executive Officer) of the
Director since 1952 Company; Director of Butler Manufacturing Co., Inc.; 67
Term expires 1995
Klaus E. Agthe .................... Director and North American Liaison for the VIAG Group (Since January
Director since 1984 1993); formerly chief executive officer in charge of operations in eastern
Term expires 1996 Germany for Asea Brown Boveri A.G., Berlin Germany (manufacturer of heavy
electrical equipment), (January 1991 - December 1992); Executive Vice
President of Asea Brown Boveri Inc., Stamford, CT (January 1990 -December
1991); and President and Chief Executive Officer of Asea Brown Boveri
Inc., Purchase, NY (January 1988 - January 1990); 63
Howard M. Dean .................... Chairman and Chief Executive Officer (formerly President and Chief
Director since 1987 Executive Officer) of Dean Foods Company, Franklin Park, IL (processor and
Term expires 1996 distributor of food products); Director of Nalco Chemical Company and Ball
Corporation; 56
George E. Powell III .............. Chief Executive Officer of the Company (since July 1990); President of the
Director since 1984 Company (since October 1987); formerly President of Yellow (October 1987 -
Term expires 1996 May 1992); 45

<CAPTION>
SHARES OF STOCK OWNED
BENEFICIALLY(1)(2),
DIRECTLY OR
INDIRECTLY,
NAME; PAST SERVICE AS OF DECEMBER 31,
TERM OF OFFICE 1993
- ----------------------------------- ----------------------
<S> <C>
M. Reid Armstrong ................. 11,667
Director since 1992
Term expires 1995
David H. Hughes ................... 3,000
Director since 1973
Term expires 1995
George E. Powell, Jr. ............. 2,427,502
Director since 1952
Term expires 1995
Klaus E. Agthe .................... 1,000
Director since 1984
Term expires 1996
Howard M. Dean .................... 500
Director since 1987
Term expires 1996
George E. Powell III .............. 1,859,387
Director since 1984
Term expires 1996
<FN>
(1) These figures include shares beneficially owned by certain members of the
families of the following directors or nominees for director, as to which shares
the director or nominee disclaims beneficial ownership: Mr. Powell, Jr., 33,800
shares; Mr. McKelvey, 200 shares; and Mr. Powell III, 38,474 shares. Also
included are 175,600 shares owned by a charitable foundation with respect to
which Mr. Powell, Jr. shares voting and investment powers, and 61,028 shares
owned by a trust with respect to which Mr. Powell, Jr. has sole voting and
investment powers. Mr. Powell, Jr. has no other beneficial interest with respect
to such shares and disclaims beneficial ownership thereof. Included in the
totals for both Mr. Powell, Jr. and Mr. Powell III are 1,538,000 shares owned by
a private charitable foundation with respect to which each shares voting and
investment powers with others and as to which each disclaims beneficial
ownership.
(2) The percentage of the Company's outstanding stock owned by each director
and nominee for director is less than one percent, except for Mr. Powell, Jr.
and Mr. Powell III, whose respective percentages of beneficial ownership are
reflected in the section titled "Principal Stockholders," above.
</TABLE>

STRUCTURE AND FUNCTIONING OF THE BOARD OF DIRECTORS

The Board of Directors held five regularly scheduled meetings during 1993.

AUDIT COMMITTEE. The Audit Committee consisted of Thomas M. Bloch, Charles A.
Duboc, and John C. McKelvey. Mr. Bloch is retiring from the Board at the
expiration of his current term. The Audit Committee held three meetings during
the last fiscal year. The Committee's functions include consulting with the
Company's independent public accountants concerning the scope and results of the
audit, reviewing the evaluation of internal accounting controls and inquiring
into special accounting-related matters.

- 4 -
<PAGE>
COMPENSATION COMMITTEE. The Compensation Committee consisted of Klaus E.
Agthe, Howard M. Dean and David H. Hughes. The Compensation Committee met four
times during the last fiscal year. The Committee's functions include making
recommendations to the Board of Directors regarding compensation of officers and
approving compensation strategies for executive officers; reviewing actions
relating to officer compensation; and setting policy for the Company's pension
and profit sharing plans.

NOMINATING COMMITTEE. The Nominating Committee consisted of Howard M. Dean,
John C. McKelvey and George E. Powell, Jr. It met once during the last fiscal
year. The Committee's functions include considering nominees for the Board of
Directors and submitting to the whole Board for its consideration nominees
approved by the Committee.

DIRECTORS' COMPENSATION

Directors who are not full-time employees of the Company or any of its
subsidiaries are paid an annual retainer for Board service of $21,500; an annual
retainer for committee service of $1,100 for each committee on which a director
serves (excepting directors on the Nominating Committee, who receive a committee
attendance fee but not a separate committee retainer); an attendance fee of
$1,200 for each Board meeting and $930 for each committee meeting attended; and
are reimbursed or made whole for all costs and expenses of any kind incurred by
them related to Board or committee meetings. Directors may elect to defer
receipt of the retainer and attendance fees. Directors who are full-time
employees of the Company or any of its subsidiaries are not paid any retainer or
attendance fees for service as members of the Board or any committee thereof.

Mr. Powell, Jr. received a retainer of $180,000 for his service as Chairman of
the Board during 1993, but not the annual retainer or meeting fees paid to other
non-employee directors.

During the last fiscal year, no incumbent director attended fewer than 75
percent of the aggregate of the total number of meetings of the Board held
during the period he was a director and of committees of the Board on which he
served during the period that he was a director.

EXECUTIVE COMPENSATION

There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company or certain of its
subsidiaries for the fiscal years ended December 31, 1993, 1992 and 1991 of
those persons who were, at December 31, 1993 (i) the President and Chief
Executive Officer of the Company and (ii) the other four most highly compensated
executive officers of the Company or certain of its subsidiaries:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------------
AWARDS
ANNUAL COMPENSATION ----------------------------- PAYOUTS
----------------------------------------- -------------
(E) (F) (I)
(A) (D) (2)OTHER (3)RESTRICTED (G) (H) (5)ALL
NAME AND PRINCIPAL (B) (C) BONUS ANNUAL STOCK OPTIONS/ LTIP PAYOUTS OTHER
POSITION YEAR SALARY ($) ($)(1) COMP.($) AWARD(S) ($) SARS (#) ($) COMP.($)
- ---------------------- ---- ----------- ----------- --------- -------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George E. Powell III 1993 360,000 0 0 0 0 0 9,062
President, Chief 1992 354,656 101,500 0 104,127 (4) 0 0 9,440
Executive Officer, 1991 334,593 0 0 0 0 0 26,980
Yellow Corporation
M. Reid Armstrong 1993 290,000 0 0 0 0 0 8,264
President, Yellow 1992 259,038 66,500 0 65,148 (4) 0 0 5,358
Freight System, Inc. 1991 224,875 0 0 0 0 0 15,236
Robert W. Burdick 1993 226,400 0 0 0 0 0 8,005
Senior Vice President- 1992 224,175 41,000 0 51,765 (4) 0 0 5,085
Corporate Development/ 1991 214,875 0 0 0 0 0 15,536
Public Affairs, Yellow
Corporation
Leo H. Suggs 1993 240,726 0 0 0 0 0 6,983
President, Preston 1992 165,000 52,000 0 0 0 0 3,302
Corporation 1991 132,796 0 0 0 0 0 3,474
Robert L. Bostick 1993 190,800 0 0 0 0 0 6,983
Senior Vice President- 1992 160,788 50,000 0 0 0 0 3,315
Operations, Yellow 1991 133,380 0 0 0 0 0 3,815
Freight System, Inc.
</TABLE>

- 5 -
<PAGE>

<TABLE>
<S> <C>
<FN>
(1) Executive officer bonuses for 1993 have not yet been finally determined
since the bonuses will be based on the Company's performance in 1994, as
described in the Compensation Committee Report on Executive Compensation.
(2) While the named executive officers receive certain perquisites from the
Company or the involved subsidiary, such perquisites do not reach the threshold
for reporting of $50,000 or ten percent of salary and bonus set forth in the
applicable rule of the Securities and Exchange Commission.
(3) The value of the restricted stock awards was determined by multiplying the
fair market value of the Company's common stock on the date of grant by the
number of shares awarded. As of December 31, 1993, the number and value of
aggregate restricted stock award holdings were as follows: Mr. Powell III, 2,093
shares ($52,063); Mr. Armstrong, 1,310 shares ($32,586); Mr. Burdick, 1,040
shares ($25,870). The value of the Company's stock on December 31, 1993, was
$24.875. If any dividends are paid with respect to the Company's Common Stock,
such dividends will be paid on the restricted stock.
(4) On October 22, 1992, restricted stock awards totaling 8,886 shares were
granted to the named executive officers as follows: Mr. Powell III, 4,186
shares; Mr. Armstrong, 2,619 shares; and Mr. Burdick, 2,081 shares. Under the
award, the restrictions are scheduled to lapse over a two-year period with the
restrictions having lapsed on 50% of the awarded shares in 1993 and 50% due to
lapse in 1994. The market value of a share of the Company's stock on the date of
the awards was $24.875.
(5) The compensation reported represents (a) shares allocated to the accounts
of the named executive officers under the Company's Stock Sharing Plan and (b)
with respect to Mr. Powell III, Mr. Armstrong, and Mr. Burdick, the cash
replacement of the stock sharing contributions to which Mr. Powell III, Mr.
Armstrong and Mr. Burdick would have been entitled before application of
legislative limitations. The shares allocated to the accounts of the named
executive officers in 1993 under the Company's Stock Sharing Plan were as
follows: Mr. Powell III, 310 shares; Mr. Armstrong, 303 shares; Mr. Burdick, 304
shares; Mr. Suggs, 271 shares; and Mr. Bostick, 271 shares. The cost basis of
each share allocated in 1993 was $25.767. Amounts paid to Mr. Powell III, Mr.
Armstrong and Mr. Burdick in 1993 pursuant to the Company's policy of cash
replacement of Stock Sharing contributions subject to legislative limitations
were as follows: Mr. Powell III, $1,075; Mr. Armstrong, $457; and Mr. Burdick,
$172.
</TABLE>

OPTIONS AND STOCK APPRECIATION RIGHTS

The following table summarizes the value of the options and SARS held by the
executive officers named in the Summary Compensation Table above. None of these
officers exercised options or SARs in 1993. No options or SARs were granted
during 1993.

OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR
VALUE (1)

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
UNEXERCISED SARS AT FY- IN-THE-MONEY SARS AT FY-
VALUE OPTIONS AT FY-END END (#) OPTIONS AT FY-END END (#)
SHARES ACQUIRED REALIZED (#) EXERCISABLE/ EXERCISABLE/ ($) EXERCISABLE EXERCISABLE
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
- ---------------------- --------------- ----------- ----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
George E. Powell III -- -- 0/0 0/0 0/0 0/0
M. Reid Armstrong -- -- 0/0 0/0 0/0 0/0
Robert W. Burdick -- -- 0/0 0/0 0/0 0/0
Leo H. Suggs -- -- 0/0 0/0 0/0 0/0
Robert L. Bostick -- -- 0/0 920/0 0/0 575/0
<FN>
(1) The value of the Company's common stock on 12/31/93 was $24.875
</TABLE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The compensation program for the Company's executive officers is established
to allow the organization to attract and retain the caliber of executive whose
leadership skills will enable the Company and its subsidiaries to effectively
compete in their market segments. Additionally, the programs are intended to act
as an incentive for the executive to attain the highest level of organizational
performance and profitability by rewarding the executive for increasing levels
of profit and stockholder value.

- 6 -
<PAGE>
In conformance with the above compensation philosophy, the total annual
compensation for all executive officers of the Company is determined by one base
element -- salary -- and an annual incentive bonus. In addition, for those
executive officers at the level of senior vice president or above at the Company
or the involved subsidiary, total annual compensation includes potential awards
under the Company's 1992 Stock Option Plan.

Salary for the Company's executive officers is determined by analysis of three
factors, consisting of (1) salary levels at service industries with gross
revenues comparable to the Company; (2) evaluation of the individual executive
officer's performance; and (3) the Company's ability to pay. While the three
factors are not formally weighted, the Company's ability to pay is a threshold
consideration. Individual executive performance is not measured by specific
performance targets or goals but is rather an overall, general evaluation
process. While the Company has targeted the median of the range established by
the competitive survey group of service industries for the salary compensation
of executive officers, actual 1993 salaries for executive officers are generally
below the median. In view of the Company's decision, as discussed below, to
forego base salary increases for all employees in 1993, none of the positions
held by executive officers of the Company received a base salary increase in
1993. The increase in salary for the Company's executive officers in 1993
compared to 1992 reflected in the Summary Compensation Table represents the
annualized effect in 1993 of salary increases granted during the course of 1992.
The salary of Leo H. Suggs, President of the Company's Preston Corporation
subsidiary and former Senior Vice President of Corporate Development of the
Company, increased significantly from 1992 due to his assumption of the
presidency of this subsidiary.

Prior to 1993, executive officer annual incentive bonuses were based entirely
upon a performance formula derived from competitive survey data of service
companies with gross revenues comparable to the Company's developed by TPF&C, a
nationally-recognized executive compensation consulting firm. This performance
formula involves increasing levels of payment, once a minimum operating profit
threshold is attained and the measure of operating profits utilized in this
performance formula has been the Company's pre-tax operating ratio. Therefore,
prior to 1993, annual bonuses were not based on performance targets but only on
actual Company results.

In December, 1993, the Compensation Committee recommended, and the Company's
Board approved, a departure from the established method of calculating annual
executive officer bonus awards for 1993. Set forth below is a description of
these recommendations and the justification therefor:

1. In 1993, the Company completed the acquisition of Preston Corporation.
While the Company anticipates that this acquisition will return significant
benefits in 1994 and beyond, it was recognized that this acquisition would have
a negative effect on the Company's overall results for 1993. The Compensation
Committee therefore decided that the anticipated short-term negative impact of
the Preston acquisition justified the waiver of the operating profit threshold
of the established performance formula, contingent on the future performance of
the Company as described in Paragraph 3 below. The amount of the potential
annual incentive bonus for executive officers who are employees of the Company
was determined by application of the performance formula after elimination of
the operating profit threshold. Executive officers who are employees of a
Company subsidiary have their annual bonus calculated by reference to the
pre-tax operating ratio of the involved subsidiary rather than the Company as a
whole. Since the pre-tax operating ratio of the Company was higher than the
pre-tax operating ratio of its principal subsidiary, Yellow Freight System,
Inc., on a comparative basis the executive officers who are employees of this
subsidiary will potentially receive higher percentage bonuses than executive
officers who are employees of the Company.

2. Even without consideration of the anticipated negative short-term effect of
the Preston Corporation acquisition, the Company's performance in 1993,
particularly in the first half of the year, compared unfavorably with the
Company's 1992 performance. Due to the 1993 performance levels, the Company
decided to eliminate the normal April base salary and wage increases for all
employees. While the Company's performance has shown steady improvement
throughout the second half of 1993, with the effect that the Company has awarded
lump-sum payments to all employees, including the Company's executive officers,
early in 1994, the amount of such lump sum payments still compares unfavorably
with the Company's past level of salary and wage increases. Accordingly, the
Committee recommended that the level of executive officer annual bonuses be
reduced by the degree to which the lump sum payments compare unfavorably with
the Company's 1992 level of salary and wage increases.

3. In order to encourage the executive officers of the Company to strive for
the continuance of the steady improvement of performance trends that has been
evident in the second half of 1993, the Committee further recommended that the
calculated awards for all executive officers at the level of senior vice
president or above at the Company or the involved subsidiary be entirely
dependent and contingent upon such continued performance

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<PAGE>
improvement in 1994. The awards calculated in December 1993 will be paid only in
the event that the Company or the involved subsidiary meets or exceeds the
minimum operating profit threshold for any quarter in 1994 after application of
the established performance formula.

Awards under the Company's 1992 Stock Option Plan utilize the same performance
formula relating to pre-tax operating ratio that forms the basis for annual
bonus awards, the only difference being that the 1992 Stock Option Plan awards
are based on a three-year average of the Company's annual operating profits. The
1992 Stock Option Plan replaced the substantially similar 1983 Stock Option
Incentive Plan. Determinations of awards under the 1983 Plan were also based on
the performance formula relating to pre-tax operating ratio described above.
Since the performance formula is based entirely on actual Company operating
results, the Compensation Committee in its deliberations does not consider the
amount of options or restricted stock awards already outstanding or previously
granted, or the aggregate size of current awards. Though the 1992 Plan
contemplates three types of awards -- Stock Options, Share Appreciation Rights
and Restricted Stock -- it has been the Compensation Committee's past practice
to award Restricted Stock. It is the Committee's belief that executive officers,
most particularly the CEO of the Company and the presidents of certain of its
subsidiaries, should have a stake in the Company's ongoing success through stock
ownership. It has thus been the Committee's practice to restrict awards to
executive officers at the level of senior vice president or above at the Company
or the involved subsidiary. This ownership position is intended to focus these
executives' attention on managing the business in the best interest of the
stockholders. In view of the Committee's decision to waive the performance
formula threshold with respect to annual incentive bonuses, contingent on the
future performance of the Company as described above, the Committee determined
that it would not be appropriate to also grant awards under the 1992 Stock
Option Plan, and accordingly, no awards under the 1992 Stock Option Plan were
granted to any of the executive officers of the Company in 1993.

CEO COMPENSATION

The base salary of George E. Powell III is set at a level commensurate with
competitive salaries for CEO positions of service industry companies with gross
revenues comparable to the Company, using survey data developed by TPF&C, a
nationally recognized executive compensation consulting firm. Currently, Mr.
Powell's base salary falls within the lower quartile of the survey group. As
with the other executive officers, Mr. Powell received no base salary increase
in 1993 because of the Company's decision to forego base salary increases for
all employees in 1993.

The potential bonus award for Mr. Powell calculated in 1993 is subject to the
contingency indicated above in the Compensation Committee's general discussion
of 1993 annual bonus awards for executive officers of the Company. No award
under the 1992 Stock Option Plan was granted Mr. Powell in 1993.

The annual bonus and restricted stock awards granted Mr. Powell in 1992 were
based on the performance formula derived from competitive survey data of service
companies with gross revenues comparable to the Company's developed by TPF&C
that is described in the above discussion relating to executive officer
compensation generally. No annual bonus was paid or award under the 1983 Stock
Option Plan granted in 1991 because the Company's profits fell below the minimum
threshold.

Howard M. Dean, Chairman
Klaus E. Agthe
David H. Hughes
Members of the Compensation Committee

- 8 -
<PAGE>
COMMON STOCK PERFORMANCE

Set forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return of the Company's common stock against the
cumulative total return of the S&P Composite-500 Stock Index and the S&P
Transportation Composite Index for the period of five years commencing December
31, 1988 and ending December 31, 1993.

Relative Market Performance
Total Return 1988-1993

[GRAPHIC]
1992 STOCK OPTION PLAN

On April 24, 1992, the stockholders approved the adoption of the 1992 Stock
Option Plan (the "1992 Plan"). 800,000 shares of common stock are available for
grant under the 1992 Plan. The 1992 Plan expires on April 25, 2002, in that no
awards may be made after that date.

The Company's 1992 Plan is administered by the Compensation Committee of the
Board of Directors, none of whose members are eligible to receive an award under
the 1992 Plan. The 1992 Plan covers executive, managerial, supervisory and
professional employees of the Company and certain of its subsidiaries (including
employee-directors and officers) and permits three types of awards: Grants of
stock options, which are either Incentive Stock Options ("ISOs") or non-ISOs
("non-qualified options"); grants of stock options coupled with a grant of stock
appreciation rights ("SARs"); and grants of restricted stock awards. The 1992
Plan also provides for share delivery to employees otherwise eligible for an
award under the Plan in lieu of cash incentive awards under any management
incentive plan.

In determining the grant of awards to eligible employees, the Compensation
Committee may consider the nature of the services rendered or that the Committee
expects may be rendered by the employee, the employee's present and potential
contributions to the success of the business, the number of years of effective
service the employee is expected to have and such other factors as the Committee
may deem relevant.

The option exercise price (or initial value in the case of an SAR) is 100% of
the fair market value of the stock on the date of the grant, and may be paid in
cash or by delivery of shares owned by the optionee. Options and SARs coupled
with options become exercisable on the first anniversary of the date of the
grant. Restrictions on the sale or transfer of restricted stock awarded under
the 1992 Plan will be lifted on a specified percentage of the total award each
year, beginning one year after the date of grant. The time at which SARs and
certain options become exercisable or restrictions lapse on restricted stock
award shares is accelerated upon the occurrence of certain events, such as total
and permanent disability or death of an employee while in the employ of the
Company or a subsidiary, if the Company is wholly or partly liquidated, or is a
party to a merger, consolidation or reorganization in which it or an entity
controlled by it is not the surviving entity, or upon the occurrence of certain
events which

- 9 -
<PAGE>
may lead to a change of control of the Company. If not previously exercised,
options or rights granted under the 1992 Plan expire either ten years or five
years after the grant date. No options or SARs have yet been awarded under the
1992 Plan. Any options or SARs presently held by the executive officers named in
the Summary Compensation Table were granted under the substantially similar
predecessor 1983 Stock Option Incentive Plan ("the 1983 Plan"). No executive
officer exercised options or SARs under the 1983 Plan in 1993.

Awards of restricted stock to the named executive officers under the 1992 Plan
and the predecessor 1983 Plan are detailed in Footnotes (3) and (4) to the
Summary Compensation Table. No executive officers were granted restricted stock
awards in 1993.

DEFINED CONTRIBUTION PLANS

The Company and certain of its subsidiaries' executive officers participate in
two defined contribution plans -- the Yellow Freight Profit-Sharing Trust and
the Yellow Freight Stock Sharing Plan. The plans cover all the regular full-time
and regular part-time office, clerical, sales, supervisory and executive
personnel of the Company and participating subsidiaries (excluding directors who
are not salaried employees) employed in the United States and not covered by a
collective bargaining agreement. A total of 5,682 employees were participants in
1993.

Each year the Board of Directors determines the amount of the contributions to
the trusts under the plans (see below) based primarily upon the Company's
profitability. No contribution to the trusts was awarded by the Board of
Directors in 1993.

The Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by
subsequent legislation, may prevent the contribution to or allocation under the
defined contribution plans of the amount to which a participant would otherwise
be entitled. The Company has a policy of replacing contributions to which a
participant would have been entitled before application of the legislative
limitations by means of an annual cash payment to affected participants. The
policy allows a participant to defer any annual cash payment through a
non-qualified, unfunded, deferred compensation arrangement, though no executive
officer receiving such payment has elected deferral. Amounts paid to the named
executive officers under the Company's policy of cash replacement of Stock
Sharing contributions subject to legislative limitations are set forth in
Footnote (5) to the Summary Compensation Table. No other executive officer
qualified for such cash payments.

PROFIT-SHARING TRUST. Two accounts are maintained for each participant and
each account is credited with 50% of the participant's share of the year's
contribution. Account B is 100% vested and consists of that participant's share
of the contribution, increments from income from investments and the net change
in the value of securities. Account A vests at the rate of 20% per year for each
year of participation. It consists of the same elements as Account B plus an
allocation of forfeitures. Vested benefits are paid upon termination of
employment, but an active participant may withdraw a portion of his accounts,
subject to certain limitations.

The Profit-Sharing Trust also contains provisions for a cash or deferred
arrangement under Section 401(k) of the Internal Revenue Code. This arrangement,
called SPARE, allows a participant to deposit in the program up to 12% of his
annual earnings before, or after, federal income taxes. For 1993, the maximum
annual participant contribution was $8,994. There is no Company matching
contribution.

A participant may choose among three investment alternatives for his deposits
and is 100% vested in his SPARE account. Accounts become payable upon cessation
of employment, retirement at or after age 65 and in the event of total and
permanent disability or death. An active participant may withdraw a portion of
his before-tax deposits, subject to certain limitations. After-tax deposits may
be withdrawn for any reason. Deposits may be withdrawn not more than once every
two years.

The amounts which the named executive officers chose to have deposited in the
Section 401(k) portion of the trust, subject to the 12% limitation, are included
in the salary column of the Summary Compensation Table. There was no
contribution to the Profit-Sharing Trust for 1993.

STOCK SHARING PLAN. The Stock Sharing Plan invests solely in Company common
stock, except for the diversification options described below. The plan trustee
may borrow funds to finance purchases of Company stock (a "purchase loan"). Each
year, the Company may make a contribution to the Stock Sharing Plan from Company
earnings. The amount of Company contributions can vary from year to year,
according to Company profits. This contribution (and any dividends on the shares
of stock in the Stock Sharing Plan purchased with an outstanding loan) may be
used to repay any purchase loan. As the loan is repaid, stock will be allocated
to each participant's account. If there is no loan outstanding, or if a
contribution in excess of the amount needed to service the debt on

- 10 -
<PAGE>
any outstanding loan is made, stock purchased by the contribution will be
allocated directly to each participant's account. Participants vote allocated
shares; the plan trustee votes unallocated shares in the same proportion as the
allocated shares are voted.

The number of shares allocated to a participant in any year is based on a
formula that compares the participant's earnings with those of all other
eligible employees. The shares allocated to the accounts of the named executive
officers in 1993 are detailed in Footnote (5) to the Summary Compensation Table.
The shares allocated in 1993 to all executive officers as a group, including the
named executive officers, totaled 2,262 shares.

A participant's account vests at the rate of 20% per year for each year of
participation in the Plan, but years of service under the Yellow Freight
Profit-Sharing Trust count toward vesting in the Stock Sharing Plan. In
addition, an account becomes 100% vested when a participant reaches age 65, dies
or becomes permanently disabled. After reaching age 55 a participant may
transfer up to 25% of his account's value into one or more of three investment
funds; after reaching age 60 a participant may transfer up to 50% of his account
to such funds.

Accounts become payable upon cessation of employment, retirement at or after
age 65 and in the event of total and permanent disability or death. Participants
have various options as to the time and method of payment.

DEFINED BENEFIT PENSION PLAN

The Company and certain of its subsidiaries' executive officers participate in
a noncontributory, defined benefit pension plan. Such plan covers all regular
full-time and regular part-time office, clerical, sales, supervisory and
executive personnel of the Company and participating subsidiaries (excluding
directors who are not salaried employees) who are at least age 21, are employed
in the United States and are not otherwise covered by a pension plan under a
collective bargaining agreement. Pension plan benefits are calculated solely on
salaries and cash bonuses. Compensation reported in the Summary Compensation
Table includes amounts which are not covered compensation under the pension
plan. Participants are vested after five years of service.

A participant retiring at age 65 will receive an annual pension benefit
(single life basis) amounting to 1 2/3% of his final average annual compensation
paid in the five highest consecutive years of the participant's last ten
consecutive years of participation, multiplied by his total years of
participation, the sum of which is reduced by 50% of the amount of his primary
Social Security entitlement at retirement (prorated if participation is less
than 30 years). The pension of the highest-paid executive officers will probably
be reduced from the above formula because of ERISA limitations.

The following table sets forth the gross annual benefits (single life at age
65), before deduction of the applicable primary Social Security offset amount (a
maximum of 50% of the participant's primary Social Security benefits at 30 years
of participation), payable upon retirement under the defined benefit pension
plan for specified remuneration and years of service classifications, part of
which may be paid pursuant to the supplemental retirement income agreements
discussed below:

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<PAGE>
PENSION VALUE TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
ELIGIBLE -----------------------------------------------------
REMUNERATION(1) 15 20 25 30 35
- ----------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
125,000 31,250 41,650 52,100 62,500 73,000
150,000 37,500 50,000 62,500 75,000 87,500
175,000 43,750 58,350 73,000 87,500 102,100
200,000 50,000 66,650 83,350 100,000 116,650
225,000 56,250 75,000 93,750 112,500 131,250
250,000 62,500 83,350 104,150 125,000 145,850
300,000 75,000 100,000 125,000 150,000 175,000
350,000 87,500 116,650 145,850 175,000 204,150
400,000 100,000 133,350 166,650 200,000 233,350
450,000 112,500 150,000 187,500 225,000 262,500
500,000 125,000 166,650 208,350 250,000 291,650
550,000 137,500 183,350 229,150 275,000 320,850
600,000 150,000 200,000 250,000 300,000 350,000
650,000 162,500 216,650 270,850 325,000 379,150
<FN>
(1) Eligible Remuneration as used in this table is defined as final
average covered compensation (salary and annual bonus) for the five highest
consecutive years of the participant's last ten consecutive years of
participation preceding termination of employment under the plan.
</TABLE>

ERISA, as amended by subsequent legislation, limits covered compensation under
the pension plan to $235,840 in 1993 and imposes maximum annual benefit
limitations, which may cause a reduction in the pension payable under the
pension plan. The Company has entered into nonqualified, unfunded supplemental
retirement income agreements with affected participants which are designed to
provide those benefits intended by the pension plan before application of the
legislative limitations.

The named executive officers have credited years of service in the plan as
follows: Mr. Powell III, 20 years; Mr. Armstrong, 20 years; Mr. Burdick, 12
years; Mr. Suggs, 5 years; and Mr. Bostick, 28 years.

RELOCATION POLICY

The Company and certain of its subsidiaries' executive officers, as well as
other salaried employees, are covered by the Company's relocation policy. The
policy reimburses employees for certain moving expenses when the employee is
transferred to a new location and is required by the Company or its subsidiary
to move his residence. Items covered by the policy include the expense of a trip
to the new location to select a new home, car mileage expenses, certain expenses
associated with terminating any lease at the old location, temporary living
expenses at the new location, travel expenses for trips home during the
transition period, cost of transporting certain household goods and
reimbursement for en route travel expenses or airfare for transporting the
employee's family to the new location. In addition, except for certain
newly-hired employees moving to their initial assignment, transferred employees
are paid a predetermined lump sum to cover miscellaneous moving costs and
expenses.

The policy pays closing costs on a home purchased by a transferred executive
officer or other key employee. The policy also gives such an employee the option
of either (1) selling his home at the old location for its estimated value to an
employee relocation assistance firm or (2) selling his home himself or through a
real estate agent. If the first option is chosen and the home sells for less
than the amount paid to the employee, the relocation assistance firm is
reimbursed by the Company for the difference between what it pays the employee
and the selling price, plus its expenses, costs and fees. If the second option
is chosen, the employee is reimbursed for normal selling expenses and receives a
cash incentive for selling the home to a third party rather than selling it to a
relocation assistance firm.

In 1993, relocation payments for Leo H. Suggs, President of the Company's
Preston Corporation subsidiary, totalled $113,326. Additionally, Preston
Corporation made to Mr. Suggs a $480,000 interest-free, relocation loan
effective May 3, 1993.

OTHER INFORMATION

The Company has entered into Executive Severance Agreements (the "Agreements")
with all the executive officers named in the Summary Compensation Table, as
designated by the Board of Directors.

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<PAGE>
In the event of a "Change in Control" of the Company followed within two years
by (1) the termination of the executive's employment for any reason other than
death, disability, retirement or "cause" or (2) the resignation of the executive
due to an adverse change in title, authority or duties, a transfer to a new
location, a reduction in salary, or a reduction in fringe benefits or annual
bonus below a level consistent with the Company's practice prior to the Change
of Control, the Agreements provide that the executive shall be paid a lump sum
cash amount equal to the sum of (a) two times the executive's highest
compensation (salary plus bonus) for any consecutive 12-month period within the
previous three years and (b) a cash amount equal to the unvested portion (if
any) of any profit sharing account of the executive under any profit sharing
plan of the Company or its subsidiaries. If the executive is within 10 years of
his normal retirement age (65), then the executive would be paid three times
such highest compensation. A termination is for "cause" if it is the result of a
conviction of a felony by a court of competent jurisdiction, which is no longer
subject to direct appeal, or an adjudication by a court of competent
jurisdiction, which is no longer subject to direct appeal, that the executive is
mentally incompetent or that he is liable for negligence or misconduct in the
performance of his duty to the Company.

"Change of Control" for the purpose of the Agreements shall be deemed to have
taken place if: (i) A third person, including a "group" as defined in Section
13(D)(3) of the Securities Exchange Act of 1934, purchases or otherwise acquires
shares of the Company and as a result thereof becomes the beneficial owner of
shares of the Company having 20% or more of the total number of votes that may
be cast for the election of directors of the Company; or (ii) as the result of,
or in connection with any cash tender or exchange offer, merger or other
business combination, or contested election, or any combination of the foregoing
transactions, the continuing directors shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the Company.

In addition, as described previously (see discussion of the "1992 Stock Option
Plan"), the Compensation Committee has provided a "Limited Right" in connection
with certain stock options held by the executive officer who is a party to an
Agreement. In the event of the purchase of Company stock pursuant to a tender or
exchange offer by a party other than the Company for 20% or more of the
Company's then outstanding shares, the "Limited Right" allows the executive to
receive from the Company, upon surrender of outstanding options, an amount in
cash equal to the then fair market value of the shares for which the "Limited
Right" is exercised, less the exercise price and applicable withholding taxes.
The "Limited Right" may be exercised within 30 days after the first purchase of
Company stock pursuant to the tender or exchange offer.

II. PROPOSAL TO APPROVE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed Arthur Andersen & Co. as independent
public accountants of the Company for 1994. The appointment of independent
public accountants by the Board of Directors is submitted annually for approval
by the stockholders. Although stockholder approval is not required, if the
stockholders do not ratify the appointment, the Board of Directors will
reconsider the matter. A representative of Arthur Andersen & Co. will be present
at the Annual Meeting of Stockholders to respond to appropriate questions, and
he will have an opportunity to make a statement if he desires to do so.

III. STOCKHOLDER PROPOSAL

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

STOCKHOLDER PROPOSAL

Mr. Charles Weingartner of 27209 N.E. 150th Street, Excelsior Springs,
Missouri, the owner of more than $1,000 worth of Company stock, has submitted
the following resolution for vote by the stockholders:

RESOLUTION

BE IT RESOLVED: That Yellow stockholders urge that the Board of
Directors take the necessary steps, in compliance with Delaware Law, to
declassify the Board of Directors for the purpose of director elections.
The Board declassification shall be completed in a manner that does not
affect the unexpired terms of directors previously elected.

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<PAGE>
SUPPORTING STATEMENT

The Board of Directors of Yellow is divided into three classes of directors
serving staggered three-year terms. This means that if shareholders wanted to
replace the board, it would take three years and three separate votes.

The general purpose of this structure is to provide continuity as well as to
prevent takeovers.

As an anti-takeover device, a staggered board is unnecessary. Yellow is a
Delaware company and enjoys nearly iron-clad protection from hostile bidders
through a number of state laws and court rulings.

"Providing continuity" is a nice way of saying that it reduces the number of
directors that could be defeated in an election. The ability to elect directors
is the single most important power of the shareholder vote. Shareholders should
be able to review all board candidates at every annual meeting.

For example, staggered boards retard shareholders from replacing current
directors with those concerned with policing executive compensation. Because of
the classified board, none of the members of the board's compensation committee
are slated to stand for reelection in 1994. Only one of the three members of the
nominating committee, the gatekeeper of board membership, is due to stand for
reelection in 1994.

Here are some concerns at Yellow:

- Yellow's chairman, who is not the chief executive officer, is paid
$200,000. This figure is nearly ten times the amount paid to other
non-employee directors at major American companies, according to a study
by Hewitt Associates. The chairman of Consolidated Freightways, who is
also not the chief executive, is paid $30,000.

- If Yellow's CEO does not meet the goal for incentive options, the
incentive policy says that the board can simply lower the goal.
Compensation consultant Graef Crystal likens this to a perverse high jump
contest. "If you still knock the bar over, it is lowered still further.
Indeed, should it become necessary, a trench will be dug and the bar
buried."

- Yellow's previous proxies have failed to disclose certain trends in
compensation. Last year's proxy suggests a decline in the value of
restricted stock awards to the CEO when an alternative accounting shows an
increase.

Overall, Yellow is performing poorly and the stock price has declined. Yet the
classified board stifles the ability of shareholders to send the board a message
about poor stock performance.

Shareholders have grown increasingly hostile to classified boards. Three of the
four management proposals to classify a board failed to pass in 1992, according
to results tabulated by the Investor Responsibility Research Center. In 1993, a
shareholder proposal to declassify the board succeeded at Martin Marietta.

Many institutional investors oppose staggered boards as a matter of policy.

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

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

The provision of the Company's Certificate of Incorporation classifying the
Board of Directors into three equal classes, each to serve for terms of three
years, with one class being elected each year, was approved in 1983 by 86% of
the Company's stockholders voting. Until receipt of the present stockholder
proposal, this provision of the Company's Articles of Incorporation had not been
the subject of any prior stockholder proposal nor, to the Board of Directors'
knowledge, had there been any prior public criticism of the classification of
the Company's Board of Directors.

The Board of Directors believes that this proposal is not in the best
interests of the Company for a number of reasons.

First, it is the opinion of the Company's Board of Directors that
classification provides the Company with significant continuity and stability,
since at any one time two-thirds of the Company's directors will have had prior
experience as directors of the Company and one-third will be in at least their
third year of service. For this reason, a majority of the companies surveyed by
the Investor Responsibility Research Center (whose sample includes companies
from the Fortune 500, the S&P 500 and the Forbes and Business Week 1000s) have
classified Boards of Directors.

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<PAGE>
Second, the Company's Board believes that a classified Board has consistently
been demonstrated to serve as a significant and appropriate obstacle to sudden
and unsolicited attempts to acquire control of publicly-traded companies. Recent
history has demonstrated a number of attempts by various individuals or entities
to acquire significant minority positions in publicly-traded companies with the
intent of obtaining actual control of the companies by eliciting their own slate
of directors, or achieving some other goal, such as the repurchase of shares at
a premium, by threatening to obtain such control. Such individuals and entities
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 of Directors
may serve to discourage such purchases, since its provisions operate to delay
the purchaser's ability to obtain control of the Board in a relatively short
period of time. At present, at least two successive annual meetings are required
in order to elect a new majority to the Company's Board of Directors. Under such
circumstances, an individual or entity seeking to acquire control of the Company
is encouraged to pursue arms-length negotiations with management and the Board
of Directors, who are thus in a position to negotiate a transaction that is fair
to all the Company's stockholders.

The proponent is clearly incorrect in his statement that a staggered Board is
"unnecessary" since "a Delaware company . . . enjoys nearly ironclad protection
from hostile bidders through a number of state laws and court rulings." The
recent Paramount-Viacom-QVC proceedings demonstrate the fallacy of this
assertion, wherein the Delaware Supreme Court ordered Paramount to give proper
consideration to the unfriendly takeover proposal of QVC despite Paramount's
preference to accept the friendly offer of Viacom.

It should be noted that adoption of this proposal would serve only as a
recommendation to the Board of Directors to take the necessary steps to
declassify the Board. Such steps would necessarily involve the repeal of the
classified Board provision in the Company's Certificate of Incorporation which,
in accordance with the terms approved by the Company's stockholders in 1983,
requires a favorable vote, at a stockholders meeting, of the holders of at least
80% of the then outstanding shares of the voting stock of the Company.

Accordingly, the Board of Directors of the Company opposes the proponent's
proposal. Stockholders should ask themselves whether the proponent is motivated
as a stockholder of your Company or whether he is pursuing an independent
agenda. The proponent is a road driver for the Company's principal operating
subsidiary and a member of the International Brotherhood of Teamsters, with
which this operating subsidiary is currently engaged in contract negotiations.
Moreover, the proponent has indicated that a union official from the Teamsters'
general headquarters in Washington, DC is acting as his representative with
respect to this proposal.

THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL
IV. OTHER MATTERS

The Board of Directors does not intend to bring any other business before the
meeting and it is not aware that anyone else intends to do so. If any other
business comes before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote as proxies in accordance with their best
judgment.

PLEASE EXERCISE YOUR RIGHT TO VOTE BY PROMPTLY COMPLETING, SIGNING AND
RETURNING THE ENCLOSED PROXY FORM. You may later revoke the proxy, and if you
are able to attend the meeting, you may vote your shares in person.

BY ORDER OF THE BOARD OF DIRECTORS:

<TABLE>
<S> <C>
Overland Park, Kansas WILLIAM F. MARTIN, JR.
March 10, 1994 Secretary
</TABLE>

- 15 -
<PAGE>
YELLOW CORPORATION
PROXY

ANNUAL MEETING OF STOCKHOLDERS, APRIL 21, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The undersigned hereby appoints GEORGE E. POWELL, JR., DAVID H. HUGHES AND
GEORGE E. POWELL III, and each of them, with full power of substitution,
Proxies of the undersigned to vote all shares of Common Stock of Yellow
Corporation, standing in the name of the undersigned or with respect to which
the undersigned is entitled to vote, at the Annual Meeting of Stockholders of
Yellow Corporation, to be held at the Holiday Inn, 12601 West 95th Street,
Lenexa, Kansas, on Thursday, April 21, at 9:30 a.m., and at any adjournments
thereof.

If more than one of the above named Proxies shall be presented in person or
by substitution at such meeting or at any adjournment thereof, the majority of
said Proxies so present and voting, either in person or by substitution, shall
exercise all of the powers hereby given. The undersigned hereby revokes any
proxy heretofore given to vote at such meeting.

(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)

<PAGE>
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR Proposals 1 and 2 and AGAINST Proposal 3.

<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS: NOMINEES-John C. McKelvey,, Charles A. Duboc and Ronald T. LeMay
FOR all nominees WITHHOLD
listed (except as AUTHORITY (To withhold authority to vote for any individual nominee, write that
marked to the to vote for all nominee's name on the line provided below.)
contrary to the right.) nominees.
____________________________________________________________________________
The Board of Directors recommends a vote FOR all director nominees listed.

/ / / /

</TABLE>

<TABLE>
<S> <C>
2. PROPOSAL TO APPROVE THE APPOINTMENT of Arthur 3. PROPOSAL SUBMITTED BY AN INDIVIDUAL SHAREHOLDER 4. OTHER BUSINESS: In
Andersen & Co. as independent public accountants recommending to the Board of Directors that the their discretion, the
of the corporation for 1994. Board take the necessary steps to declassify the Proxies are authorized to
corporation's Board. vote upon such other
business as may properly
come before the meeting.
The Board of Directors recommends a vote FOR The Board of Directors recommends a vote AGAINST
Proposal 2. Proposal 3.

FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN

/ / / / / / / / / / / /
</TABLE>

Please sign exactly as name appears to
the left. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.

________________________________________
Signature

________________________________________
Signature if held jointly

Dated:__________________________________

"PLEASE MARK INSIDE BLUE BOXES PLEASE MARK, SIGN, DATE AND RETURN THE
SO THAT DATA PROCESSING EQUIPMENT PROXY CARD PROMPTLY USING THE ENCLOSED
WILL RECORD YOUR VOTES" POSTAGE-PAID ENVELOPE.

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.

<PAGE>

INSTRUCTIONS TO PROFIT-SHARING PLAN TRUSTEE
YELLOW CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, APRIL 21, 1994

The undersigned hereby casts his/her vote (as defined in Section 7.11 of
the Trust) as follows, and instructs BOATMEN'S TRUST COMPANY, as Trustee, to
vote all shares of Common Stock of Yellow Corporation, held by the Yellow
Freight Profit-Sharing Trust and with respect to which the voting participants
are entitled to instruct the Trustee to vote, at the Annual Meeting of
Stockholders of Yellow Corporation, to be held at the Holiday Inn, 12601 West
95th Street, Lenexa, Kansas, on Thursday, April 21, 1994, at 9:30 a.m., and at
any adjournments thereof, in accordance with the direction of the majority of
votes cast on each such matter, as provided in Section 7.11 of the Trust:

1. ELECTION OF DIRECTORS: Nominees - John C. McKelvey, Charles A. Duboc and
Ronald T. LeMay.

<TABLE>
<S> <C> <C>
FOR all nominees listed above (except WITHHOLD AUTHORITY to vote (INSTRUCTION: To withhold authority to vote for
as marked to the contrary to the right). for all nominees listed above. any individual nominee, write that nominee's
name on the line provided below.)
/ / / /
-----------------------------------------------
The Board of Directors recommends a vote FOR
all director nominees listed.
</TABLE>

2. PROPOSAL TO APPROVE THE APPOINTMENT OF Arthur Andersen & Co. as independent
public accountants for 1994.

FOR AGAINST ABSTAIN
/ / / / / /

The Board of Directors recommends a vote FOR Proposal 2.

3. PROPOSAL SUBMITTED BY AN INDIVIDUAL SHAREHOLDER recommending to the Board
of Directors that the Board take the necessary steps to declassify the
corporation's Board.

FOR AGAINST ABSTAIN
/ / / / / /

The Board of Directors recommends a vote AGAINST Proposal 3.

(Continued and to be SIGNED and dated on the reverse side.) __

<PAGE>
PS

As to other matters coming before the meeting, the Trustee will vote in
accordance with its best judgment.

Please mark, date and sign the above
Instructions and mail as soon as possible in
the accompanying envelope. No postage is
required if mailed in the United States.

Dated: ____________________________, 1994

_____________________________________________
Participant's Signature

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.

<PAGE>

INSTRUCTIONS TO STOCK SHARING PLAN TRUSTEE
YELLOW CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, APRIL 21, 1994

The undersigned hereby instructs BOATMEN'S TRUST COMPANY, as Trustee, to
vote all shares of Common Stock of Yellow Corporation, allocated to the
undersigned's account in the Yellow Freight Stock Sharing Plan and with respect
to which the undersigned is entitled to instruct the Trustee to vote, at the
Annual Meeting of Stockholders of Yellow Corporation, to be held at the Holiday
Inn, 12601 West 95th Street, Lenexa, Kansas, on Thursday, April 21, 1994, at
9:30 a.m., and at any adjournments thereof, as follows:

1. ELECTION OF DIRECTORS: Nominees - John C. McKelvey, Charles A. Duboc and
Ronald T. LeMay.
<TABLE>
<S> <C> <C>
FOR all nominees listed above (except WITHHOLD AUTHORITY to vote (INSTRUCTION: To withhold authority to vote for
as marked to the contrary to the right). for all nominees listed above. any individual nominee, write that nominee's name
on the line provided below.)
/ / / /
____________________________________________________
The Board of Directors recommends a vote FOR all
director nominees listed.
</TABLE>

2. PROPOSAL TO APPROVE THE APPOINTMENT of Arthur Andersen & Co. as independent
public accountants of the corporation for 1993.

FOR AGAINST ABSTAIN
/ / / / / /

The Board of Directors recommends a vote FOR Proposal 2.

3. PROPOSAL SUBMITTED BY AN INDIVIDUAL SHAREHOLDER recommending to the Board
of Directors that the Board take the necessary steps to declassify the
corporation's Board.

FOR AGAINST ABSTAIN
/ / / / / /

The Board of Directors recommends a vote AGAINST Proposal 3.

(Continued and to be SIGNED and dated on the reverse side.)
<PAGE>

4. OTHER BUSINESS: In its discretion, the Trustee is authorized to vote upon
such other business as may properly come before the meeting.

YES NO
/ / / /

IF NO DIRECTION IS GIVEN, THE TRUSTEE CANNOT VOTE THE SHARES ALLOCATED TO YOUR
ACCOUNT.

Please mark, date and sign the above
Instructions and mail as soon as possible in
the accompanying envelope. No postage is
required if mailed in the United States.

Dated: _____________________________, 1994

____________________________________________
Participant's Signature

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.

<PAGE>

INSTRUCTIONS TO PAYSOP TRUSTEE
YELLOW CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, APRIL 21, 1994

The undersigned hereby instructs BOATMEN'S TRUST COMPANY, as Trustee, to
vote all shares of Common Stock of Yellow Corporation, allocated to the
undersigned's account in the Yellow Freight System, Inc. Employee Stock
Ownership Trust and with respect to which the undersigned is entitled to
instruct the Trustee to vote, at the Annual Meeting of Stockholders of Yellow
Corporation, to be held at the Holiday Inn, 12601 West 95th Street, Lenexa,
Kansas, on Thursday, April 21, 1994, at 9:30 a.m., and at any adjournments
thereof, as follows:

1. ELECTION OF DIRECTORS: Nominees - John C. McKelvey, Charles A. Duboc and
Ronald T. LeMay.

/ / / / ---------------------------------------------------
The Board of Directors recommends a vote FOR all
director nominees listed.

</TABLE>

2. PROPOSAL TO APPROVE THE APPOINTMENT OF Arthur Andersen & Co. as independent
public accountants for 1994.

FOR AGAINST ABSTAIN
/ / / / / /

The Board of Directors recommends a vote FOR Proposal 2.

3. PROPOSAL SUBMITTED BY AN INDIVIDUAL SHAREHOLDER recommending to the Board of
Directors that the Board take the necessary steps to declassify the
corporation's Board.

FOR AGAINST ABSTAIN
/ / / / / /

The Board of Directors recommends a vote AGAINST Proposal 3.

(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)

<PAGE>

4. OTHER BUSINESS: In its discretion, the Trustee is authorized to vote upon
such other business as may properly come before the meeting.

YES NO
/ / / /

IF NO DIRECTION IS GIVEN, THE TRUSTEE CANNOT VOTE THE SHARES ALLOCATED TO
YOUR ACCOUNT.

PAYSOP

Please mark, date and sign the above
Instructions and mail as soon as
possible in the accompanying envelope.
No postage is required if mailed in the
United States.

Dated:_____________________, 1994

________________________________________
Participant's Signature

THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS.