YELLOW CORP, DEF 14A, 1998-03-10

YELLOW CORP
DEF 14A, 1998-03-10
TRUCKING (NO LOCAL)

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<PAGE> 1

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12

Yellow Corporation
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] 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.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2

YELLOW CORPORATION LOGO

YELLOW CORPORATION
10990 Roe Avenue
Overland Park, Kansas 66207

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

NOTICE OF ANNUAL MEETING AND PROXY STATEMENT

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 16, 1998

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Yellow
Corporation (the "Company") will be held at the Kansas City Downtown Marriott
Hotel, 200 W. 12th Street, Kansas City, Missouri, on April 16, 1998 at 9:30
a.m., Central Daylight Time, to consider the following matters:

<TABLE>
<C> <S>
I. The election of nine directors;
II. The approval of the adoption of the 1997 Stock Option Plan;
III. the approval of the appointment of Arthur Andersen LLP as
independent public accountants of the Company for 1998; and
IV. the transaction of such other business as may properly come
before such meeting or any adjournment thereof.
</TABLE>

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 16, 1998 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:

William F. Martin, Jr.
Overland Park, Kansas
March 6, 1998 WILLIAM F. MARTIN, JR., Secretary
<PAGE> 3

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS

YELLOW CORPORATION
10990 Roe Avenue
Overland Park, Kansas 66207

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 1998 Annual Meeting of Stockholders of
the Company, to be held at the Kansas City Downtown Marriott Hotel, 200 W. 12th
Street, Kansas City, Missouri (the Company's telephone is 913/696-6100; mailing
address 10990 Roe Avenue, Overland Park, Kansas 66211), at 9:30 a.m., Central
Daylight Time, on April 16, 1998, and at any and all adjournments thereof. The
Company's Annual Report (including audited financial statements) for the year
ended December 31, 1997 accompanies this Proxy Statement, Notice of Annual
Meeting of Stockholders and form of proxy, which will be mailed to stockholders
on or about March 6, 1998. 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 nine directors; (2) the approval of the adoption of the
1997 Stock Option Plan; and (3) the approval of the appointment of Arthur
Andersen LLP as independent public accountants of the Company for 1998.

VOTING AND PROXIES

RECORD DATE; VOTING RIGHTS

Stockholders of record as of the close of business on February 16, 1998
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 28,031,285 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 adoption of the 1997 Stock
Option Plan; (3) for the approval of the appointment of Arthur Andersen LLP as
independent public accountants of the Company for 1998; 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. Approval the 1997 Stock Option Plan requires
the affirmative vote of a majority of the outstanding shares as of the record
date. The election of directors shall be determined by a plurality of the votes
cast. Determination of the appointment of Arthur Andersen LLP as independent
public accountants 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.

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<PAGE> 4

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.

SUBMISSION OF PROPOSALS BY STOCKHOLDERS

Stockholders' proposals intended to be presented at the 1999 annual meeting
must be received by November 13, 1998 to be eligible for inclusion in the proxy
materials.

PRINCIPAL STOCKHOLDERS

As of January 31, 1998, 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
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ----------------- --------
<S> <C> <C>
Mellon Bank Corporation................................... 2,795,901(1) 9.97%
One Mellon Bank Center
Pittsburgh, PA 15258
FMR Corp.................................................. 2,664,400(2) 9.5%
82 Devonshire Street
Boston, MA 02109
All executive officers and directors as a group (12 233,742(3) 0.08%
persons)................................................
</TABLE>

(1) According to information provided to the Company. Mellon Bank
Corporation had, through certain of its subsidiaries, the following voting and
investment powers with respect to such shares: (a) sole voting power, 2,357,051
shares; (b) shared voting power, 24,400 shares; (c) sole investment power,
2,595,201 shares; and (d) shared investment power, 198,500 shares.

(2) According to information provided to the Company, FMR Corp. had,
through certain of its subsidiaries, the following voting and investment powers
with respect to such shares: (a) sole voting power, 53,400 shares; (b) shared
voting power, 0 shares; (c) sole investment power, 2,664,400 shares; and (d)
shared investment power, 0 shares.

(3) Executive officers and directors stock ownership includes: 1,292 shares
held in employee stock plans; 185,000 shares which officers have the right to
acquire within 60 days of such date through the exercise of stock options
pursuant to the Company's 1992 Stock Option Plan; 17,425 shares which officers
have the right to acquire within 60 days of such date through the exercise of
stock options pursuant to the Company's 1996 Stock Option Plan; 15,500 shares
which directors have the right to acquire within 60 days of such date through
the exercise of stock options pursuant to the Company's Director Stock
Compensation Plan; and 200 shares owned by a relative of a director as to which
such director disclaims beneficial ownership.

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<PAGE> 5

I. ELECTION OF DIRECTORS

At the meeting, nine directors are to be elected to hold office until the
1999 Annual Meeting and until their successors are elected and have qualified.
If any nominee should be unable to stand for election as a director, it is
intended that the shares represented by proxies will be voted for the election
of such substitute as management may nominate.

The following table sets forth information with respect to each nominee for
election as a director of the Company. No nominee has any family relationship
with any other director or executive officer of the Company.

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<PAGE> 6

<TABLE>
<CAPTION>
SHARES OF STOCK OWNED
BENEFICIALLY, DIRECTLY
PRINCIPAL OCCUPATION; OR INDIRECTLY
NAME; PAST SERVICE DIRECTORSHIPS; AGE AS OF JANUARY 31, 1998(1)(2)
------------------ --------------------- ----------------------------
<S> <C> <C>
Ronald T. LeMay................ Vice Chairman, President and Chief 3,545
Director since 1994 Operating Officer of Sprint Corporation,
Kansas City, Missouri
(Telecommunications) (since October
1997). Formerly Chief Executive Officer
of Waste Management, Inc. (July 1997 --
October 1997); Director, President and
Chief Operating Officer of Sprint
Corporation, Kansas City, MO (1996-1997),
Chief Executive Officer of the Sprint
Telecommunications Venture (1995 --
1996); Vice Chairman of Sprint
Corporation (March 1995-February 1996);
Director, President, and Chief Operating
Officer, Long Distance Division, Sprint
Corporation (October 1989 -- March 1995);
Director of Imation Corporation and
Ceridian Corporation; 52
John C. McKelvey............... President and Chief Executive Officer of 3,935
Director since 1977 Midwest Research Institute, Kansas City,
MO (scientific and technical research);
64
A. Maurice Myers............... Chairman of the Company (since July, 185,000
Director since 1996 1996). President and Chief Executive
Officer of the Company (since April,
1996). Formerly President and Chief
Operating Officer America West Airlines,
Inc., Phoenix, AZ (Jan. 1994 -- Dec.
1995); President and Chief Executive
Officer of Aloha Air Group, Inc.,
Honolulu, HI (Aug. 1983 -- Dec. 1993);
Director of Hawaiian Electric Industries,
Inc.; 57
William L. Trubeck............. Senior Vice President-Finance and Chief 3,845
Director since 1994 Financial Officer, International
MultiFoods, Inc., Minneapolis, MN (food
distribution and production) (since
February, 1997). Formerly Senior Vice
President-Finance and Chief Financial
Officer of SPX Corporation, Muskegon, MI
(November 1994 -- October 1996); Senior
Vice President and Chief Financial
Officer of Honeywell, Inc., Minneapolis,
MN (April 1993 -- October 1994); Chief
Financial Officer, White & Case, New
York, NY (1991-1993); 51
Carl W. Vogt................... Senior Partner, Fulbright & Jaworski, 2,587
Director since 1996 L.L.P., Washington, DC (since 1994).
Formerly Chairman, National
Transportation Safety Board, Washington,
DC (1992-1994); Managing Partner,
Fulbright & Jaworski, L.L.P., Washington,
DC (prior to 1994); 61
</TABLE>

(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:
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<PAGE> 7

Mr. McKelvey, 200 shares. The figures also include 185,000 shares that Mr. Myers
has a right to acquire within 60 days pursuant to the Company's 1992 Stock
Option Plan; 1,500 shares which Mr. McKelvey has a right to acquire within sixty
days pursuant to the stock option feature of the Company's Director Stock
Compensation Plan; and 2,000 shares which Mrs. Carr and Messrs. Agthe, Dean,
Hughes, LeMay, Trubeck and Vogt have a right to acquire within 60 days pursuant
to the stock option feature of the Director Stock Compensation Plan.

(2) The percentage of the Company's outstanding stock owned by each nominee
for director is less than one percent.

STRUCTURE AND FUNCTIONING OF THE BOARD OF DIRECTORS

The Board of Directors held five regularly scheduled meetings during 1997.

Audit Committee. The Audit Committee met three times during 1997. The
Audit Committee consisted of William L. Trubeck, David H. Hughes, Howard M. Dean
and Carl W. Vogt. 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.

Compensation Committee. The Compensation Committee met four times during
1997. The Compensation Committee consisted of Klaus E. Agthe, Cassandra C. Carr,
Ronald T. LeMay and John C. McKelvey. 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 the Chairman
of the Board and the Chairmen of the Audit and Compensation committees. It met
once during 1997. 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.

At the December, 1997 Board meeting, the Board decided to eliminate the
Nominating Committee, effective with the first Board meeting in 1998, to be
replaced by a Corporate Governance Committee. This Committee, which will include
only outside directors, will have the following duties: (a) the organization,
structure and responsibility of the Board and its Committees; (b) evaluation of
the effectiveness of the Board and each Committee in the Company's corporate
governance process; (c) review of the qualifications of prospective directors
and the nomination of director candidates; (d) review of the appropriate level
of outside directors' fees and retainers; and (e) determination of the
appropriate ratio of inside and outside directors.

DIRECTORS' COMPENSATION

Directors who are not full time employees of the Company are paid an annual
retainer for Board service of $23,000; an annual retainer for Committee service
of $1,200 for each Committee on which a Director serves; an attendance fee of
$1,300 for each Board meeting and $1,100 for each Committee meeting attended;
and are reimbursed or made whole for all costs or expenses of any kind incurred
by them relating to Board or Committee meetings. Committee chairmen receive an
attendance fee of $2,100 for each committee meeting attended. Directors may
elect to defer receipt of the retainer and attendance fees. Pursuant to the
terms of the Directors Stock Compensation Plan, a minimum of 50% of the Board
and Committee retainers are to be paid in the form of Company common stock, with
the stock award determined annually on the date of the Company's Annual Meeting
of Stockholders based on the closing price of the Company's common stock on that
date and the then-applicable level of Board and Committee retainers. The
directors annually have the option of taking up to 100% of the Board and
Committee retainers in Company common stock rather than cash. Also pursuant to
the Directors Stock Compensation Plan, commencing on April 24, 1997 and annually
on the first business day of each calendar year thereafter, the Directors
receive option grants of 2,000 shares of the Company's common stock, with the
options vesting after six months and exercisable for five years. A total

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<PAGE> 8

of 100,000 shares are reserved for award under the Directors Stock Compensation
Plan. Directors who are full time employees of the Company are not paid any
retainer or attendance fees for services as members of the Board or any
Committee thereof.

During 1997, no incumbent Director attended fewer than 75% 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 for the fiscal years
ended December 31, 1997, 1996 and 1995 of those persons who were, at December
31, 1997, the executive officers of the Company.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------------- ------------------------- -------
(B) (C) (D) (E) (F) (G) (H) (I)
(A) (1)OTHER RESTRICTED OPTIONS/ LTIP (2)ALL
NAME AND PRINCIPAL ANNUAL STOCK SARS PAYOUTS OTHER
POSITION YEAR SALARY ($) BONUS ($) COMP.($) AWARDS(S) ($) (#) ($) COMP.($)
------------------ ---- ---------- --------- -------- ------------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. M. Myers 1997 $550,000 $369,150 $75,441 0 170,000/0 0 0
President and Chief Executive 1996 $412,722 $ 96,249 0 400,000/0 0 0
Officer, Yellow Corporation 1995 N/A N/A N/A N/A N/A N/A N/A
Herbert A. Trucksess, III 1997 $220,997 $115,260 0 50,000/0 0 0
Senior Vice President of Finance 1996 $204,996 $ 25,625 0 75,000/0 0 $ 944
and Treasurer, Yellow 1995 $200,688 0 0 0/0 0 $3,323
Corporation
William F. Martin, Jr. 1997 $191,580 $ 94,832 0 25,000/0 0 0
Senior Vice President 1996 $186,000 $ 23,250 0 75,000/0 0 $ 944
& Secretary, Yellow Corporation 1995 $181,331 0 0 0/0 0 $5,361
Samuel A. Woodward 1997 $209,100 $103,502 0 25,000/0 0 0
Senior Vice President, 1996 $ 93,289 $ 23,429 0 75,000/0 0 0
Operations
& Planning, Yellow Corporation 1995 N/A N/A N/A N/A N/A N/A N/A
</TABLE>

(1) Mr. Myers' other annual compensation includes $32,821 for reimbursement
of club initiation fees. While the other three named executive officers receive
certain perquisites from the Company, 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.

(2) The compensation reported for 1995 and 1996 includes (a) shares
allocated to the accounts of certain of the named executive officers under the
Company's Stock Sharing Plan and (b) with respect to Mr. Trucksess and Mr.
Martin, the cash replacement of the stock sharing contributions to which the
named executives would have been entitled before application of legislative
limitations.

OPTIONS AND STOCK APPRECIATION RIGHTS

The following tables summarize the option exercises by the executive
officers named in the Summary Compensation Table above during 1997; the year-end
value of their options; and the option grants to said executive officers during
1997.

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<PAGE> 9

OPTION AND SAR EXERCISES AND YEAR END VALUE TABLE (1)

<TABLE>
<CAPTION>
VALUE OF VALUE OF
NUMBER OF NUMBER OF UNEXERCISED UNEXERCISED
UNEXERCISED UNEXERCISED IN-THE-MONEY IN-THE-MONEY
OPTIONS AT SARS AT OPTIONS AT SARS AT
FY-END (#) FY-END (#) FY-END ($) FY-END (#)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
- ---------------------- --------------- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
A. M. Myers 200,000 $3,075,000 0/370,000 0 0/$4,102,500 0
H. A. Trucksess III 6,000 $ 102,375 12,750/106,250 0 $164,156/$777,969 0
W. F. Martin, Jr. 18,750 $ 296,297 0/81,250 0 0/$751,094 0
S. A. Woodward 14,750 $ 212,014 4,675/81,250 0 $60,190/$751,094 0
</TABLE>

(1) The value of the Company's common stock on 12/31/97 was $25.125.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL(1) RATES OF STOCK
SECURITIES OPTIONS/SAR'S PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SAR'S EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ------------------------ ------------- ------------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
A. M. Myers 170,000 12.40% $16.875 3/20/07 $1,804,210 $4,572,150
H. A. Trucksess III 50,000 3.60% $24.050 7/15/07 $ 756,000 $1,916,500
W. F. Martin, Jr. 25,000 1.80% $24.050 7/15/07 $ 378,000 $ 958,250
S. A. Woodward 25,000 1.80% $24.050 7/15/07 $ 378,000 $ 958,250
</TABLE>

(1) Includes grants to employees of certain of the Company's subsidiaries.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The compensation program for the Company's executive officers was
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 executives to attain the highest level
of organizational performance and profitability by rewarding the executive for
increasing levels of profit and stockholder value.

In conformance with the above compensation philosophy, the total annual
compensation for all executive officers of the Company is determined by three
elements, namely, (1) salary; (2) a potential annual incentive compensation
award or bonus; and (3) participation in the Company's stock option plan.

Salary for the Company's executive officers is determined by analysis of
three factors: (1) salary levels at service industries with gross revenues
comparable to the Company, based upon survey data produced by Towers Perrin, a
nationally-recognized executive compensation consulting firm; (2) evaluation of
the individual executive officer's performance; and (3) the Company's ability to
pay. The three factors are considered collectively but not pursuant to a precise
formula. The Company's ability to pay is a threshold consideration. Individual
executive performance is evaluated by reference to specific performance targets
or goals that are established each year for each executive. While the Company
has targeted the median of the range established by the survey group of service
industries with gross revenues comparable to the Company, the actual 1997 base
salaries of executive officers are generally below the median.

In July of 1996, an annual incentive compensation, or bonus, plan was
implemented for the Company's executive officers that provides for the payment
of varying levels of incentive award as expressed as a percent of annual base
compensation, with the percentage increasing the higher an executive officer's
position within the Company.

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<PAGE> 10

Each year a threshold, target, and maximum overall Company financial and
personal measurement is to be established that ties each executive's annual
compensation potential to the Company's annual business goals and individual
performance. For 1997, the Committee decided to focus the executive group on the
financial performance of the Company by basing potential awards on the financial
measures only. Therefore, 50% of the award is based on operating income and 50%
on return on capital compared to a peer group of publicly-held truck
transportation companies. During 1997 the Company attained 98% of its operating
income target and 100% of its return on capital target. Accordingly, the named
executive officers received an incentive award equal to 99% of the target
potential.

The awards of stock options during 1997 to the Company's executive officers
(other than President and Chief Executive Officer A. Maurice Myers, whose
compensation is discussed separately), were based upon survey data developed by
Towers Perrin on the appropriate level of stock compensation for executives at
companies with gross revenues comparable to the Company's. In granting stock
options, the Committee takes into consideration the amount and value of any
previous stock option grants. The awards granted in 1997 are based upon the
closing price of the Company's common stock as reported by NASDAQ on the date of
each grant, and the awards vest in equal installments over a four-year period.
The 1997 awards of stock compensation to executive officers were entirely based
on stock options due to the Committee's belief that options represent the most
effective vehicle to incent management to increase profit and stockholder value.

PRESIDENT AND CEO COMPENSATION

The compensation of President and Chief Executive Officer A. Maurice Myers
is the subject of an employment agreement dated March 20, 1996, the essential
elements of which are detailed in the section of this proxy statement devoted to
employment contracts, which discussion is hereby incorporated by reference. The
Committee believes that the compensation package awarded to Mr. Myers was
necessary to attract to the Company an executive with a proven track record of
superior management performance in the transportation industry. The Committee
notes that both Mr. Myers' base annual salary and the amount of his stock option
awards are consistent with the Company's goal of targeting the median of the
Towers Perrin survey group of companies. On March 3, 1997, Mr. Myers' employment
agreement was amended to increase his target and maximum award of annual bonus
to 70% and 140%, respectively, of base salary from 60% and 100% to conform the
parameters of Mr. Myers' bonus program to what the Committee has proposed
generally for all the Company's executive officers.

Mr. Myers' annual salary is subject to an annual review based upon the same
criteria that were discussed earlier with respect to executive officer salary
compensation generally. In lieu of a base salary increase during 1997, the
Committee elected to provide for the payment of a $1,000,000 life insurance
policy for Mr. Myers.

Mr. Myers' 1997 annual incentive compensation award was determined in the
same manner as previously described for executive officers generally.

Finally, the Committee has reviewed the provisions of Section 162(m) of the
Internal Revenue Code, which was enacted in 1993, relating to the $1 million
deduction cap for executive salaries and believes that no compensation for the
named executive officers will be governed by this regulation for 1997.

Klaus E. Agthe, Chairman
Cassandra C. Carr
John C. McKelvey
Ronald T. LeMay

Members of the Compensation Committee

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<PAGE> 11

EMPLOYMENT CONTRACTS, CHANGE OF CONTROL AGREEMENTS
AND TERMINATION OF EMPLOYMENT AGREEMENTS

The Company has entered into an Employment Agreement with its Chairman,
President and Chief Executive Officer A. Maurice Myers that contains the
following essential terms and conditions: (a) a base salary of $550,000 per year
to be reviewed annually in accordance with the Company's normal salary policy
for executive officers; (b) an annual bonus pursuant to which a target award in
the amount of 70% of Mr. Myers' base salary, with a maximum of 140% of base
salary, shall be established for each year, with the criteria for establishment
of the target and parameters for payment to be determined annually by the
Compensation Committee, at least 80% of the criteria established by the
Committee being based on specific measurements of financial performance of the
Company during the applicable year and the remaining percentage being based on
non-financial criteria; (c) stock option awards on March 20, 1996 and March 20,
1997 based on the closing price of the Company's common stock on the NASDAQ
exchange on those dates in the amount of 400,000 shares and 170,000 shares,
respectively, with each award vesting 50% on the first anniversary of the award,
and 25% vesting on the second and third anniversary of each award; (d) a
supplemental retirement benefit providing Mr. Myers with the difference between
the benefits that he would have received under the Company's pension plan if the
service credited for benefit accrual purposes under the plan were 20 years plus
his actual such service, if any, after his normal retirement date and the
benefits actually payable to Mr. Myers under the pension plan, said supplemental
retirement benefit vesting at the rate of 20% per year with Mr. Myers' becoming
100% vested on the fifth anniversary of his hire date; (e) payments in the event
of Mr. Myers' termination "without cause," or resignation for "good reason" or
following a "change of control", as those terms are defined in the Agreement
("change of control" having the same definition as set forth in the Company's
Executive Severance Agreements, described below) in the amount of twice Mr.
Myers' annual rate of compensation, including target bonus, at the time of
termination, plus target bonus for the year of termination, and immediate
vesting in all outstanding stock options and any incentive and benefit plans
applicable at the time of termination; and (f) the payment of certain expenses
regarding Mr. Myers' relocation to the Kansas City area from Phoenix, Arizona.

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. (In the case of A. Maurice
Myers, payments are only to the extent that they would exceed payments under the
"change of control" provisions of Mr. Myers' Employment Agreement.)

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,

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<PAGE> 12

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 later (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.

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, 1992 and ending December 31, 1997.

<TABLE>
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) Yellow Corporation S&P 500 Index Transportation
<S> <C> <C> <C>
DEC 92 100 100 100
MAR 93 88.00 104.37 104.97
JUN 93 71.87 104.88 105.10
SEP 93 91.80 107.88 111.50
DEC 93 94.64 110.08 119.03
MAR 94 91.57 105.91 111.60
JUN 94 67.30 108.35 108.82
SEP 94 73.14 111.55 102.08
DEC 94 94.89 111.53 99.60
MAR 95 64.30 122.39 114.97
JUN 95 73.79 134.08 119.61
SEP 95 85.98 144.73 134.68
DEC 95 60.30 102.45 139.05
MAR 96 60.99 101.68 148.31
JUN 96 53.94 100.94 150.22
SEP 96 62.92 174.16 150.07
DEC 96 58.52 188.05 158.12
MAR 97 75.82 180.73 161.26
JUN 97 91.09 227.58 187.90
SEP 97 132.56 244.60 204.52
DEC 97 102.28 251.63 206.25
</TABLE>

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 executive 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

-10-
<PAGE> 13

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, at the earliest, 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 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.

1996 STOCK OPTION PLAN

On April 24, 1997, the stockholders approved the adoption of the 1996 Stock
Option Plan (the "1996 Plan"). 1,400,000 shares of common stock are available
for grant under the 1996 plan. The 1996 plan expires on July 18, 2006, in that
no awards may be made after that date.

The 1996 plan is administered by the Compensation Committee of the Board of
Directors, none of whose members are eligible to receive any award under the
1996 plan. The 1996 plan covers executive, managerial, supervisory and
professional employees of the Company and certain of its subsidiaries (including
employee-directors and executive officers) and permits two types of awards:
Grants of non-qualified stock options and grants of stock options coupled with a
grant of stock appreciation rights ("SARs"). The 1996 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 grants 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 maximum number of shares with respect to which options or
SARs may be granted during any calendar year to any employee under the Plan is
200,000 shares.

-11-
<PAGE> 14

DEFINED CONTRIBUTION PLANS

Prior to January 1, 1995, the Company's executive officers participated in
two defined contribution plans -- the Yellow Freight Profit Sharing Trust and
the Yellow Freight Stock Sharing Plan. Effective January 1, 1995, these plans
were merged to create the Yellow Corporation Retirement Savings Plan. The Plan
covers all the regular full-time and 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 5,155 employees were participants in 1997.

Each year the Board of Directors determines the amount of contributions to
the trust based primarily upon the Company's profitability and/or the Plan's
debt obligation. No contribution was made to the Plan in 1997.

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.

Plan Provision -- Two accounts are maintained for each participant, a
Company Managed Account and an Employee Managed Account. Company contributions
and forfeitures are allocated to the Company managed account, which vests at the
rate of 20% per year of service. Vested benefits are paid upon termination of
employment, but an active participant may withdraw a portion of his prior Profit
Sharing Account, subject to certain limitations.

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 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
shares of stock in the 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 debt on any outstanding loan is made,
cash or stock purchased by the contribution will be allocated directly to each
participant's Company Managed Account. Participants vote allocated shares; the
Plan trustee votes unallocated shares in the same proportion as the allocated
shares are voted.

The numbers 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 certain of the named
executive officers in 1995 and 1996 are detailed in Footnote (2) to the Summary
Compensation Table.

The Plan also contains provisions for a cash or deferred arrangement under
Section 401(k) of the Internal Revenue Code. This arrangement allows a
participant to contribute up to 15% of his annual earnings before, or after,
federal income taxes to his Employee Managed Account. For 1997, the maximum
annual participant contribution was $9,500. There is no company matching
contribution.

A participant may choose to invest his Employee Managed Account among a
number of investment alternatives. In addition, after reaching age 55 a
participant may transfer 50% or 100% of his Company Managed Account's value into
one or more of the investment 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. 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.

-12-
<PAGE> 15

The amounts which the named executive officers chose to have deposited in
the Section 401(k) portion of the Plan, subject to the 15% and maximum annual
participant limitation, are included in the salary column of the Summary
Compensation Table.

DEFINED BENEFIT PENSION PLAN

The Company and certain of its subsidiaries' 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:

PENSION VALUE TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------
ELIGIBLE REMUNERATION(1) 15 20 25 30 35
- ------------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
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
700,000 175,000 233,350 291,650 350,000 408,350
750,000 187,500 250,000 312,500 375,000 437,500
800,000 200,000 266,650 333,350 400,000 466,650
850,000 212,500 283,350 354,150 425,000 495,850
</TABLE>

(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.

ERISA, as amended by subsequent legislation, limits covered compensation
under the pension plan to $160,000 in 1997 and imposes maximum annual benefit
limitations, which may cause a reduction in the pension payable under the
pension plan. The Company enters into nonqualified, unfunded supplemental

-13-
<PAGE> 16

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. Myers, 1 year, Mr. Trucksess, 3 years, Mr. Woodward, 1 year, and
Mr. Martin, 17 years.

RELOCATION POLICY

The Company's 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 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 1997, pursuant to the terms of Mr. Myers' Employment Agreement described
above, Mr. Myers received or was reimbursed for $4,749 in relocation expenses.
Mr. Woodward received $63,196.03 under the Company's relocation policy.

II. PROPOSED 1997 STOCK OPTION PLAN

On July 15, 1997, the Board of Directors adopted the 1997 Stock Option Plan
(the "Plan") subject to stockholders' approval where required by applicable
Securities and Exchange Commission or stock market regulations. The Board of
Directors believes this plan will be of significant benefit to the Company in
attracting and retaining key executive employees at the Company and its
operating subsidiaries, and providing a long range incentive for such employees
to work for the continued success of the Company. The 1997 Stock Option Plan is
required in addition to the existing 1992 and 1996 Stock Option Plans because of
the Company's continuing desire to extend the incentive of stock options to a
significant number of management and supervisory personnel in the Company and
its operating subsidiaries. 1,400,000 shares are reserved for award under the
Plan. The maximum number of shares with respect to which options or SARs may be
granted during any calendar year to any employee under the Plan is 200,000
shares.

The Board recommends that stockholders vote for approval and adoption of
the Plan so that the Company can continue to attract, motivate, and retain those
key employees who are largely responsible for the Company's future.

The 1997 Plan is in all respects identical to the previous 1996 Plan in
that awards are restricted to stock option grants or share appreciation rights.
It is the Board of Directors' belief that stock options and share appreciation
rights are the most effective incentive and motivational vehicles.

The full text of the proposed Plan is attached to this proxy statement as
Exhibit A. This description of the proposed Plan is qualified in its entirety by
reference to Exhibit A.

-14-
<PAGE> 17

Adoption of the Plan requires the affirmative vote of a majority of the
outstanding shares as of the record date. As a result of such voting
requirement, abstentions and broker non-votes will have the effect of votes
"against" this proposal.

III. PROPOSAL TO APPROVE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants of the Company for 1998. 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 LLP 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.

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:

William F. Martin, Jr.
WILLIAM F. MARTIN, JR.
Secretary

Overland Park, Kansas
March 6, 1998

-15-
<PAGE> 18

EXHIBIT A

YELLOW CORPORATION
1997 STOCK OPTION PLAN

1. PURPOSE

The Yellow Corporation 1997 Stock Option Plan is designed to enable
qualified executive, managerial, supervisory and professional personnel of
Yellow Corporation and its Subsidiaries to acquire or increase their ownership
of common stock of the Company on reasonable terms. The opportunity so provided
is intended to foster in participants a strong incentive to put forth maximum
effort for the continued success and growth of the Company and its Subsidiaries,
to aid in retaining individuals who put forth such efforts, and to assist in
attracting the best available individuals in the future.

2. DEFINITIONS

When used herein, the following terms shall have the meaning set forth
below:

2.1 "Award" shall mean an Option or SAR.

2.2 "Board" means the Board of Directors of Yellow Corporation.

2.3 "Committee" means the members of the Board's Compensation Committee who
are non-employee directors as defined in Rule 16b-3 of the Securities and
Exchange Commission as it exists on the effective date of the Plan or as
subsequently amended or interpreted and are "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986 and the
regulations thereunder.

2.4 "Company" means Yellow Corporation.

2.5 "IRC '86" means the Internal Revenue Code of 1986, as in effect as of
the effective date of the Plan or as thereafter amended, and applicable
regulations.

2.6 "Fair Market Value" means with respect to the Company's Shares the
closing price of the Shares as reported by NASDAQ or if the closing price is not
reported, the bid price of the Shares as reported by NASDAQ on the date on which
the value is to be determined or, if the stock did not trade on that date, the
next preceding date on which such stock traded.

2.7 "Grantee" means a person to whom an Award is made.

2.8 "Non-Qualified Stock Option" or "NQSO" means an Option awarded under
the Plan which by its terms and conditions is not, and is not intended to be, an
"Incentive Stock Option" as defined by IRC '86.

2.9 "Option" means the right to purchase, at a price, for a term, under
conditions, and for cash or other considerations fixed by the Committee in
accordance with the Plan, and subject to such other limitations and restrictions
as the Plan and the Committee impose, a number of shares specified by the
Committee.

2.10 "Plan" means the Company's 1997 Stock Option Plan.

2.11 "SAR" means a right to surrender to the Company all or a portion of an
Option and to be paid therefor an amount, as determined by the Committee, no
greater than the excess, if any, of (i) the Fair Market Value, on the date such
right is exercised, of the Shares to which the Option or portion thereof
relates, over (ii) the aggregate option price of those Shares.

2.12 "Shares" means shares of the Company's common stock or, if by reason
of the adjustment provisions hereof any rights under an Award under the Plan
pertain to any other security, such other security.

2.13 "Subsidiary" means any business, whether or not incorporated, in which
the Company, at the time an Award is granted to an employee thereof, or in other
cases, at the time of reference, owns directly or indirectly not less than 50%
of the equity interest.

2.14 "Successor" means the legal representative of the estate of a deceased
Grantee or the person or persons who shall acquire the right to exercise an
Option or an SAR, by bequest or inheritance or by reason of the death of the
Grantee, as provided in accordance with Section 9 hereof.

2.15 "Term" means the period during which a particular Option or SAR may be
exercised.

1
<PAGE> 19

2.16 "QDRO" means a qualified domestic relations order as defined by IRC
'86 or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.

3. ADMINISTRATION OF THE PLAN

3.1 The Plan shall be administered by the Committee.

3.2 The Committee shall have plenary authority, subject to the provisions
of the Plan, to determine when and to whom Awards shall be granted, the Term of
each Award, the number of Shares covered by it, the participation by Grantee in
other plans, and any other terms or conditions of each such Award. The Committee
may grant such additional benefits in connection with any Award as it deems
appropriate. The number of Shares, the Term, the other terms and conditions of a
particular kind of Award and any additional benefits granted in connection with
any Award need not be the same, even as to Awards made at the same time. The
Committee's actions in making Awards and fixing their size, Term and other terms
and conditions and in granting any additional benefits in connection with any
Award shall be conclusive on all persons.

3.3 The Committee shall have the sole responsibility for construing and
interpreting the Plan, for establishing and amending such rules and regulations
as it deems necessary or desirable for the proper administration of the Plan,
and for resolving all questions arising under the Plan. Any decision or action
taken by the Committee arising out of or in connection with the construction,
administration, interpretation and effect of the Plan and of its rules and
regulations shall, to the extent permitted by law, be within its absolute
discretion, except as otherwise specifically provided herein, and shall be
conclusive and binding upon all Grantees, all Successors, and any other persons,
whether that person is claiming under or through any Grantee or otherwise.

3.4 The Committee shall regularly inform the Board as to its actions with
respect to all Awards under the Plan and the Terms and conditions of such Awards
in a manner, at such times, and in such form as the Board may reasonably
request.

4. ELIGIBILITY

Awards may be made under the Plan only to employees of the Company or a
Subsidiary who have executive, managerial, supervisory or professional
responsibilities. Officers shall be employees for this purpose, whether or not
they are also Directors, but a Director who is not such an employee shall not be
eligible to receive an Award. Awards may be made to eligible employees whether
or not they have received prior Awards, under the Plan or under any previously
adopted plan, and whether or not they are participants in other benefit plans of
the Company. In making a determination concerning the granting of Awards to
eligible employees, the Committee may take into account the nature of the
services they have rendered or that the Committee expects they will render,
their present and potential contributions to the success of the business, the
number of years of effective service they are expected to have and such other
factors as the Committee in its sole discretion shall deem relevant.

5. SHARES SUBJECT TO PLAN

Subject to adjustment as provided in Section 18 below, 1,400,000 Shares are
hereby reserved for issuance in connection with Awards under the Plan. The
Shares so issued may be unreserved Shares held in the treasury however acquired
or Shares which are authorized but unissued. Any Shares subject to issuance upon
exercise of Options shall once again be available for issuance in satisfaction
of Awards to the extent that (i) cash is issued in satisfaction of the exercise
of such Shares or (ii) the Option expires or terminates unexercised as to any
Shares covered thereby. Subject to adjustment as provided in Section 18 below,
the maximum number of Shares with respect to which options or SARs may be
granted during any calendar year to any employee under the Plan shall be 200,000
Shares.

2
<PAGE> 20

6. GRANTING OF OPTIONS

6.1 Subject to the terms of the Plan, the Committee may from time to time
grant Options to eligible employees.

6.2 The purchase price of each Share subject to Option shall be fixed by
the Committee, but shall not be less than 100% of the Fair Market Value of the
Share on the last business day prior to the date the Option is granted.

6.3 Each Option shall expire and all right to purchase Shares thereunder
shall cease on the date fixed by the Committee, which subject to the terms of
the Plan, shall not be later than the tenth anniversary of the grant date of the
Option.

6.4 Each Option shall become exercisable at the time, and for the number of
Shares, fixed by the Committee. Except to the extent otherwise provided in or
pursuant to Sections 9 and 10, no Option shall become exercisable as to any
Shares prior to the first anniversary of the date on which the Option was
granted.

7. STOCK APPRECIATION RIGHTS

7.1 The Committee may, in its discretion, grant an SAR to the holder of an
Option, either at the time the Option is granted or by amending the instrument
evidencing the grant of the Option at any time after the Option is granted and
more than six months before the end of the Term of the Option, so long as the
grant is made during the period in which grants of SARs may be made under the
Plan.

7.2 Each SAR shall be for such Term, and shall be subject to such other
terms and conditions, as the Committee shall impose. The terms and conditions
may include Committee approval of the exercise of the SAR, limitations on the
time within which and the extent to which such SAR shall be exercisable,
limitations on the amount of appreciation which may be recognized with regard to
such SAR, and specification of what portion, if any, of the amount payable to
the Grantee upon his exercise of an SAR shall be paid in cash and what portion,
if any, shall be payable in Shares. If and to the extent that Shares are issued
in satisfaction of amounts payable on exercise of an SAR, the Shares shall be
valued at their Fair Market Value on the date of exercise.

7.3 Except to the extent otherwise provided in or pursuant to Sections 9
and 10, no SAR shall be exercisable during the first six months after its date
of grant.

7.4 Upon exercise of an SAR the Option, or portion thereof, with respect to
which such right is exercised shall be surrendered and shall not thereafter be
exercisable.

8. NON-TRANSFERABILITY OF RIGHTS

No rights under any Award shall be transferable otherwise than by will or
the laws of descent and distribution or pursuant to a QDRO, and the rights, and
except to the extent otherwise provided in Section 12, the benefits, of any such
Award may be exercised and received, respectively, during the lifetime of the
Grantee only by him or by his guardian or legal representative or by an
"alternate payee" pursuant to a QDRO.

9. DEATH OR TERMINATION OF EMPLOYMENT

9.1 Subject to the provisions of the Plan, the Committee may make such
provisions concerning exercise or lapse of Options or SARs on death or
termination of employment as it shall in its discretion determine. No such
provision shall extend the Term of an Option or SAR, nor shall any such
provision permit an Option or SAR to be exercised prior to six months after the
date on which it was granted, except in the event of death or termination by
reason of disability.

9.2 Transfers of employment between the Company and a Subsidiary, or
between Subsidiaries, shall not constitute termination of employment for
purposes of any Award. The Committee may specify in the terms and conditions of
an Award whether any authorized leave of absence or absence for military or
government

3
<PAGE> 21

service or for any other reason shall constitute a termination of employment for
purposes of the Award and the Plan.

10. PROVISIONS RELATING TO TERMINATION OF THE COMPANY'S SEPARATE EXISTENCE

The Committee may provide that in the event that the Company is to be
wholly or partly liquidated, or agrees to participate in a merger, consolidation
or reorganization in which it, or an entity controlled by it, is not the
surviving entity, any or all Options and SARs granted under the Plan shall be
immediately exercisable in full.

11. WRITINGS EVIDENCING AWARDS

Each Award granted under the Plan shall be evidenced by a writing which
may, but need not, be in the form of an agreement to be signed by the Grantee.
The writing shall set forth the nature and size of the Award, its Term, the
other terms and conditions thereof, other than those set forth in the Plan, and
such other information as the Committee directs. Acceptance of any benefits of
an Award by the Grantee shall be conclusively presumed to be an assent to the
terms and conditions set forth therein, whether or not the writing is in the
form of an agreement to be signed by the Grantee.

12. EXERCISE OF RIGHTS UNDER AWARDS

12.1 A person entitled to exercise an Option or SAR may do so by delivery
of a written notice to that effect specifying the number of Shares with respect
to which the Option or SAR is being exercised and any other information the
Committee may prescribe.

12.2 The notice shall be accompanied by payment in full for the purchase
price of any Shares to be purchased with such payment being made in cash; shares
of the Company's common stock having a Fair Market Value equivalent to the
purchase price of such Shares; a combination thereof; or cashless exercise
pursuant to the Cashless Exercise Program offered by the Company. No Shares
shall be issued upon exercise of an Option until full payment has been made
therefor.

12.3 The notice of exercise of an SAR shall be accompanied by the Grantee's
copy of the writing or writings evidencing the grant of the SAR and the related
Option.

12.4 Upon exercise of an Option or SAR, the Grantee may request in writing
that the Shares to be issued in satisfaction of the Award be issued in the name
of the Grantee and another person as joint tenants with right of survivorship or
as tenants in common.

12.5 All notices or requests provided for herein shall be delivered to the
Secretary of the Company.

13. EFFECTIVE DATE OF THE PLAN AND DURATION.

13.1 The Plan shall become effective on July 15, 1997, subject to
stockholder approval at the 1998 Annual Meeting of Stockholders of the Company
where such approval is required by applicable SEC or stock market regulations.

13.2 No Awards may be granted under the Plan on or after July 16, 2007
although the terms of any Award may be amended at any time prior to the end of
its Term in accordance with the Plan.

14. DATE OF AWARD

The date of an Award shall be the date on which the Committee's
determination to grant the same is final, or such later date as shall be
specified by the Committee in connection with its determination.

15. STOCKHOLDER STATUS

No person shall have any rights as a stockholder by virtue of the grant of
an Award under the Plan except with respect to Shares actually issued to that
person.

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<PAGE> 22

16. POSTPONEMENT OF EXERCISE

The Committee may postpone any exercise of an Option or SAR for such time
as the Committee in its discretion may deem necessary in order to permit the
Company (i) to effect or maintain registration of the Plan or the Shares
issuable upon the exercise of an Option or an SAR under the Securities Act of
1933, as amended, or the securities laws of any applicable jurisdiction, (ii) to
permit any action to be taken in order to comply with restrictions or
regulations incident to the maintenance of a public market for its Shares, or
(iii) to determine that such Shares and the Plan are exempt from such
registration or that no action of the kind referred to in (ii) above needs to be
taken; and the Company shall not be obligated by virtue of any terms and
conditions of any Award or any provision of the Plan to recognize the exercise
of an Option or an SAR to sell or issue shares in violation of the Securities
Act of 1933 or the law of any government having jurisdiction thereof. Any such
postponement shall not extend the Term of an Option or SAR. Neither the Company
nor its directors or officers shall have any obligation or liability to the
Grantee of an Award, to the Grantee's Successor or to any other person with
respect to any Shares as to which the Option or SAR shall lapse because of such
postponement.

17. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN

The Board may at any time terminate, suspend or modify the Plan. However,
no termination, suspension or modification of the Plan shall adversely affect
any right acquired by any Grantee or any Successor under an Award granted before
the date of such termination, suspension or modification, unless such Grantee or
Successor shall consent; but it shall be conclusively presumed that any
adjustment for changes in capitalization as provided for herein does not
adversely affect any such right. Any member of the Board who is an officer or
employee of the Company or a Subsidiary shall be without vote on any proposed
amendment to the Plan, or on any other matter which might affect that member's
individual interest under the Plan.

18. ADJUSTMENT FOR CHANGES IN CAPITALIZATION

Any increase in the number of outstanding Shares of the Company occurring
through stock splits or stock dividends after the adoption of the Plan shall be
reflected proportionately in an increase in the aggregate number of Shares then
available for the grant of Awards under the Plan, or becoming available through
the termination, surrender or lapse of Awards previously granted but
unexercised, and in the number of Shares subject to Awards then outstanding; and
a proportionate reduction shall be made in the per share option price as to any
outstanding Options. Any fractional shares resulting from such adjustment shall
be eliminated. If changes in capitalization other than those considered above
shall occur, the Board shall make such adjustment in the number or class of
shares, remaining subject to Awards then outstanding and in the per share option
price as the Board in its discretion may consider appropriate to reflect such
change in capitalization, and all such adjustments shall be conclusive upon all
persons.

19. DELIVERY OF SHARES IN LIEU OF CASH INCENTIVE AWARDS

19.1 Any employee otherwise eligible for an Award under the Plan who is
eligible to receive a cash incentive payment from the Company under any
management incentive plan may make application to the Committee in such manner
as may be prescribed from time to time by the Committee, to receive Shares from
the Plan in lieu of all or any portion of such cash payment.

19.2 The Committee may in its discretion honor such application by
delivering Shares from the Plan to such employee equal in Fair Market Value to
that portion of the cash payment otherwise payable to the employee under such
incentive plan for which a Share delivery is to be made in lieu of cash payment.

19.3 Any Shares delivered to employees under the Plan in lieu of cash
incentive payments shall come from the aggregate number of Shares authorized for
use by the Plan and shall not be available for any other Awards under the Plan.

19.4 Such applications and such delivery of Shares shall not be permitted
on or after July 16, 2007.

5
<PAGE> 23

20. LOANS

20.1 The Company may make loans to Grantees for the sole purpose of
exercising Option Awards under the Plan and meeting the Federal tax consequences
of such exercise. Such loans shall be subject to the terms and conditions
established by the Committee from time to time which shall in all cases include
those specific items contained in this Section 20 as well as such other items as
may be established by the Committee.

20.2 No loan shall exceed the exercise price of the option to be exercised
plus the amount of Federal income taxes reasonably estimated to be due at the
exercise of the option or within the next following seven month period.

20.3. No loan shall have a term exceeding five years subject to renewal at
the discretion of the Committee. Notwithstanding any other terms of the loan,
each loan shall be fully due and payable on the loan recipient's termination of
employment, except that in the case of termination due to disability, the
Committee at its discretion may extend the terms of the loan beyond termination.

20.4 Interest shall be charged on the loan with a rate established by the
Committee but in no case less than an amount equal to any dividends payable
during the term of the loan on the Shares being purchased by the Grantee at the
exercise of the Option. Such minimum interest rate shall be determined by
dividing the dividends paid on such Shares during the preceding twelve months by
the Option price for such Shares.

20.5 If such a loan is made to a Grantee, the Company shall not deliver a
certificate or any shares purchased with the loan proceeds, until such time as
the loan is repaid.

21. NO-UNIFORM DETERMINATION

The Committee's determination under the Plan including, without limitation,
determination of the persons to receive Awards, the form, amount and type of
Awards (e.g. NQSOs, SARs), the terms and provisions of Awards and the written
material evidencing such Awards, the grant of additional benefits in connection
with any Award, and the granting or rejecting of loans or applications for
delivery of stock in lieu of cash bonus or incentive payments need not be
uniform and may be made selectively among otherwise eligible employees, whether
or not such employees are similarly situated.

22. TAXES

The Company is authorized to pay or withhold the amount of any tax
attributable to any amounts payable under any Awards, and the Company may defer
making payment of any Award if any such tax, charge or assessment may be pending
until indemnification to its satisfaction. This authority shall include
authority to withhold or receive Shares and to make cash payments in respect
thereof in satisfaction of an individual's tax obligations.

23. TENURE

An employee's right, if any, to continue in the employ of the Company or a
Subsidiary shall not be affected by the fact that he is a participant under this
Plan. At the sole discretion of the Committee, an employee terminated for cause
may be required to forfeit all of his rights under the Plan, except as to
Options or SARs already exercised.

24. APPLICATION OF PROCEEDS

The proceeds received by the Company from the sale of its Shares under the
Plan shall be used for general corporate purposes.

25. OTHER ACTIONS

Nothing in the Plan shall be construed to limit the authority of the
Company to exercise its corporate rights and powers, including, by way of
illustration and not by way of limitation, the right to grant options for proper
corporate purposes otherwise than under the Plan to any employee or any other
person, firm,
6
<PAGE> 24

corporation, association or other entity, or to grant options to, or assume
options of, any person in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of all or any part of the business and
assets of any person, firm, corporation, association or other entity.

26. GOVERNING LAW

The Plan and all determinations made and actions taken pursuant hereto
shall be governed by and construed in accordance with the laws of the State of
Delaware.

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<PAGE> 25
Please mark
your votes as indicated in
this example /x/

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 ALL PROPOSALS.

1. ELECTION OF DIRECTORS:

FOR all nominees WITHHOLD
listed (except as AUTHORITY
marked to the to vote for all
contrary to the right). / / nominees. / /

Nominees - Klaus E. Agthe, Cassandra C. Carr, Howard M. Dean, David H. Hughes,
Ronald T. LeMay, John C. McKelvey,
A. Maurice Myers, William L. Trubeck, Carl W. Vogt

(To withhold authority to vote for 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.

2. PROPOSAL TO APPROVE THE ADOPTION of the 1997 Stock Option Plan. / / / / / /

3. PROPOSAL TO APPROVE THE APPOINTMENT of Arthur Andersen LLP as independent
public accountants of the Corporation for 1998. / / / / / /

4. OTHER BUSINESS: In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.

CONFIDENTIAL VOTE REQUESTED / /

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 or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

- ------------------------------------
Signature

- ------------------------------------
Signature if held jointly

Dated: , 1998
------------------------

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE

[Yellow Corporation Logo]

Dear Stockholder,

Attached is the proxy card that can be used to vote your shares of Yellow
Corporation common stock. Whether you expect to attend the Annual 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 are receiving more than one set of annual meeting material you may be
able to save your company money by combining stockholder accounts. Sometimes
when stock is purchased in two or more transactions slight differences in
registration can result in multiple accounts. For example, misspelled names or
the use of middle initials on some purchases but not on others may cause
separate accounts to be established. Please contact our transfer agent
ChaseMellon Shareholder Services at 1-800-851-9677 for information on combining
these accounts.

Thank you for investing in Yellow Corporation.

<PAGE> 26
YELLOW CORPORATION
PROXY

ANNUAL MEETING OF STOCKHOLDERS, APRIL 16, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The undersigned hereby appoints A. MAURICE MYERS, HOWARD M. DEAN AND
WILLIAM L. TRUBECK, 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 Kansas City Downtown Marriott Hotel, 200
W. 12th Street, Kansas City, Missouri, on Thursday, April 16, 1998, at 9:30
a.m., and at any adjournments thereof.

If more than one of the above named Proxies shall be present 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 the reverse side.)

- ------------------------------------------------------------------------------
FOLD AND DETACH HERE