<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ROADWAY EXPRESS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
================================================================================
<PAGE> 2
[ROADWAY EXPRESS LOGO]
February 20, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of Roadway Express, Inc., which will be held on Wednesday, March 25, 1998, at
9:00 a.m. at the Sheraton Suites Hotel, located at 1989 Front Street, Cuyahoga
Falls, Ohio.
At the Annual Meeting, you will be asked to elect seven Directors to the
Board of Directors, to approve the Equity Ownership Plan, the Nonemployee
Directors' Equity and Deferred Compensation Plan and the Nonemployee Directors'
Stock Option Plan, to approve an amendment to the 1996 Employee Stock Purchase
Plan and to approve the appointment of the independent auditors of the Company
for the current fiscal year.
The Company has enclosed a copy of its 1997 Annual Report for the year
ended December 31, 1997 with this notice of annual meeting of shareholders and
proxy statement. If you would like another copy of the 1997 Annual Report,
please write to the Secretary of the Company at the above address.
Please read the enclosed information carefully before completing and
returning the enclosed proxy card. Returning your proxy card as soon as possible
will assure your representation at the meeting, whether or not you plan to
attend. If you do attend the annual meeting, you may, of course, withdraw your
proxy should you wish to vote in person.
Sincerely,
/s/ Michael W. Wickham
MICHAEL W. WICKHAM
President and Chief Executive Officer
<PAGE> 3
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<PAGE> 4
[ROADWAY EXPRESS LETTERHEAD]
------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 25, 1998
------------------------------------------------------------------
To The Shareholders:
You are hereby notified that the Annual Meeting of Shareholders of Roadway
Express, Inc., a Delaware corporation (the "Company"), will be held Wednesday,
March 25, 1998, at 9:00 a.m. at the Sheraton Suites Hotel, located at 1989 Front
Street, Cuyahoga Falls, Ohio, for the purpose of:
1. Electing seven directors to the Board of Directors consisting of Frank
P. Doyle, Dale F. Frey, Phillip J. Meek, Robert E. Mercer, Carl W.
Schafer, Sarah Roush Werner and Michael W. Wickham;
2. Approving the Equity Ownership Plan;
3. Approving the Nonemployee Directors' Equity and Deferred Compensation
Plan;
4. Approving the Nonemployee Directors' Stock Option Plan;
5. Approving an amendment to the 1996 Employee Stock Purchase Plan to
confirm the number of shares of Common Stock available for issuance
under the plan;
6. Approving the designation of Ernst & Young LLP as the independent
auditors of the Company for the year ending December 31, 1998; and
7. Transacting such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The record of shareholders entitled to notice and to vote at the meeting
was taken as of the close of business on February 10, 1998.
You are invited to attend the meeting, but whether or not you expect to
attend in person, please mark, sign, date and return the enclosed proxy in the
accompanying postage-paid envelope so that your shares will be represented at
the meeting or adjournment thereof.
If you wish to have your vote treated in a confidential manner, please mark
the box "Confidential Vote Requested" on your proxy card.
JOHN M. GLENN
Secretary
February 20, 1998
<PAGE> 5
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<PAGE> 6
ROADWAY EXPRESS, INC.
1077 GORGE BOULEVARD
AKRON, OHIO 44310
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 25, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Roadway Express, Inc., a Delaware corporation (the
"Company"), of proxies to be used at the annual meeting of shareholders of the
Company to be held on March 25, 1998 (the "Annual Meeting"). The Notice of
Annual Meeting of Shareholders, this Proxy Statement and related proxy card are
being mailed to shareholders on or about February 20, 1998.
Shareholders of record of the Company at the close of business on February
10, 1998, will be entitled to vote at the Annual Meeting (the "Record Date"). On
that date, the Company had outstanding and entitled to vote 20,556,714 shares of
common stock, par value $.01 per share ("Common Stock"). Each share of Common
Stock entitles the holder to one vote on all matters properly brought before the
meeting, including the election of directors.
Shares can be voted only if the shareholder is present in person or by
proxy. The Company has adopted a policy relating to proxy voting and independent
tabulation and inspection of elections. The policy provides that the Company
will furnish shareholders the opportunity to request confidential treatment of
their votes. There is a place on the enclosed proxy card for shareholders to
make such an election. If a shareholder so requests confidential treatment, an
independent vote tabulator and the independent inspectors of election will keep
the shareholder's vote permanently confidential and not disclose the vote to
anyone. This policy will be in effect at the Annual Meeting. Confidential
treatment will not apply when disclosure is required by law or under certain
other limited circumstances.
You may revoke your proxy at any time prior to the exercise of the powers
it confers. The shares represented by properly executed proxies will, unless
such proxies have previously been revoked, be voted in the manner specified on
the proxies. If specific choices are not indicated on a properly executed proxy,
the shares represented by such proxies received will be voted: (i) for the
nominees for Director named in this Proxy Statement; (ii) for approval of the
Nonemployee Directors' Stock Option Plan; (iii) for approval of the Nonemployee
Directors' Equity and Deferred Compensation Plan; (iv) for approval of the
Equity Ownership Plan; (v) for approval of the amendment to the 1996 Employee
Stock Purchase Plan; (vi) for approval of the appointment of Ernst & Young LLP,
as independent auditors; and (vii) in accordance with the best judgment of the
persons named in the enclosed proxy, or their substitutes, for any other matters
that properly come before the Annual Meeting. The Board of Directors is not
aware of any matter to be presented for action at the meeting other than those
set forth herein.
The presence, in person or by proxy, of the holders of a majority of the
total number of outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum for any business to be transacted at the Annual Meeting.
Abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of determining a quorum. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner. Directors
are elected by a plurality of the affirmative votes cast. Abstentions and broker
"non-votes" are not counted for purposes of the election of Directors. The
affirmative vote by the holders of a majority of the total number of shares of
Common Stock present in person or represented by proxy and entitled to vote on
the matter is required to approve any other matter to be acted upon at the
Annual Meeting. An abstention is counted as a vote against and a broker
"non-vote" is not counted for purposes of approving other matters to be acted
upon at the Annual Meeting.
The Board of Directors has designated R. E. Mercer, Director and Chairman;
M. W. Wickham, Director, President and Chief Executive Officer; and J. D.
Cunningham, Vice President-Finance and Administration, and Treasurer as Proxies
for appointment by shareholders to represent and vote their shares in accordance
with their directions.
<PAGE> 7
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The By-Laws of the Company provide that the Board of Directors shall
consist of not less than three members, as fixed by the Board of Directors from
time to time. The Board of Directors presently has eight members but it has
resolved that effective as of the Annual Meeting, the Board of Directors shall
be reduced to seven members in light of the retirement of William Sword as a
Director. At the Annual Meeting, seven Directors are to be elected to hold
office until the Company's next annual meeting. The Board of Directors
recommends that its seven nominees for Director be elected at the Annual
Meeting. All nominees have consented to being named and to serve if elected. If
any nominee becomes unavailable for any reason, the proxies will be voted for
the election of such other person as a Director as the Board of Directors may
recommend.
DIRECTOR NOMINEES
Information regarding the nominees to the Board of Directors of the Company
is set forth below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
PRESENT POSITIONS, RECENT
NAME BUSINESS EXPERIENCE AND AGE
- ---------------------------------------------------------------------------------------------
<S> <C>
Frank P. Doyle Director of the Company since January 1996. Retired.
Executive Vice President of General Electric Company, a
manufacturing, services and technology company, from 1992
through 1995, and Senior Vice President from 1981 through
1992. Director: Digital Equipment Corporation, The
PaineWebber Group of Mutual Funds and Educational Testing
Services. Age 66.
Dale F. Frey Director of the Company since January 1998. Retired.
Chairman and Chief Executive Officer of General Electric
Investment Corporation from 1984 through early 1997, and
Vice President and Treasurer of General Electric Company, a
manufacturing, services and technology company, from 1980
through January 1994. Director: Aftermarket Technology
Corp., First American Financial Corporation, Praxair, Inc.,
Promus Hotel Corporation and USF&G Corporation. Age 65.
Phillip J. Meek Director of the Company since January 1996. Retired. Senior
Vice President, Capital Cities/ABC, Inc., a broadcasting,
cable and publishing company, and President of its
publishing group from 1986 through 1997. Trustee: Ohio
Wesleyan University and chair of its Endowment Committee.
Director: Calyx & Carolla, American Press Institute and
United Way of New York City. Age 60.
Robert E. Mercer Chairman of the Board and Director of the Company since
January 1996. Director of Roadway Services, Inc. from 1989
through 1995. Retired Chairman and Chief Executive Officer
of The Goodyear Tire & Rubber Company, a manufacturer of
tires and related products, from 1983 through 1988, and
Chairman to March 1989. Director: General Electric Company.
Age 73.
Carl W. Schafer Director of the Company since January 1996. President of
the Atlantic Foundation, supporting oceanographic research
since 1990. Director: Wainoco Oil Corporation, Evans
Systems, Inc., Electronic Clearing House, Inc.,
Nutraceutix, Inc. and The PaineWebber and Guardian Groups
of Mutual Funds. Age 62.
Sarah Roush Werner Director of the Company since January 1996. Director of
Roadway Services, Inc. from 1970 through 1995. Private
investor, Marysville, Washington. Age 67.
Michael W. Wickham Chief Executive Officer of the Company since January 1996.
President of the Company since July 1990. Director of the
Company since 1989. Executive Vice President-Administration
and Finance from January 1990 through June 1990. Age 51.
- ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 8
COMMITTEES AND DIRECTORS MEETINGS
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The former Nominating Committee and the Executive
and Finance Committee were dissolved in April, 1997, when the Board of Directors
assumed their functions.
The members of the Audit Committee are C. W. Schafer, P. J. Meek, and R. E.
Mercer. W. Sword served as a member of the Audit Committee until April, 1997,
when R. E. Mercer was appointed as a member of the Audit Committee. During 1997,
the Audit Committee reviewed the audit plan developed by the Company's
independent auditors and the professional services provided by them to assure
their independence. Additionally, the Audit Committee reviewed the annual
financial statements prepared by management prior to their issuance and met with
the independent auditors to review their opinion on the annual financial
statements and the results of their audit procedures. The Audit Committee also
reviewed, in consultation with the independent auditors and the Company's
Director of Internal Audit, the adequacy of the Company's internal controls.
Written recommendations for nominees to the Board of Directors to be
elected at the 1999 annual meeting of shareholders (the "1999 Meeting") will be
considered by the Board of Directors if such recommendations are received in
accordance with the Company's By-Laws by the Secretary of the Company at its
principal offices at least 70 days prior to the 1999 Meeting or, if the Company
does not make a public announcement of the date of the 1999 Meeting, at least 80
days prior to such meeting, not later than ten days after the actual public
announcement of the 1999 Meeting.
The members of the Compensation Committee are F. P. Doyle, D. F. Frey, P.
J. Meek and W. Sword. C. W. Schafer served as a member of the Compensation
Committee until April, 1997, when W. Sword was appointed as a member of the
Compensation Committee. D. F. Frey was appointed as a member of the Compensation
Committee in February, 1998. The Compensation Committee recommends compensation
for executive officers of the Company.
The Board of Directors held seven meetings in 1997. The Compensation
Committee met six times and the Audit Committee met twice. The former Executive
and Finance Committee met once, and the Nominating Committee did not meet, prior
to their dissolution in April, 1997. All of the Directors attended at least
seventy-five percent of the total meetings held by the Board of Directors and by
the committees on which they served in 1997.
DIRECTOR COMPENSATION
During 1997, each nonemployee Director of the Company was paid an annual
retainer of $18,000 plus (a) an annual retainer of $4,000 for each committee
membership and (b) an additional sum of $1,500 for each meeting of the Board of
Directors or a committee. The chairmen of the Audit, Compensation, Executive and
Finance and Nominating Committees were each paid an additional annual retainer
of $2,000. Each Director of the Company, except for the Chairman of the Board of
Directors, received an annual retainer of 100 shares of Common Stock. The
Chairman of the Board of Directors received an annual retainer of 1,000 shares
of Common Stock.
3
<PAGE> 9
BENEFICIAL OWNERSHIP OF COMMON STOCK
Except as otherwise noted, the following table sets forth certain
information as of January 31, 1998 as to the security ownership of those persons
owning of record or known to the Company to be the beneficial owner of more than
five percent of the Common Stock and the beneficial ownership of Common Stock by
each of the Director nominees and each of the executive officers named in the
Summary Compensation Table, and all Directors and executive officers as a group.
Except as otherwise noted, the information with respect to beneficial ownership
has been furnished by the respective Director nominee, executive officer or five
percent beneficial owner, as the case may be. Unless otherwise indicated, the
persons named below have sole voting and investment power with respect to the
number of shares set forth opposite their names. Beneficial ownership of the
Common Stock has been determined for this purpose in accordance with the
applicable rules and regulations promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act").
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PERCENTAGE OF SHARES OF
AMOUNT AND NATURE OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK BENEFICIALLY OWNED
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Sarah Roush Werner
P. O. Box 611
Marysville, Washington 98270 1,652,361 (a) 8.0%
The GAR Foundation
Robert W. Briggs and National City
Bank, Northeast, Trustees
One Cascade Plaza
Akron, Ohio 44308 1,046,228 (b) 5.1%
Roadway Express, Inc. 401(k) Stock
Savings Plan
Key Trust Company of Ohio,
National
Association, Trustee 4,197,664 (c) 20.4%
Frank P. Doyle 2,200 *
Dale F. Frey -- *
Phillip J. Meek 6,200 *
Robert E. Mercer 3,809 *
Carl W. Schafer 600 (d) *
Michael W. Wickham 46,978 f)(g) *
J. Dawson Cunningham 27,583 f)(g) *
Louis J. Esposito 18,168 (e) *
John M. Glenn 3,459 e)(g) *
James D. Staley 26,914 e)(f) *
All Directors and executive officers 1,799,641 f)(g) 8.8%
as a group (12 persons)
- ----------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent.
(a) Includes 43,340 shares as to which Mrs. Werner has investment and voting
power although she disclaims any beneficial ownership.
(b) According to the Schedule 13G filed with the Securities and Exchange
Commission, dated February 10, 1998 (the "Schedule 13G") by National City
Corporation ("National City"), as of December 31, 1997, National City has
shared investment power over 1,046,228 shares as co-trustee of The GAR
Foundation. According to the Schedule 13G, National City also has sole
voting power with respect to an additional 11,424 shares.
(c) Pursuant to the terms of the Roadway Express, Inc. 401(k) Stock Savings
Plan, participants are entitled to instruct the trustee as to the voting of
any shares allocated to their account(s), and shares for which no direction
is received by the trustee. The trustee must vote the shares as directed.
4
<PAGE> 10
(d) Includes shares held in an individual retirement account as follows: Mr.
Schafer, 500 shares; Mr. Wickham, 2,344 shares; Mr. Cunningham, 735 shares;
and Mr. Glenn, 500 shares.
(e) Includes shares held pursuant to the Roadway Express, Inc. 401(k) Stock
Savings Plan, as of December 31, 1997, as follows: Mr. Wickham, 10,484
shares; Mr. Cunningham, 4,076 shares; Mr. Esposito, 8,109 shares; Mr. Glenn,
2,459 shares; Mr. Staley, 7,347 shares; and all executive officers as a
group, 34,486 shares.
(f) Includes shares of incentive stock granted under the Roadway Express, Inc.
Management Incentive Stock Plan, as of December 31, 1997, as follows: Mr.
Wickham, 23,600 shares; Mr. Cunningham, 16,800 shares; Mr. Staley, 16,800
shares; and all executive officers as a group, 66,400 shares.
(g) Includes shares held by family members as to which beneficial ownership is
disclaimed, as follows: Mr. Wickham, 10,350 shares; Mr. Cunningham, 1,125
shares; Mr. Glenn, 500 shares; and all executive officers as a group, 11,975
shares.
5
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning annual compensation
for services rendered to the Company for 1995, 1996 and 1997 by those persons
who were the chief executive officer and the other four most highly compensated
executive officers of the Company during 1997 (collectively, the "Named
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
OTHER ANNUAL LTIP ALL OTHER
COMPENSATION PAYOUTS COMPENSATION
NAMES AND PRINCIPAL POSITION YEAR SALARY BONUS (b) (c) (D)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. W. Wickham 1997 $300,000 $179,000 $4,720 -- $ 16,054
Director, President and Chief 1996 270,000 45,264 3,540 -- 19,470
Executive Officer 1995 267,923 -- -- -- 50,633
J. D. Cunningham 1997 $200,000 $103,000 $3,360 -- $ 12,105
Vice President-Finance and 1996 186,000 22,934 2,520 -- 13,891
Administration, and Treasurer 1995 184,569 -- -- -- 28,661
L. J. Esposito 1997 $173,000 $ 91,000 $2,400 $265,500 $ 8,255
Vice President-Sales 1996 163,000 22,934 1,800 -- 73,634
1995 161,746 -- -- -- 12,785
J. M. Glenn(a) 1997 $180,000 $ 83,000 $1,840 $203,550 $ 11,524
Vice President-General Counsel 1996 170,000 21,003 1,380 -- 6,181
and Secretary 1995 170,000 46,878 -- -- 21,511
J. D. Staley 1997 $200,000 $103,000 $3,360 -- $ 9,064
Vice President-Operations 1996 186,000 25,952 2,520 -- 10,882
1995 184,569 -- -- -- 25,076
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Mr. Glenn served as Vice President and General Counsel of Roadway Services,
Inc., the Company's former parent company, during 1995, and the compensation
shown for such period was paid by Roadway Services, Inc.
(b) Reflects cash dividends paid on incentive stock awarded under the Roadway
Express, Inc. Management Incentive Stock Plan (the "Management Incentive
Stock Plan").
(c) Reflects payouts of shares of incentive stock previously granted under the
Management Incentive Stock Plan to which all restrictions have lapsed due to
the attainment of certain management objectives based upon stock
appreciation and the executive officers' attainment of age 55. Although
shares of incentive stock previously granted to other executive officers
have partially vested with respect to the attainment of certain management
objectives based upon stock appreciation, such shares of incentive stock
remain subject to a substantial risk of forfeiture, which will lapse upon
the executive officers' attainment of age 55 provided that the executive
officer has remained in the continuous employ of the Company or one of its
subsidiaries, or in the event that certain change in control events occur.
Such shares of incentive stock that remain subject to forfeiture entitle the
executive officer to all of the rights of a shareholder generally, including
the right to vote such shares and receive any dividends that may be paid
thereon.
(d) Reflects for 1997 (i) dividend equivalents earned on stock credits awarded
under the Roadway Services, Inc. Long-Term Stock Award Incentive Plan and
predecessor plans (Mr. Wickham, $8,899; Mr. Cunningham, $4,905; Mr.
Esposito, $1,654; Mr. Glenn, $4,324; and Mr. Staley, $2,891); and (ii)
Company matching contributions under the Roadway Express, Inc. 401(k) Stock
Savings Plan, a voluntary contributory defined contribution employee benefit
plan (Mr. Wickham, $7,155; Mr. Cunningham, $7,200; Mr. Esposito, $6,601; Mr.
Glenn, $7,200; and Mr. Staley, $6,173).
6
<PAGE> 12
ROADWAY EXPRESS, INC. PENSION PLAN
The following table shows estimated annual pension benefits payable as
retirement benefits to the Named Officers.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
$200,000 $ 46,688 $ 62,250 $ 77,813 $ 93,375
300,000 69,188 92,250 115,313 138,375
400,000 91,688 122,250 152,813 183,375
500,000 114,188 152,250 190,313 228,375
600,000 136,688 182,250 227,813 273,375
- ------------------------------------------------------------------
</TABLE>
The Roadway Express, Inc. Pension Plan (the "Pension Plan") is a
noncontributory qualified defined benefit plan. The Pension Plan provides annual
retirement benefits after normal retirement at age 65 equal to the greater of
(a) 2% of the final 240 consecutive months average compensation at or below
$45,000 times total years of service not to exceed 30, or (b) 1 3/4% of the
final 240 consecutive months average compensation up to $45,000 and 1 1/2% of
the final 240 consecutive months average compensation in excess of $45,000 times
total years of service not to exceed 30. Benefits under the Pension Plan are not
subject to reductions for Social Security benefits or other offset amounts.
Benefits are payable as a straight life annuity under various assumptions
based on final 20 year average compensation and years of service. Annual
compensation for computing annual pension benefits includes base salary and
incentive compensation. For the Named Officers, annual compensation represents
the sum of the amounts shown for 1997 in the Salary, Bonus and Other Annual
Compensation columns of the Summary Compensation Table.
The credited years of service and the estimated final 20 year average
compensation under the Pension Plan for the Named Officers are: Mr. Wickham,
29 1/2 years and $431,963; Mr. Cunningham, 12 1/2 years and $270,862; Mr.
Esposito, 26 1/2 years and $212,988; Mr. Glenn, 10 1/2 years and $243,209; and
Mr. Staley, 26 1/2 years and $271,055.
Federal law places certain limitations on the amount of compensation that
may be taken into account in calculating pension benefits and on the amount of
pensions that may be paid under federal income tax qualified plans. Since the
Company believes the retirement income objectives of the Company's pension plans
are appropriate for all eligible participants, it has adopted a nonqualified
Section 415 Excess Plan and a nonqualified Section 401(a)(17) Benefit Plan
(collectively, the "Excess Plans") providing for the payment from general funds
of the benefits that would be lost by plan participants as a result of present
or future Internal Revenue Code of 1986 (the "Internal Revenue Code") provisions
limiting the benefits payable or the compensation taken into account. Upon the
retirement or death of a participant under either of the Excess Plans, the
supplemental retirement benefit payable with respect to such participant will be
determined under the pension formula set forth above, but without the
limitations set forth in the Internal Revenue Code described above.
1997 EXECUTIVE COMPENSATION REPORT
The Compensation Committee is composed of four nonemployee members of the
Board of Directors. The Compensation Committee is responsible for establishing
basic principles related to the compensation programs of the Company and for
providing oversight for compensation programs for executive officers.
In 1997, the Compensation Committee undertook a complete reassessment of
executive compensation, with the objective to assure that compensation for
executive officers would fully comport with the mission and vision statement of
the Company while assuring that it could attract, retain, and motivate
management level employees through a total compensation program. An independent
compensation consultant was retained to survey the industry in which the Company
operates and other service companies with revenues of comparable magnitude to
the Company in order to compare compensation received by the Company's
management both in the aggregate and for individual positions. Other
considerations included the nature of the industry in which the Company operates
and other factors likely to shape the Company's future.
7
<PAGE> 13
Base Salaries. Salaries for executive officers, including the chief
executive officer, were determined by three factors: (i) salary levels among
service companies with revenues of comparable magnitude and specifically those
of the Company's nearest competitors, (ii) performance of the Company,
considering its recent emergence as a stand-alone company and (iii) individual
performance as evaluated in writing and orally by the chief executive officer
and through the Compensation Committee's own observations, and in the case of
the chief executive officer, by the Compensation Committee itself after
consulting with other members of the Board of Directors.
The Compensation Committee agreed with the Company's long-standing
philosophy that base compensation should be below market, while permitting
management to achieve superior total compensation through cash and long-term
incentives. It concluded, however, that its then current executive salaries were
nonetheless too low by a significant margin and that a failure to raise
executive salaries above 1996 levels would threaten the attainment of the
Company's strategic goals. Accordingly, as a part of a several year correction
process, salary levels were raised to bring them closer to the median for the
larger less-than-truckload (LTL) freight competitors.
Cash Incentive Compensation. In 1997, the Compensation Committee revised
and simplified the Company's annual cash incentive pay-out plan. After studying
the operating budget for 1997, it determined that the top management group,
which includes all executive officers, including the chief executive officer,
should be paid individualized cash incentives. Factors considered in setting the
amounts for executive officers included the relative importance of the position
with the Company and the difficulty of the efforts required to obtain high
performance at such position. At a pre-determined level of targeted
profitability, which was substantially over 1996 actual levels, full pay-outs
for 1997 under the new plan were set for all executive officers. Percentages of
pay-outs were to have declined by steps of 5% to the extent that the Company's
profitability did not meet the predetermined level, provided that there would be
no pay-outs if after-tax profits did not exceed certain minimum levels of
profitability.
Management Incentive Stock Plan. The Compensation Committee determined the
Management Incentive Stock Plan had met its objectives for 1996 and should be
continued. Under the Management Incentive Stock Plan, awards of restricted stock
are targeted over a five year period. Pursuant to the Management Incentive Stock
Plan, grants of an aggregate of 310,341 shares of Common Stock were made to 61
key employees for a two-year period commencing in 1996 (figures differ slightly
from last year due to changes in participation).
Awards of stock, although effective as of the first day of the respective
year, are subject to lapse and forfeiture if a number of conditions are not
satisfied. The conditions include attainment of certain objectives for
appreciation in market price of the Common Stock, vesting requirements and such
others as the Compensation Committee may determine.
This report on 1997 executive compensation shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulation 14A promulgated by the Securities and
Exchange Commission or Section 18 of the Exchange Act.
This report is submitted on behalf of the Compensation Committee.
F. P. DOYLE; D. F. FREY; P. J. MEEK; W. SWORD
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PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
shareholder return on the Common Stock with the S&P 500 Index and the S&P
Truckers Group, respectively, for the period commencing January 2, 1996 (the
initial trading date for the Common Stock) through December 31, 1997. The graph
assumes that the value of the investment in the Common Stock and each index was
$100 at January 2, 1996, and all dividends were reinvested. The comparisons in
this table are required by the Securities and Exchange Commission and,
therefore, are not intended to forecast or be necessarily indicative of the
actual future return on the Common Stock.
COMPARISON OF SHAREHOLDER RETURN
LOGO
<TABLE>
<CAPTION>
ROADWAY S&P 500 S&P TRUCKERS
EXPRESS, INC. INDEX GROUP
--------------- ------- ------------
<S> <C> <C> <C>
January 2, 1996 $ 100 $ 100 $100
December 31, 1996 $ 115 $ 119 $ 82
December 31, 1997 $ 133 $ 159 $124
</TABLE>
APPROVAL OF THE EQUITY OWNERSHIP PLAN
(PROPOSAL NO. 2)
GENERAL
The Roadway Express Equity Ownership Plan (the "Equity Plan") serves the
Company's objective of providing superior sustainable value to its shareholders
by affording the Compensation Committee the ability to provide sufficient
incentive compensation to attract and retain high-performing employees. The
Company's compensation structure places a portion of the total compensation at
risk with the performance of the Company, the organizational unit and the
individual. The risk portion increases with the responsibility level of the
employee. The Board of Directors adopted the Equity Plan on February 2, 1998,
subject to the approval of the Company's shareholders at the Annual Meeting.
The principal reason for adopting the Equity Plan is to provide shares
available under the Equity Plan as described below. The Equity Plan is intended
to comply with rules for deductibility under Section 162(m) of the Internal
Revenue Code. A copy of the full text of the Equity Plan is attached hereto as
Exhibit A and the summary description below is qualified in its entirety by
reference to such exhibit.
SUMMARY DESCRIPTION
General. Under the Equity Plan, the Compensation Committee is authorized
to make awards of options to purchase shares of Common Stock ("Option Awards"),
awards of stock appreciation rights ("Stock Appreciation Rights"), awards of
restricted shares ("Restricted Shares") or deferred shares ("Deferred Shares")
and awards of phantom shares ("Phantom Shares") and performance units
("Performance Units"). The terms applicable to
9
<PAGE> 15
awards of the various types, including those terms that may be established by
the Compensation Committee when making or administering particular awards, are
set forth in detail in the Equity Plan.
Shares Available Under the Plan. Subject to adjustment as provided in the
Equity Plan, the number of shares of Common Stock that may be issued or
transferred (a) upon the exercise of Option Awards, (b) in payment or upon the
exercise of Stock Appreciation Rights, (c) as Restricted Shares, (d) in payment
of Phantom Shares or Performance Units that have been earned, (e) as Deferred
Shares, or (f) in payment of dividend equivalents paid with respect to awards
made under the Equity Plan, may not exceed 1,300,000 shares in the aggregate
increased by shares authorized but not granted under other stock-related plans
and reduced by shares authorized under the Equity Plan and designated to be used
to grant awards under any other stock-related plan. Such shares of Common Stock
may be shares of original issuance or treasury shares or a combination of both.
Upon the payment of any option price by the transfer to the Company of shares of
Common Stock or upon satisfaction of any withholding amount by means of transfer
or relinquishment of shares of Common Stock, there will be deemed to have been
issued or transferred under the Plan only the net number of shares of Common
Stock actually issued or transferred by the Company.
Compliance with Section 162(m) of the Internal Revenue Code. The Equity
Plan makes provision for compliance with Section 162(m) of the Internal Revenue
Code. Phantom Shares and Performance Units awarded to named executives will
provide for objective performance goals and are intended to qualify for
deductibility without regard to the limits of Section 162(m). The maximum number
of shares of Common Stock that can be granted to any participant during any
period of three consecutive calendar years is 500,000; provided, however, that
in no event may any participant in any period of one calendar year be granted
Performance Units or Phantom Shares having an aggregate maximum value as of the
date of grant thereof in excess of $1 million.
Eligibility. Officers, including officers who are members of the Board of
Directors, and key employees of the Company and its subsidiaries may be selected
by the Compensation Committee to receive benefits under the Equity Plan. The
exact number and composition of officers and key employees who will be eligible
to participate in the Equity Plan will be determined by the Compensation
Committee.
Option Awards. Option Awards may be granted that entitle the optionee to
purchase shares of Common Stock at a predetermined price per share (which may
not be less than the market value at the date of grant, except for nonqualified
stock options granted in lieu of salary or bonus, which shall be not less than
85% of the market value at the date of grant). The option price is payable in
cash at the time of exercise; by the transfer to the Company of nonforfeitable
unrestricted shares of Common Stock owned by the optionee having a value at the
time of exercise equal to the option price; any other legal consideration the
Compensation Committee may deem appropriate; or a combination of such payment
methods. Any grant may provide for deferred payment of the option price from the
proceeds of sale through a bank or broker on the date of exercise of some or all
of the shares of Common Stock to which the exercise relates. The Compensation
Committee has the authority to specify at the time Option Awards are granted
that shares of Common Stock will not be accepted in payment of the option price
until they have been owned by the optionee for a specified period. However, the
Equity Plan does not require any such holding period and would permit immediate
sequential exchanges of shares of Common Stock at the time of exercise of Option
Awards.
The Compensation Committee may, at or after the date of grant of any
Options (other than the grant of incentive stock options as described under
Section 422 of the Internal Revenue Code ("Incentive Stock Options")), provide
for the payment of dividend equivalents to the optionee on a current, deferred
or contingent basis or may provide that such equivalents be credited against the
option price.
No Option Awards may be exercisable more than ten years from the date of
grant. Each grant must specify the period of continuous employment with the
Company or any subsidiary that is necessary before the Option Awards become
exercisable and may provide for the earlier exercise of such Option Awards in
the event of a "change in control" of the Company or other similar transaction
or event. Successive grants may be made to the same optionee whether or not
Option Awards previously granted remain unexercised.
Stock Appreciation Rights. A grant of Stock Appreciation Rights represents
the right to receive from the Company an amount of the difference between the
base price established for such Stock Appreciation Rights, determined by the
Compensation Committee, and the market value of the Common Stock on the date the
Stock Appreciation Rights are exercised. Stock Appreciation Rights can be tandem
(i.e., granted with Option Awards to provide an alternative to exercise of the
Option Award) or free-standing. Tandem Stock Appreciation Rights may
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<PAGE> 16
only be exercised at a time when the related Option Award is exercisable and the
spread is positive, and requires that the related Option Award be surrendered
for cancellation. Free-standing Stock Appreciation Rights may have a base price
per right that does not exceed a maximum specified by the Compensation Committee
on the date of grant and may specify the period of employment that is necessary
before such Stock Appreciation Rights become exercisable. Such grant may also
include that payment may be made by one or more methods of payment and may
specify performance goals that must be achieved as a condition to exercise such
Stock Appreciation Rights.
Restricted Shares. An award of Restricted Shares involves the immediate
transfer by the Company to a participant of ownership of a specific number of
shares of Common Stock in consideration of the performance of services. The
participant is entitled immediately to voting, dividend and other ownership
rights in such shares. The transfer may be made without additional consideration
or in consideration of a payment by the participant that is less than current
market value, as the Compensation Committee may determine. The Compensation
Committee may condition the award on the achievement of performance goals.
Restricted Shares must be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Internal Revenue Code for a period to be
determined by the Compensation Committee. An example would be a provision that
the Restricted Shares would be forfeited if the participant ceased to serve the
Company as an officer or key employee during a specified period of years. In
order to enforce these forfeiture provisions, the transferability of Restricted
Shares will be prohibited or restricted in a manner and to the extent prescribed
by the Compensation Committee for the period during which the forfeiture
provisions are to continue. The Compensation Committee may provide for a shorter
period during which the forfeiture provisions are to apply in the event of a
change in control of the Company or other similar transaction or event.
Deferred Shares. An award of Deferred Shares constitutes an agreement by
the Company to deliver shares of Common Stock to the participant in the future
in consideration of the performance of services, but subject to the fulfillment
of such conditions, including performance goals, during the deferral period as
the Compensation Committee may specify. During such deferral period, the
participant has no right to transfer any rights under his or her award and no
right to vote them, but the Compensation Committee may, at or after the date of
award, authorize the payment of dividend equivalents on such shares on either a
current or deferred or contingent basis, either in cash or additional shares of
Common Stock. Awards of Deferred Shares may be made without additional
consideration or in consideration of a payment by such participant that is less
than the market value per share at the date of award.
Deferred Shares must be subject to a deferral period, as determined by the
Compensation Committee at the date of the award, except that the Compensation
Committee may provide for a shorter deferral period in the event of a change in
control of the Company or other similar transaction or event.
Phantom Shares and Performance Units. A Phantom Share is the equivalent of
one share of Common Stock, and a Performance Unit is the equivalent of $1.00. A
participant may be granted any number of Phantom Shares or Performance Units.
Such participant will be given one or more performance goals to meet within a
specified performance period. Such performance period may be subject to earlier
termination in the event of a change in control of the Company or other similar
transaction or event. A minimum level of acceptable achievement may also be
established by the Compensation Committee. If by the end of the performance
period the participant has achieved the specified performance goals, he or she
will be deemed to have fully earned the Phantom Shares or Performance Units. If
the participant has not achieved the performance goals, but has attained or
exceeded the predetermined minimum, he or she will be deemed to have partly
earned the Phantom Shares and/or Performance Units (such part to be determined
in accordance with a formula). To the extent earned, the Phantom Shares and/or
Performance Units will be paid to the participant at the time and in the manner
determined by the Compensation Committee in cash, shares of Common Stock or in
any combination thereof.
Performance Goals. The Equity Plan requires that the Compensation
Committee establish performance goals for purposes of Phantom Shares and
Performance Units. When so determined by the Compensation Committee, Option
Awards, Stock Appreciation Rights, Restricted Shares, Deferred Shares and
dividend equivalents may also specify performance goals. Performance goals may
be described either in terms of Company-wide objectives or objectives that are
related to performance of the division, subsidiary, department or function
within the Company or a subsidiary in which the participant is employed.
Performance goals applicable to any award to a participant who is, or is
determined by the Compensation Committee likely to become a "covered employee"
within the meaning of Section 162(m)(3) of the Internal Revenue Code will be
limited to specified levels of or growth in (i) cash flow, (ii) costs, (iii)
earnings per share, (iv) market share, (v) net income, (vi) product quality,
(vii) productivity improvement, (viii) return on assets, (ix) return on equity,
(x) return on invested capital,
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<PAGE> 17
(xi) sales growth, (xii) shareholder return, (xiii) stock price, (xiv) value
added, and any combination thereof. Except in the case of such a covered
employee, if the Compensation Committee determines that a change in the
business, operations, corporate structure or capital structure of the Company,
or the manner in which it conducts its business, or other events or
circumstances render the performance goals unsuitable, the Compensation
Committee may modify such performance goals or the related minimum acceptable
level of achievement, in whole or in part, as the Compensation Committee deems
appropriate and equitable.
Transferability. Except as otherwise determined by the Compensation
Committee, no Option Award or other award under the Equity Plan is transferable
by a participant other than by will or the laws of descent and distribution.
Except as otherwise determined by the Compensation Committee, Option Awards are
exercisable during the optionee's lifetime only by him or her. The Compensation
Committee may authorize the transfer of unexercised options to the spouse or
descendants of a participant, or to a trust or other vehicle.
The Compensation Committee may specify at the date of grant that part or
all of the shares of Common Stock that are (i) to be issued or transferred by
the Company upon exercise of Option Awards, upon termination of the deferral
period applicable to Deferred Shares or upon payment under any grant of Phantom
Shares or Performance Units or (ii) no longer subject to the substantial risk of
forfeiture and restrictions on transfer referred to in Section 5.5 of the Equity
Plan, shall be subject to further restrictions on transfer.
Adjustments. The maximum number of shares that may be issued and delivered
under the Equity Plan, the number of shares covered by outstanding Option
Awards, and the prices per share applicable thereto, are subject to adjustment
in the event of stock dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, spin-offs, reorganizations,
liquidations, issuances of rights or warrants, and similar events. In the event
of any such transaction or event, the Compensation Committee, in its discretion,
may provide in substitution for any or all outstanding awards under the Equity
Plan such alternative consideration as it, in good faith, may determine to be
equitable in the circumstances and may require the surrender of all awards so
replaced. The Compensation Committee may also make or provide for such
adjustments in the numbers of shares specified in Section 2.2 of the Equity Plan
as the Compensation Committee may determine appropriate to reflect any
transaction or event described in Section 5.2 of the Equity Plan.
Administration and Amendments. The Equity Plan is to be administered by
the Compensation Committee, consisting of not less than two members of the Board
of Directors, each of whom shall be a "nonemployee director" within the meaning
of Rule 16b-3 under the Exchange Act, and an "outside director" within the
meaning of Section 162(m) of the Internal Revenue Code.
The Compensation Committee is authorized to interpret the Equity Plan and
related agreements and other documents. The Compensation Committee may make
awards to employees under any or a combination of all of the various categories
of awards that are authorized under the Equity Plan, or in its discretion, make
no awards. The Equity Plan may be amended from time to time by the Board of
Directors. However, any amendment which must be approved by the shareholders of
the Company in order to comply with applicable law or the rules of the principal
national securities exchange or quotation system upon which the Common Stock is
traded or quoted will not be effective unless and until such approval has been
obtained in compliance with such applicable law or rules. Presentation of the
Equity Plan or any amendment thereof for shareholder approval is not to be
construed to limit the Company's authority to offer similar or dissimilar
benefits through plans that are not subject to shareholder approval.
The Compensation Committee may provide for special terms for awards to
participants who are foreign nationals or who are employed by the Company or any
of its subsidiaries outside the United States of America as the Compensation
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom.
The Compensation Committee may not, without further approval of the
shareholders of the Company, authorize the amendment of any outstanding Option
Award to reduce the option price. Furthermore, no Option Award may be canceled
and replaced with awards having a lower option price without further approval of
the shareholders of the Company.
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<PAGE> 18
FEDERAL INCOME TAX CONSEQUENCES
Following is a brief summary of certain of the federal income tax
consequences of certain transactions under the Equity Plan based on federal
income tax laws in effect on January 1, 1998. This summary is not intended to be
exhaustive and does not describe state or local tax consequences.
Option Awards. In general, (i) no income will be recognized by an optionee
at the time an Option Award is granted; (ii) at exercise, ordinary income will
be recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise; and (iii) at sale, appreciation (or
depreciation) after the date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.
Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an Incentive Stock Option. If shares of
Common Stock are issued to the optionee pursuant to the exercise of an Incentive
Stock Option, and if no disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one year after the
transfer of such shares to the optionee, then upon sale of such shares, any
amount realized in excess of the option price will be taxed to the optionee as a
long-term capital gain and any loss sustained will be a long-term capital loss.
If shares of Common Stock acquired upon the exercise of an Incentive Stock
Option are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to the excess (if any) of the fair market
value of such shares at the time of exercise (or, if less, the amount realized
on the disposition of such shares if a sale or exchange) over the option price
paid for such shares. Any further gain (or loss) realized by the participant
generally will be taxed as short-term or long-term capital gain (or loss)
depending on the holding period.
Stock Appreciation Rights. No income generally will be recognized upon the
award of Stock Appreciation Rights. Upon payment with respect to Stock
Appreciation Rights exercised, the recipient generally will be required to
include as taxable ordinary income in the year of receipt an amount equal to the
amount of cash received and the fair market value of any unrestricted shares of
Common Stock received.
Restricted Shares. The recipient of Restricted Shares generally will be
subject to tax at ordinary income rates on the fair market value of the
Restricted Shares reduced by any amount paid by the participant at such time as
the shares are no longer subject to forfeiture or restrictions on transfer for
purposes of Section 83 of the Internal Revenue Code ("restrictions"). However, a
recipient who so elects under Section 83(b) of the Internal Revenue Code within
30 days of the date of transfer of the shares will have taxable ordinary income
on the date of transfer of the shares equal to the excess of the fair market
value of such shares (determined without regard to the restrictions) over the
purchase price if any, of such Restricted Shares. If a Section 83(b) election
has not been made, any dividends received with respect to Restricted Shares
subject to restrictions generally will be treated as compensation that is
taxable as ordinary income to the participant.
Deferred Shares. No income generally will be recognized upon the award of
Deferred Shares. The recipient of a Deferred Share award generally will be
subject to tax at ordinary income rates on the fair market value of unrestricted
shares of Common Stock on the date that such shares are transferred to the
participant under the award, reduced by any amount paid by the participant, and
the capital gains/loss holding period for such shares will also commence on such
date.
Phantom Shares and Performance Units. No income generally will be
recognized upon the grant of Phantom Shares or Performance Units. Upon payment
with respect to Phantom Shares or Performance Units earned, the recipient
generally will be required to include as taxable ordinary income in the year of
receipt an amount equal to the amount of cash received and the fair market value
of any unrestricted shares of Common Stock received.
Special Rules Applicable to Officers and Directors. In limited
circumstances where the sale of stock received as a result of a grant or award
could subject an officer or director to suit under Section 16(b) of the Exchange
Act, the tax consequences to the officer or director may differ from the tax
consequences described above. In these circumstances, unless a special election
has been made, the principal difference usually will be to postpone valuation
and taxation of the stock received so long as the sale of the stock received
could subject the officer or director to suit under Section 16(b) of the
Exchange Act, but no longer than six months.
Tax Consequences To Participants' Employers. To the extent that a
participant recognizes ordinary income in the circumstances described above, the
participant's employer will generally be entitled to a corresponding
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deduction, provided, among other things, that such income meets the test of
reasonableness, does not along with other income of the participant exceed the
limitation on deductible compensation under Section 162(m) of the Internal
Revenue Code, is an ordinary and necessary business expense, is not an "excess
parachute payment," and that any applicable withholding obligations are
satisfied.
Accounting Treatment. Phantom Shares, Performance Units and Stock
Appreciation Rights will require a charge against income of the Company
periodically representing increases in the value of the anticipated benefits.
In the case of Phantom Shares and Performance Units, such charge is based on
the dollar amount expected to be paid at the end of the performance period.
Restricted Shares and Deferred Shares will require a charge against income
equal to the fair market value of the awarded shares at the time of award less
the amount, if any, paid or payable by the awardee. Such charge is spread over
the earn-out period for the Restricted or Deferred Shares. Given the variety of
awards that may be made separately or in combination under the Equity Plan,
actual awards may result in periodic charges against income in certain other
circumstances.
PLAN BENEFITS
It is not possible to determine future awards that will be received by
participants in the Equity Plan.
VALUATION
For purposes of establishing the option price and for all other valuation
purposes under the Equity Plan, the market value of a share of Common Stock on
any relevant date will be the closing price of the Common Stock on that date, as
such price is reported on the Nasdaq National Market. The market value of Common
Stock on the Record Date was $25 3/8 per share.
REQUIRED VOTE
Approval of the Equity Plan requires the affirmative vote of the holders of
a majority of the shares of Common Stock present, or represented, and entitled
to vote on the matter at the Annual Meeting.
Your Board of Directors recommends a vote FOR approval of the Roadway
Express Equity Ownership Plan.
APPROVAL OF THE NONEMPLOYEE DIRECTORS'
EQUITY AND DEFERRED COMPENSATION PLAN
(PROPOSAL NO. 3)
GENERAL
The Board of Directors has adopted, subject to approval of the Company's
shareholders, the Roadway Express Nonemployee Directors' Equity and Deferred
Compensation Plan (the "Deferred Compensation Plan"). The purpose of the
Deferred Compensation Plan is to further align the interests of Directors and
shareholders in enhancing the value of the Company. The Deferred Compensation
Plan is also expected to assist in attracting and retaining qualified
individuals to serve as Directors. The Deferred Compensation Plan gives
nonemployee Directors the opportunity to receive all or a portion of their
compensation payable for services as a Director payable in cash in shares of
Common Stock and to defer receipt, and therefore the recognition as income for
federal income tax purposes, of all or a portion of their compensation payable
for services as a Director. As of the Record Date, six nonemployee Directors
will be eligible to participate in the Deferred Compensation Plan. The maximum
number of shares of Common Stock that may be issued under the Deferred
Compensation Plan is 100,000, which may be shares of original issuance or
treasury shares increased by shares authorized but not granted under other
stock-related plans and reduced by shares authorized under the Deferred
Compensation Plan and designated to be used to grant awards under any other
stock-related plan. A copy of the full text of the Deferred Compensation Plan is
attached hereto as Exhibit B and the summary description below is qualified in
its entirety by reference to such exhibit.
SUMMARY DESCRIPTION
Voluntary Shares. Before the start of any calendar quarter, a Director may
elect to have up to 100% of the portion of his or her fees for the quarter paid
in shares of Common Stock in lieu of cash ("Voluntary Shares"). After the end of
each calendar quarter beginning April 1, 1998, the Company will issue to each
Director a number of Voluntary Shares equal to the portion of such Director's
fees that such Director has elected to receive as shares in
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lieu of cash for such calendar quarter, divided by the fair market value of the
Common Stock on the last day of such calendar quarter, less the number of shares
in each case that the Director has elected to defer.
Deferral of Receipt of Fees and Shares. A nonemployee Director may elect
to defer receipt of all or a portion of his or her fees and shares into deferred
shares. Dividend equivalents equal to any cash dividends paid by the Company
will be credited on deferred shares.
When a Director terminates services as a Director, he or she (or in the
event of his or her death, his or her beneficiary) will be entitled to receive
his or her deferred shares, together with dividends credited to date. The
Deferred Compensation Plan also provides that a nonemployee Director may
irrevocably elect to receive a pretermination distribution of all or part of his
or her deferred fees and shares beginning not earlier than the third plan year
following the plan year such fees and shares would have otherwise been payable.
A Director may elect at any time to receive all or part of his or her deferred
fees or deferred shares within 60 days if the amount subject to the distribution
is reduced by 10% and that percentage is forfeited.
Distribution of a Director's deferred shares will be made (a) by payment in
shares or in cash in a single distribution, (b) by payment in shares or in cash
in no greater than 10 annual installments or (c) a combination of both as
designated by the Director.
Administration, Amendment and Termination. The Deferred Compensation Plan
is administered by the Compensation Committee. The Board of Directors may amend
or terminate the Deferred Compensation Plan from time to time. However, no such
action may affect a nonemployee Director's rights in awards without the
Director's consent. Without approval of shareholders, no such action shall
increase the number of shares available under the Deferred Compensation Plan or
otherwise cause Rule 16b-3 under the Exchange Act to become inapplicable to the
Deferred Compensation Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax treatment of the
income deferral actions under the Deferred Compensation Plan based upon the
current provisions of the Internal Revenue Code and regulations promulgated
thereunder.
Voluntary Shares. Voluntary Shares whose receipt is not deferred at the
election of a Director will constitute taxable income to the individual
Director, and a deductible expense to the Company, in an amount equal to the
fair market value of the shares, in the year in which the shares were issued.
Deferred Income. Fees and shares that a Director elects to defer under the
Deferred Compensation Plan will become subject to federal income taxation to the
Director only as and when the deferred shares are actually paid over to the
Director. The Company will become entitled to a compensation expense deduction
at the same time. The same treatment applies to dividends credited to the
Director's account during the period of deferral.
PLAN BENEFITS
It is not possible to determine the amount of fees the eligible Directors
will elect to receive as Voluntary Shares in lieu of cash or the amount of fees
the eligible Directors will elect to defer into deferred shares.
VALUATION
For purposes of establishing the number of voluntary shares and for all
other purposes under the Deferred Compensation Plan, the fair market value of a
share of Common Stock will be the closing price of the Common Stock on the last
day of such calendar quarter as reported on the Nasdaq National Market. The fair
market value of Common Stock on December 31, 1997 was $22 1/8 per share.
REQUIRED VOTE
Approval of the Deferred Compensation Plan requires the affirmative vote of
the holders of a majority of the shares of Common Stock present, or represented,
and entitled to vote on the matter at the Annual Meeting.
Your Board of Directors recommends a vote FOR approval of the Roadway
Express Nonemployee Directors' Equity and Deferred Compensation Plan.
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APPROVAL OF THE NONEMPLOYEE DIRECTORS'
STOCK OPTION PLAN
(PROPOSAL NO. 4)
GENERAL
The Board of Directors has adopted, subject to approval of the Company's
shareholders, the Roadway Express Nonemployee Directors' Stock Option Plan
("Option Plan"). The purpose of the Option Plan is to further align the
interests of Directors and shareholders in enhancing the value of the Company.
The Option Plan is also expected to assist in attracting and retaining qualified
individuals to serve as Directors. The Option Plan gives nonemployee Directors
the opportunity to receive all or a portion of their compensation payable for
services as a Director in stock options. The maximum number of shares of Common
Stock that may be issued and as to which grants of stock options may be made
under the Option Plan is 100,000, which may be shares of original issuance or
treasury shares increased by shares authorized but not granted under other
stock-related plans and reduced by shares authorized under the Option Plan and
designated to be used to grant awards under any other stock-related plan. A copy
of the Option Plan is attached hereto as Exhibit C and the summary description
below is qualified in its entirety by reference to such exhibit.
SUMMARY DESCRIPTION
Eligibility. All individuals who are nonemployee Directors on the first
day of the calendar year are eligible to participate in the Option Plan. Under
the Option Plan, the nonemployee Director may designate the amount of his or her
annual compensation payable without regard to the number of Board of Directors
or committee meetings attended or committee positions held (the "Retainer")
which he or she can invest in stock options (an "Option") under the Option Plan.
A Director shall be permitted to invest in an Option under the Option Plan only
if the total amount invested by that Director is equal to at least 25% of the
Retainer. As of the Record Date, six nonemployee Directors will be eligible to
participate in the Option Plan.
Administration. The Option Plan will be administered by the Compensation
Committee. The Compensation Committee shall have no power to add to, subtract
from or modify any of the terms of the Option Plan, or to change or add to any
benefits provided under the Option Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Option Plan. No member of
the Compensation Committee shall act in respect of his or her own Retainer. All
decisions and determinations by the Compensation Committee shall be final and
binding on all parties.
Stock Options. To the extent a Director elects to invest all or a portion
of his or her Retainer for a plan year, an Option shall be granted on the first
day of such plan year for that number of shares of Common Stock equal to 100%
(or for plan years beginning on or after January 1, 1999, an amount not in
excess of 120%, as determined by the Board of Directors at its last meeting
before the beginning of each plan year) of the amount of the Retainer invested
divided by the value of an Option for one share of Common Stock on the valuation
date. For this purpose, value shall be determined by the Black-Scholes option
pricing model, as applied by the Compensation Committee. To the extent that the
application of the foregoing formula would result in an Option covering a
fractional share of Common Stock, the number of shares of Common Stock covered
by an Option shall be rounded up.
Subject to the expiration or earlier termination of an Option, 100% of the
Option shall become exercisable on the first anniversary of the date of grant.
An Option shall expire ten years from the date an Option is granted and shall be
subject to earlier termination as hereinafter provided. Once an Option becomes
exercisable, it may thereafter be exercised, wholly or in part, at any time
prior to its expiration or termination. In the event of the Director's
termination from service on the Board of Directors, an outstanding Option may be
exercised only to the extent it was exercisable on the date of such termination
and shall expire two years after such termination, or on its stated expiration
date, whichever occurs first. Notwithstanding the above, in the event of a
termination for cause as determined by the Compensation Committee, all
unexercised Options shall be forfeited. The exercise price of an Option granted
to a Director shall be equal to the fair market value of the Common Stock on the
date of grant.
Unless otherwise determined by the Compensation Committee, an Option is
neither transferable nor assignable by the Director other than by will or by the
laws of descent and distribution and may be exercised, during the lifetime of
the Director, only by the Director, or in the event of his or her legal
incapacity, by his or her guardian or legal representative acting on behalf of
the Director. The Compensation Committee may authorize the transfer an
unexercised Option to the spouse or descendants of a Director, or to a trust or
other vehicle.
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Acceleration of Options and Lapse of Restrictions in Certain Events. Upon
the occurrence of any of the following events, an Option shall become
immediately and fully exercisable: the death of the Director, the disability of
the Director, or a "change in control" of the Company. An Option shall expire
two years after such event, or on its stated expiration date, whichever occurs
first.
Miscellaneous. The Board of Directors may alter or amend the Option Plan
from time to time or may terminate it in its entirety; provided, however, that
no such action, except for an acceleration of benefits, shall, without the
consent of a Director, impair the rights in any shares of Common Stock issued or
to be issued to such Director, as a result of a grant of Options under the
Option Plan; and provided further, that any amendment that must be approved by
the shareholders of the Company in order to comply with applicable law or the
rules of the principal national securities exchange or quotation system upon
which the shares of Common Stock are traded or quoted shall not be effective
unless and until such approval has been obtained in compliance with such
applicable law or rules.
FEDERAL INCOME TAX CONSEQUENCES
Because the options granted pursuant to the Option Plan are not subject to
the special treatment afforded by Section 422 of the Internal Revenue Code, they
are treated as nonqualified stock options for purposes of federal taxation, and
will be taxed in a manner similar to that described above under heading
"Approval of the Equity Ownership Plan -- Federal Income Tax Consequences," for
nonqualified stock option rights granted under the Equity Plan.
PLAN BENEFITS
It is not possible to determine the amount of compensation eligible
Directors will designate to be invested in Options.
VALUATION
For purposes of establishing the option price and for all other valuation
purposes under the Option Plan, the fair market value of a share of Common Stock
on any relevant date will be the closing price of the Common Stock on that date,
as such price is reported on the Nasdaq National Market. The fair market value
of Common Stock on the Record Date was $25 3/8 per share.
REQUIRED VOTE
Approval of the Option Plan requires the affirmative vote of the holders of
a majority of the shares of Common Stock present, or represented, and entitled
to vote on the matter at the Annual Meeting.
Your Board of Directors recommends a vote FOR approval of the Roadway
Express Nonemployee Directors' Stock Option Plan.
APPROVAL OF THE AMENDMENT
TO THE 1996 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL NO. 5)
GENERAL
The 1996 Employee Stock Purchase Plan (the "Purchase Plan") was approved by
Roadway Services, Inc. in its capacity as sole shareholder of the Company on
December 22, 1995. During 1997, 176,782 shares were purchased by employees of
the Company as a group under the Purchase Plan (combined 1996 and 1997 activity
was 304,904 shares). To enable the Company's employees to continue to benefit
under the Purchase Plan and to coordinate the number of authorized shares
available under the Purchase Plan with the Company's other existing and the
newly adopted stock-related plans, on February 2, 1998, the Board of Directors
approved an amendment to the Purchase Plan to confirm the original intent of the
sole shareholder and the Company at the time of adoption of the Purchase Plan to
authorize a total of 800,000 shares under the Purchase Plan and to permit such
shares to be increased by shares authorized but not granted under the Company's
other stock-related plans and reduced by shares authorized under the Purchase
Plan and designated to be used to grant awards under any of the Company's other
stock-related plans. At the Annual Meeting, the shareholders are being requested
to approve this amendment.
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The following description of the Purchase Plan is necessarily brief and
general. A copy of the Purchase Plan, as amended, is attached hereto as Exhibit
D and the summary description below is qualified in its entirety by reference to
such exhibit.
DESCRIPTION OF THE PURCHASE PLAN
The Purchase Plan provides eligible employees with the opportunity to
purchase shares of Common Stock pursuant to a payroll deduction program. The
Purchase Plan provides for offering periods of not less than one month and not
more than one year (the "Offering Periods"), as determined by the Compensation
Committee during which contributions may be made to purchase shares of Common
Stock. At the end of each Offering Period, shares are purchased automatically at
85% of the market price at the beginning of the Offering Period or 85% of the
market price on the last day of the Offering Period, whichever price is lower.
As of the Record Date, there were approximately 28,000 employees eligible to
participate in the Purchase Plan.
An employee may have up to 10% of his or her basic compensation (excluding
bonuses or awards under the Company's management incentive program, but
including any quotas set in connection with any sales incentive compensation
plan) withheld and applied to the purchase of shares under the Purchase Plan.
However, during any calendar year no employee is entitled to purchase shares of
Common Stock under the Purchase Plan having a value of more than $25,000.
800,000 shares of Common Stock are available for issuance under the
Purchase Plan. In the event of a stock split, stock dividend or other
subdivision, combination or classification of the Common Stock, appropriate
adjustments will be made with respect to the maximum number of shares subject
to, and the purchase price of shares under, the Purchase Plan.
All employees of the Company or of any subsidiary of the Company who are
not executive officers (as defined in the Purchase Plan) may participate in the
Purchase Plan, except employees who are customarily employed for less than 20
hours per week or employees who have not been employed by the Company or by a
subsidiary of the Company for six months or more. Further, any employee who
owns, or holds options to acquire, or who, as a result of participation in the
Purchase Plan, would own or hold options to purchase five percent (5%) or more
of the Company's securities is not eligible to participate in the Purchase Plan.
Under the Purchase Plan an employee may enroll in the Purchase Plan at the
beginning of any Offering Period.
A participant may withdraw from the Purchase Plan at any time. Termination
of a participant's employment for any reason, including death, or the employee's
failure to remain an eligible employee, also terminates participation in the
Purchase Plan. In the event of termination, all payroll deductions previously
credited to the participant's account are returned, without interest.
The Purchase Plan may be terminated or amended from time to time by the
Board of Directors, provided that a participant's existing rights cannot be
adversely affected thereby, nor may any amendment be made without the approval
of shareholders of the Company if such amendment would increase the aggregate
number of shares of Common Stock to be issued under the Plan, materially modify
the requirements for eligibility to participate in the Purchase Plan, or cause
the Purchase Plan to fail to meet the requirements of an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code.
ADMINISTRATION
The Purchase Plan is administered by the Compensation Committee of the
Board of Directors of the Company or such other committee of not less than two
members of the Board of Directors of the Company appointed by the Board of
Directors of the Company. The Compensation Committee has the power to make,
amend and repeal rules, policies and procedures for the operation and
administration of the Purchase Plan, all of which are final and binding upon
each participant having an interest therein.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan and the right of employees to make purchases thereunder
are intended to qualify under the provisions of Sections 421 and 423 of the
Internal Revenue Code. Under these provisions, no income will be taxable to an
employee at the time shares are purchased under the Purchase Plan. As summarized
below, an employee may be taxed upon disposition or sale of the shares acquired
under the Purchase Plan.
If the shares are sold at least two years after the date of granting of the
option and more than one year after the transfer of the shares to the employee.
In this event, the lesser of (a) the excess of the fair market value of the
shares
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at the time granted over the purchase price of the shares or (b) the excess of
the fair market value of the shares at the time such shares are disposed of over
the purchase price of the shares will be treated as ordinary income. Any further
gain upon such sale will be treated as a capital gain. If the shares are sold
and the sale price is less than the purchase price, there is no ordinary income
and the employee has a capital loss equal to the difference.
If the shares are sold prior to the expiration of two years after the
beginning of the applicable Offering Period and less than one year after the
transfer of the shares to the employee: In this event (a "Disqualifying
Disposition"), the excess of the fair market value of the shares at the date the
shares are exercised over the purchase price will be treated as ordinary income
to the employee. This excess will constitute ordinary income in the year of sale
or other disposition. Any further gain upon such sale will be treated as a
capital gain. If the shares are sold for less than their fair market value on
the date of purchase the same amount of ordinary income is attributed to the
employee and a capital loss will be recognized equal to the difference between
the sale price and the fair market value of the shares on such purchase date. To
the extent the employee recognizes ordinary income by reason of a Disqualifying
Disposition, the Company will be entitled to a corresponding tax deduction for
compensation in the tax year in which the disposition occurs, provided the
Company has satisfied its withholding obligations under the Internal Revenue
Code.
In the event an employee dies owning stock acquired under the Purchase
Plan, compensation must be reported in his or her final income return. The
amount of compensation to be reported will be the lesser of (a) the excess of
the fair market value of the shares at the time these shares were granted over
the purchase price of the shares or (b) the excess of the fair market value of
the shares at the time of the employee's death over the purchase price of the
shares.
The foregoing discussion is merely a summary of the more significant
effects of the federal income tax on an employee and the Company with respect to
shares purchased under the Purchase Plan and does not purport to be a complete
analysis of the tax laws dealing with this subject. Reference should be made to
the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder. In addition, this summary does not discuss the
provisions of the income tax laws of any state or foreign country in which an
employee may reside. Each employee should consult his or her own tax advisor
concerning the federal (and any state and local) income tax consequences of
participation in the Purchase Plan.
VALUATION
For purposes of establishing the market price at the beginning or end of
Offering Periods and for all other purposes under the Purchase Plan, the market
value of a share of Common Stock will be the closing price of the Common Stock
on the Nasdaq National Market on such date. The market value of Common Stock on
the Record Date was $25 3/8 per share.
REQUIRED VOTE
Approval of the amendment to the Purchase Plan requires the affirmative
vote of the holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote on the matter at the Annual Meeting.
Your Board of Directors recommends a vote FOR approval of the amendment to
the 1996 Employee Stock Purchase Plan.
DESIGNATION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 6)
A proposal will be presented at the meeting to ratify the designation of
Ernst & Young LLP as the independent auditors of the Company for 1998. Ernst &
Young LLP has been the independent auditors of the Company since 1951, including
the period from 1982 through 1995 when the Company was a wholly owned subsidiary
of Roadway Services, Inc. It is expected that representatives of Ernst & Young
LLP will attend the Annual Meeting, with the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
Your Board of Directors recommends a vote FOR this proposal.
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SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the 1999 Annual Meeting must be
received in writing by the Company at its principal offices by October 23, 1998,
in order to be included in the Company's Proxy Statement and form of proxy
relating to that meeting. Proposals must comply with federal securities
regulations and Delaware law.
COST OF SOLICITATION
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by regular employees
of the Company by telephone. The Company does not expect to pay any compensation
for the solicitation of proxies, but it may reimburse brokers and other persons
holding stock in their names, or in the names of nominees, for their expenses in
sending proxy material to principals and obtaining their proxies.
JOHN M. GLENN
Secretary
February 20, 1998
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EXHIBIT A
ROADWAY EXPRESS
EQUITY OWNERSHIP PLAN
Roadway Express, Inc. hereby establishes this Plan to be called the Equity
Ownership Plan to encourage certain employees of the Company to acquire common
stock of the Company, to make monetary payments to certain employees based upon
the value of the common stock, or based upon achieving certain goals on a basis
mutually advantageous to such employees and the Company and thus provide an
incentive for continuation of the efforts of the employees for the success of
the Company, for continuity of employment and to further the interests of
shareholders.
ARTICLE I
DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be
deemed to include the feminine, the singular to include the plural, unless the
context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock, Deferred Stock, Performance Unit or Phantom Stock granted under the
Plan.
(b) "Award Agreement" means an agreement between the Company and a
Participant or other documentation evidencing an Award.
(c) "Beneficiary" means the person or persons designated by a
Participant to exercise an Award in the event of the Participant's death
while employed by the Company, or in the absence of such designation, the
executor or administrator of the Participant's estate.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means, in connection with an involuntary termination by
the Company of a Participant's employment, conduct in violation of the
Company's Code of Conduct or other act determined to be detrimental to the
Company's best interests.
(f) "Change in Control" of the Company means any of the following:
(1) a filing pursuant to any federal or state law in connection
with any tender offer for shares of the Company (other than a tender
offer by the Company);
(2) the merger, consolidation or reorganization of the Company into
or with another corporation or other legal person, if as a result of
such merger, consolidation or reorganization less than 50% of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock (as that term is hereafter
defined) of the Company immediately prior to such transaction by reason
of their ownership of Voting Stock of the Company;
(3) the sale or transfer by the Company of all or substantially all
of its assets to another company or other legal person, if as a result
of such sale or transfer less than 50% of the combined voting power of
the then-outstanding securities of such company immediately after such
sale or transfer is held in the aggregate by the holders of Voting Stock
of the Company immediately prior to such sale or transfer by reason of
their ownership of Voting Stock of the Company;
(4) the adoption of any resolution of reorganization or dissolution
of the Company by its shareholders;
(5) the filing of a report on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 50% or more of the combined voting power
of the then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock");
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(6) the filing of a report or proxy statement by the Company with
the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction;
(7) if during any period of two consecutive years, individuals who
at the beginning of such period constituted the directors of the Company
cease for any reason to constitute a majority thereof (unless the
election, or the nomination for election by the Company's shareholders,
of each director of the Company first elected during such period was
approved by a vote of at least two-thirds of the directors then still in
office who were directors of the Company at the beginning of any such
period; or
(8) the occurrence of any other event or series of events, which
event or series of events, in the opinion of the Board, will, or is
likely to, if carried out, result in a change in control of the Company;
provided, however, a "Change in Control" will not be deemed to have
occurred, either (i) solely because (A) the Company, (B) a subsidiary of
the Company, or (C) any Company-sponsored employee stock ownership plan
or any other employee benefit plan of the Company, either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the
Exchange Act, disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 50% or otherwise, or because the Company
reports that a change in control of the Company has or may have occurred
or will or may occur in the future by reason of such beneficial
ownership, or (ii) solely because of a change in control of any
subsidiary by which a Participant is employed. Notwithstanding the
foregoing provisions of Paragraphs (1)-(5) of this Subsection, if, prior
to any event described in Paragraphs (1)-(5) of this Subsection
instituted by any person not an officer or director of the Company, or
prior to any disclosed proposal instituted by any person not an officer
or director of the Company which could lead to any such event,
management proposes any restructuring of the Company which ultimately
leads to an event described in Paragraphs (1)-(5) of this Subsection
pursuant to such management proposal, then a "Change in Control" will
not be deemed to have occurred for purposes of the Plan. If any "Change
in Control" is abandoned, the Board, may, by notice to the Participants,
nullify the effect thereof.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the Compensation Committee of the Board.
(i) "Company" means Roadway Express, Inc., a Delaware corporation.
(j) "Deferral Period" means the period of time during which shares of
Deferred Stock are subject to deferral limitations under Section 3.5.
(k) "Deferred Stock"means an award pursuant to Section 3.5 of the
right to receives shares of Stock at the end of a specified Deferral
Period.
(l) "Disability" means a condition which entitles a Participant to
benefits under the long-term disability plan maintained by the Company and
applicable to him.
(m) "Disposition" means any conveyance, sale, transfer, assignment,
pledge or hypothecation, whether outright or as security, inter vivos or
testamentary, with or without consideration, voluntary or involuntary.
(n) "Dividend Equivalent Rights" means certain rights to receive
payments as described in Section 3.10.
(o) "Fair Market Value" means, with respect to a share of Stock, the
last transaction price per share as quoted by the National Market System of
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), for a day specified herein for which such fair market value is
to be calculated or if there was no transaction price of such shares so
quoted for such day, on the most recent preceding day on which there was
such a so quoted transaction price.
(p) "Incentive Stock Option" means an incentive stock option, as
defined in Code Section 422, described in Section 3.2.
(q) "Less-Than-80% Subsidiary" means a Subsidiary with respect to
which the Company directly or indirectly owns or controls less than 80% of
the total combined voting or other decision-making power.
(r) "Non-Qualified Stock Option" means a stock option, other than an
Incentive Stock Option, described in Section 3.2.
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(s) "Option" means a Non-Qualified Stock Option or an Incentive Stock
Option.
(t) "Over 10% Owner" means an individual who at the time an Incentive
Stock Option is granted owns Stock possessing more than 10% of the total
combined voting power of the Company or one of its Parents or Subsidiaries,
determined by applying the attribution rules of Code Section 424(d).
(u) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, with respect to
Incentive Stock Options, at the time of granting of such Option, each of
the corporations other than the Company owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
(v) "Participant" means an individual who is selected by the Committee
to receive an Award hereunder.
(w) "Performance Goals" means a performance objective or objectives
established pursuant to the Plan for Participants who have received grants
of Performance Units or, when so determined by the Committee, Options,
Stock Appreciation Rights, Restricted Stock, Deferred Stock, Phantom Stock
and dividend credits. Performance Goals may be described in terms of
Company-wide objectives or objectives that are related to the performance
of the individual Participant or of the division, department or function
within the Company in which the Participant is employed. The Performance
Goals applicable to any Award to a Participant who is, or is determined by
the Committee to be likely to become, a "covered employee" within the
meaning of Code Section 162(m) shall be limited to specified levels of or
growth in:
(1) cash flow;
(2) costs;
(3) earnings per share;
(4) market share;
(5) net income;
(6) product quality;
(7) productivity improvement;
(8) return on assets;
(9) return on equity;
(10) return on invested capital;
(11) sales growth;
(12) shareholder return;
(13) stock price;
(14) value added;
and any combination thereof.
Except in the case of such a covered employee, if the Committee determines
that a change in the business, operations, corporate structure or capital
structure of the Company, or the manner in which it conducts its business,
or other events or circumstances render the Performance Goals unsuitable,
the Committee may modify such Performance Goals or the related minimum
acceptable level of achievement, in whole or in part, as the Committee
deems appropriate and equitable.
(x) "Performance Units" refers to a grant of performance units
described in Section 3.6.
(y) "Phantom Stock" refers to the rights described in Section 3.7.
(z) "Plan" means the Roadway Express Equity Ownership Plan.
(aa) "Reload Options" means additional Options granted automatically
to a Participant upon the exercise of Options pursuant to Section 3.2(f).
(bb) "Restricted Stock" means Stock awarded pursuant to Section 3.4 as
to which neither the substantial risk of forfeiture nor the restrictions on
the transfer referred to in Section 3.4 has expired.
(cc) "Retirement" means a Participant's voluntary termination of
employment with the Company after attaining age 55.
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(dd) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect), as in effect from
time to time.
(ee) "Stock" means the Company's common stock and any security into
which Stock may be converted by reason of any transaction or event of the
type referred to in Section 5.2.
(ff) "Stock Appreciation Right" means a stock appreciation right
described in Section 3.3.
(gg) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, with respect
to Incentive Stock Options, at the time of the granting of the Option, each
of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
(hh) "Termination of Employment" means the termination of the
employee-employer relationship between a Participant and the Company and
its affiliates regardless of the fact that severance or similar payments
are made to the Participant, for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death, Disability or
Retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a leave of
absence constitutes a Termination of Employment, or whether a Termination
of Employment is for Cause. In the event that a Participant who has been
granted a Non-Qualified Stock Option hereunder ceases to be an employee but
remains a member of the Board, no Termination of Employment shall be deemed
to have occurred until the Participant ceases to be a member of the Board.
(ii) "Vested" means that an Award is nonforfeitable and, where
appropriate, exercisable, with regard to a designated number of shares of
Stock.
ARTICLE II
GENERAL TERMS
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
officers and key employees of the Company and its affiliates to stimulate their
efforts toward the continued success of the Company and to operate and manage
the business in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by officers and key
employees by providing them with a means to acquire a proprietary interest in
the Company by acquiring shares of Stock or to receive compensation which is
based upon appreciation in the value of Stock; and (c) provide a means of
attracting, retaining and rewarding key personnel.
2.2 Stock Subject to the Plan.
(a) Subject to adjustment in accordance with Section 5.2, 1,300,000 shares
of Stock (the "Maximum Plan Shares") are hereby reserved and subject to issuance
under the Plan, which may be Stock of original issuance or Stock held in
treasury or a combination thereof. At no time shall the Company have outstanding
Awards and shares of Stock issued in respect to Awards in excess of the Maximum
Plan Shares; provided, however, that the Maximum Plan Shares (1) may be
supplemented by shares of Stock authorized but not granted under the following
Company plans: Management Incentive Stock Plan, 1996 Employee Stock Purchase
Plan, Nonemployee Directors' Stock Option Plan and Nonemployee Directors' Equity
and Deferred Compensation Plan ("stock related plans") and (2) shall be reduced
by any Maximum Plan Shares used to grant awards under any other stock related
plans in excess of the shares authorized under such other plans. To the extent
permitted by law, the shares of Stock attributable to the nonvested, unpaid,
unexercised, unconverted or otherwise unsettled portion of any Award that is
forfeited, canceled or expires or terminates for any reason without becoming
Vested, paid, exercised, converted or otherwise settled in full shall again be
available for purposes of the Plan.
(b) Upon the full or partial payment of any Exercise Price (as defined in
Section 3.2(a)) by the transfer to the Company of shares of Stock or upon
satisfaction of tax withholding provisions in connection with any such exercise
or any other payment made or benefit realized under the Plan by the transfer or
relinquishment of shares of Stock, there shall be deemed to have been issued or
transferred under the Plan only the net number of shares of Stock actually
issued or transferred by the Company.
(c) Upon payment in cash of the benefit provided by any Award, any shares
of Stock that were covered by such Award shall again be available for issuance
or transfer hereunder.
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(d) Subject to adjustment as provided in Section 5.2, the maximum number of
shares of Stock covered by awards under the Plan granted to any Participant
during any period of three consecutive calendar years shall not exceed 500,000
shares of Stock.
(e) In no event shall any Participant in any period of one calendar year be
granted Performance Units having an aggregate maximum value as of the date of
grant thereof in excess of $1,000,000.
(f) The aggregate number of shares of Stock actually issued by the Company
upon the exercise of Incentive Stock Options shall not exceed the total number
of shares of Stock first specified in Section 2.1(a), subject to adjustment as
provided in Section 5.2.
(g) In the case of Incentive Stock Options, the aggregate Fair Market Value
(determined as at the date an Incentive Stock Option is granted) of Stock with
respect to which Incentive Stock Options become exercisable for the first time
by an individual during any calendar year under all plans of the Company and its
Parents and Subsidiaries shall not exceed $100,000; provided further, that if
the limitation is exceeded, the Incentive Stock Option(s) which cause the
limitation to be exceeded shall be treated as Non-Qualified Stock Option(s).
(h) In no event shall Awards other than Options and Stock Appreciation
Rights exceed 50% of the Maximum Plan Shares, adjusted in accordance with the
proviso in the second sentence of Subsection (a) of this Section.
2.3 Administration of the Plan.
(a) The Plan shall be administered by the Committee. The Committee shall be
composed of not less than two members of the Board, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of Code Section 162(m). A majority of the Committee
shall constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts unanimously
approved by the members of the Committee in writing, shall be the acts of the
Committee.
(b) Subject to the provisions of the Plan, the Committee shall have full
and conclusive authority to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the respective Award Agreements and to make all other
determinations necessary or advisable for the proper administration of the Plan.
The Committee's determination under the Plan need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive, Awards
under the Plan (whether or not such persons are similarly situated). The
Committee's decisions shall be final and binding on all Participants.
2.4 Eligibility and Limits. Participants in the Plan shall be selected by
the Committee from among those employees of the Company who, in the opinion of
the Committee, are in a position to contribute materially to the Company's
continued growth and development and to its long-term financial success.
ARTICLE III
TERMS OF AWARDS
3.1 Terms and Conditions of All Awards.
(a) Award. The number of shares of Stock as to which an Award shall be
granted shall be determined by the Committee in its sole discretion, subject to
the provisions of Section 2.2 as to the total number of shares available for
grants under the Plan.
(b) Award Agreement. Each Award shall be evidenced by an Award Agreement
in such form as the Committee may determine is appropriate, subject to the
provisions of the Plan.
(c) Date of Grant. The date an Award is granted shall be the date on which
the Committee has approved the terms and conditions of the Award Agreement and
has determined the recipient of the Award and the number of shares covered by
the Award and has taken all such other action necessary to complete the grant of
the Award.
(d) Vesting. The Committee may provide for a vesting schedule in any Award
Agreement. Any Award may provide for the earlier exercisability of such rights
in the event of Retirement, death or Disability of the Participant. Unless
otherwise determined by the Committee at or after grant, no Option shall be
exercisable during the 6 months following the date of the granting of the
Option.
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(e) Change in Control. The Committee, in its discretion, may provide at
the time of a grant of any Award that the terms of the award, including, but not
limited to, the method of determining Fair Market Value, or the date on which an
Award vests or becomes exercisable, may be modified in the event of a Change in
Control.
(f) Transferability. Awards shall not be transferable or assignable except
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant, or in the event of
the Disability of the Participant, by the legal representative of the
Participant. Notwithstanding the preceding sentence, the Committee may, in its
sole discretion, authorize all or a portion of the Stock Options to be granted
to a Participant which are not intended to be Incentive Stock Options to be on
terms which permit transfer by such Participant to (1) the spouse, children or
grandchildren of the Participant ("Immediate Family Members"), (2) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (3) a
partnership in which such Immediate Family Members are the only partners, or (4)
other persons or entities, provided that (i) the agreement pursuant to which
such Options are transferred must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with the preceding
sentence, and (ii) subsequent transfers of transferred Options shall be
prohibited except those in accordance with the preceding sentence. Following
transfer, any such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer. The events of
termination of employment of Section 3.2 shall continue to be applied with
respect to the Participant, following which the Options shall be exercisable by
the transferee only to the extent, and for the period specified in the Award
Agreement pursuant to which such Options are granted.
(g) Performance Goals. Any Award may specify Performance Goals that must
be achieved as a condition of the exercise or release of restrictions relating
to such Award.
3.2 Terms and Conditions of Options. At the time any Option is granted,
the Committee shall determine whether the Option is to be an Incentive Stock
Option or a Non-Qualified Stock Option, and the Option shall be clearly
identified as to its status as an Incentive Stock Option or a Non-Qualified
Stock Option. At the time any Incentive Stock Option is exercised, the Company
shall be entitled to place a legend on the certificates representing the shares
of Stock purchased pursuant to the Option to clearly identify them as shares of
Stock purchased upon exercise of an Incentive Stock Option. An Incentive Stock
Option may only be granted within ten years from the earlier of the date the
Plan is adopted or approved by the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance with Section 5.2 and
the other provisions of this Section, the exercise price (the "Exercise Price")
per share of the Stock purchasable under any Option shall be as set forth in the
applicable Award Agreement. With respect to each grant of an Incentive Stock
Option to a Participant who is not an Over 10% Owner, the Exercise Price per
share shall not be less than the Fair Market Value on the date the Option is
granted; provided, however, that in the case of Non-Qualified Options, if
granted in lieu of salary or cash bonus, the Exercise Price shall not be less
than 85% of the Fair Market Value per share of Stock on the date the Option is
granted. With respect to each grant for an Incentive Stock Option to a
Participant who is an Over 10% Owner, the Exercise Price shall not be less than
110% of the Fair Market Value on the date the Option is granted. Notwithstanding
the foregoing, with respect to a Non-Qualified Stock Option, the Committee in
its discretion, may determine a price per share of Stock of less than the Fair
Market Value of the share of Stock at the time of grant, if such option is
granted as substitute for a stock option granted by an entity which has been
merged with or acquired by the Company and such substitute grant is made in
connection with such merger or acquisition.
(b) Option Term. Any Option granted shall not be exercisable after the
expiration of ten years after the date the Option is granted. Any Incentive
Stock Option granted to an Over 10% Owner shall not be exercisable after the
expiration of five years after the date the Option is granted. In either case,
the Committee may specify a shorter term and state such term in the Award
Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to
exercise of an Option shall be made in any form or manner authorized by the
Committee in the Award Agreement or by amendment thereto, including, but not
limited to, cash in the form of currency or certified or cashier's check or
other acceptable cash equivalents, by delivery to the Company of a number of
shares of Stock (including by attestation) which have been owned by the holder
for at least six months prior to the date of exercise having an aggregate Fair
Market Value on the date of exercise equal to the Exercise Price or by tendering
a combination of cash and Stock. The holder of an Option, as such, shall have
none of the rights of a stockholder.
(d) Payment with Restricted Stock. Any grant may provide that payment of
the Exercise Price may also be made in whole or in part in the form of shares of
Restricted Stock or other Stock that are subject to risk of forfeiture
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or restrictions on transfer. Unless otherwise determined by the Committee
whenever any Exercise Price is paid in whole or in part by means of any of the
forms of consideration specified in this Subsection, the shares of Stock
received by the Participant upon the exercise of the Options shall be subject to
the same risks of forfeiture or restrictions on transfer as those that applied
to the consideration surrendered by the Participant; provided, however, that
such risks of forfeiture and restrictions on transfer shall apply only to the
same number of shares of Stock received by the Participant as applied to the
forfeitable or restricted Stock surrendered by the Participant.
(e) Cashless Exercise. Any Award may provide for deferred payment of the
Exercise Price from the proceeds of sale through a bank or broker on the date of
exercise of some or all of the shares of Stock to which the exercise relates.
(f) Reload Options. Any grant may provide for the automatic grant to the
Participant of Reload Options upon the exercise of Options, including Reload
Options, for shares of Stock or any other noncash consideration authorized under
Subsections (d) and (e) of this Section.
(g) Successive Grants. Successive grants may be made to the same
Participant regardless of whether any Options previously granted to such
Participant remain unexercised.
(h) Cash Out. Upon receipt of written notice to exercise, the Committee
may elect to cash out all or part of the portion of the Options to be exercised
by paying the Participant an amount, in cash or Stock, equal to the excess of
the Fair Market Value of the Stock over the Exercise Price (the "Spread Value")
on the effective date of such cash-out. In addition, the Committee may, at or
after the date of grant (with the consent of the Participant if after the date
of grant), require that all or part of the shares of Stock to be issued with
respect to the Spread Value of an exercised Option take the form of Restricted
Stock, which shall be valued on the date of exercise on the basis of the Fair
Market Value of such Restricted Stock determined without regard to the
forfeiture restriction involved.
(i) Conditions to the Exercise. Each Option granted under the Plan shall
be exercisable by whom, at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
Award Agreement; provided, however, that subsequent to the grant of an Option,
the Committee, at any time before complete termination of such Option, may
accelerate the time or times at which such Option may be exercised in whole or
in part, including, without limitation, upon a Change in Control and may permit
the Participant or any other designated person to exercise the Option, or any
portion thereof, for all or part of the remaining Option term notwithstanding
any provision of the Stock Agreement to the contrary.
(j) Termination of Incentive Stock Option. With respect to an Incentive
Stock Option, in the event of Termination of Employment of a Participant, the
Option or portion thereof held by the Participant which is unexercised shall
expire, terminate, and become unexercisable no later than the expiration of
three months after the date of Termination of Employment; provided, however,
that in the case of a Participant whose Termination of Employment is due to
death or Disability, one year shall be substituted for such three month period.
For purposes of this Subsection, Termination of Employment of the Participant
shall not be deemed to have occurred if the Participant is employed by another
corporation (or a parent or subsidiary corporation of such other corporation)
which has assumed the Incentive Stock Option of the Participant in a transaction
to which Code Section 424(a) is applicable.
(k) Special Provisions for Certain Substitute Options. Notwithstanding
anything to the contrary in this Section, any Option issued in substitution for
an option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code Section 424(a) is applicable, may
provide for an exercise price computed in accordance with such Code Section and
the regulations thereunder and may contain such other terms and conditions as
the Committee may prescribe to cause such substitute Option to contain as nearly
as possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued option being
replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Award or not in connection with an
Award. A Stock Appreciation Right shall entitle the Participant to receive the
excess of (1) the Fair Market Value of a specified or determinable number of
shares of the Stock at the time of payment or exercise over (2) a specified
price which, in the case of a Stock Appreciation Right granted in connection
with an Option, shall be not less than the Exercise Price for that number of
shares. A Stock Appreciation Right granted in connection with an Award may only
be exercised to the extent that the related Award has not been exercised, paid
or otherwise settled. The exercise
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of a Stock Appreciation Right granted in connection with an Award shall result
in a pro rata surrender or cancellation of any related Award to the extent the
Stock Appreciation Right has been exercised.
(a) Payment. Upon payment or exercise of a Stock Appreciation Right, the
Company shall pay to the Participant the appreciation in cash or shares of Stock
(valued at the aggregate Fair Market Value on the date of payment or exercise)
or any combination thereof as provided in the Award Agreement or, in the absence
of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right shall be
exercisable or payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
Award Agreement; provided, however, that subsequent to the grant of a Stock
Appreciation Right, the Committee, at any time before complete termination of
such Stock Appreciation Right, may accelerate the time or times at which such
Stock Appreciation Right may be exercised or paid in whole or in part.
(c) Maximum Amount. Any Award may specify that the amount payable upon the
exercise of a Stock Appreciation Right shall not exceed a maximum specified by
the Committee on the date of grant.
3.4 Terms and Conditions of Restricted Stock. Awards of Restricted Stock
and restrictions or conditions applicable to such Award, if any, shall be as the
Committee determines, and the certificate for such shares shall bear evidence of
any restrictions or conditions. Subsequent to the date of the grant of the
Award, the Committee shall have the power to permit, in its discretion, an
acceleration of the expiration of an applicable restriction period with respect
to any part or all of the shares awarded to a Participant. The Committee may
require a cash payment from the Participant in an amount no greater than the
aggregate Fair Market Value of the shares of Stock awarded determined at the
date of grant in exchange for the grant of an Award pursuant to this Section or
may grant an Award pursuant to this Section without the requirement of a cash
payment.
(a) Rights Attributable to Restricted Stock. Each Award shall constitute
an immediate transfer of the ownership of shares of Stock to the Participant in
consideration of the performance of services, entitling such Participant to
dividend, voting and other ownership rights, subject to the substantial risk of
forfeiture and restrictions on transfer hereinafter referred to.
(b) Terms of Award. Each Award shall provide that the shares of Restricted
Stock covered thereby shall be subject to a "substantial risk of forfeiture"
within the meaning of Code Section 83 for a period to be determined by the
Committee on the date of grant; provided, however, that subsequent to the date
of grant, the Committee, at any time before the lapse of the "substantial risk
of forfeiture," may provide for the earlier termination of such period,
including without limitation, in the event of a Change in Control or other
similar transaction or event. If the Committee conditions the nonforfeitability
of shares of Restricted Stock upon service alone, such vesting may not occur
before three years from the date of grant of such shares of Restricted Stock,
and if the Committee conditions the nonforfeitability of shares of Restricted
Stock upon Performance Goals, such nonforfeitability may not occur before one
year from the date of grant of such shares of Restricted Stock.
(c) Transferability. Each Award shall provide that, during the period for
which such substantial risk of forfeiture is to continue, the transferability of
the shares of Restricted Stock shall be prohibited or restricted in the manner
and to the extent prescribed by the Committee on the date of grant. Such
restrictions may include without limitation rights of repurchase or first
refusal in the Company or provisions subjecting the shares of Restricted Stock
to a continuing substantial risk of forfeiture in the hands of any transferee.
(d) Dividends. Any Award may require that any or all dividends or other
distributions paid on the shares of Restricted Stock during the period of such
restrictions be automatically sequestered. Such distribution may be reinvested
on an immediate or deferred basis in additional shares of Stock, which may be
subject to the same restrictions as the underlying award or such other
restrictions as the Committee may determine.
(e) Certificates. Unless otherwise directed by the Committee, all
certificates representing shares of Restricted Stock, together with a stock
power that shall be endorsed in blank by the Participant with respect to such
shares, shall be held in custody by the Company until all restrictions thereon
lapse.
3.5 Terms and Conditions of Deferred Stock. Grants or sales of Deferred
Stock may be made and shall be subject to Section 2.2 upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:
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(a) Each grant or sale shall constitute the agreement by the Company to
issue or transfer shares of Stock to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during
the Deferral Period of such conditions as the Committee may specify.
(b) Each grant or sale may be made without additional consideration from
the Participant or in consideration of a payment by the Participant that is less
than the Market Value per Share on the date of grant.
(c) Each grant or sale shall provide that the shares of Deferred Stock
covered thereby shall be subject to a Deferral Period, which shall be fixed by
the Committee on the date of grant, and any grant or sale may provide for the
earlier termination of such period in the event of Retirement, death or
Disability of the Participant or a Change in Control or other similar
transaction or event. If the Committee conditions the nonforfeitability of
shares of Deferred Stock upon service alone, such nonforfeitability may not
occur before three years from the date of grant of such shares of Deferred
Stock, and if the Committee conditions the Vesting of shares of Deferred Stock
upon Performance Goals, such nonforfeitability may not occur before one year
from the date of grant of such shares of Deferred Stock.
(d) During the Deferral Period, the Participant shall not have any right to
transfer any rights under the subject award, shall not have any rights of
ownership in the shares of Deferred Stock and shall not have any right to vote
such shares.
3.6 Terms and Conditions of Performance Unit Awards. An Award of
Performance Units shall entitle the Participant to receive, at a specified
future date, payment of an amount equal to all or a portion of the value of a
specified number of units (stated in terms of a designated dollar amount per
unit) granted by the Committee. At the time of the grant, the Committee shall
determine the base value of each unit, the number of units subject to an Award
of Performance Units, the Performance Goals applicable to the determination of
the ultimate payment value of the Performance Units and the period over which
Company performance shall be measured which shall not be less than one year. The
Committee may provide for an alternate base value for each unit under certain
specified conditions.
(a) Payment. Payment in respect of Performance Units may be made by the
Company in cash or shares of Stock (valued at Fair Market Value on the date of
payment) or any combination thereof as provided in the Award Agreement or, in
the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Award of Performance Units shall specify
the Performance Goals that are to be achieved and each grant shall specify in
respect of the specified Performance Goals a minimum acceptable level of
achievement below which no payment will be made and shall set forth a formula
for determining the amount of any payment to be made if performance is at or
above the minimum acceptable level but falls short of full achievement of the
specified Performance Goals.
(c) Performance Period. The period over which performance is measured with
respect to an Award of Performance Units may be subject to earlier termination
in the event of Retirement, death or Disability of the Participant or a Change
in Control or other similar transaction or event.
3.7 Terms and Conditions of Phantom Stock. Each grant of Phantom Stock
shall entitle the Participant to receive, at a specified future date, payment of
an amount equal to all or a portion of the Fair Market Value of a specified
number of shares of Stock at the end of a specified period in consideration of
the performance of services.
(a) Payment. Payment in respect of Phantom Stock may be made by the
Company in cash or shares of Stock (valued at Fair Market Value on the date of
payment) or a combination thereof as provided in the Award Agreement or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Phantom Stock granted under the Plan shall be
payable at such time or times, or upon the occurrence of such event or events,
and in such amounts, as the Committee shall specify in the award Agreement;
provided, however, that subsequent to the grant of Phantom Stock, the Committee,
at any time before expiration of the applicable period provided in the Award
Agreement, may accelerate the time or times at which such Phantom Stock may be
paid in whole or in part.
(c) Restrictions on Transfer. Prior to the expiration of the applicable
period provided in the Award Agreement, the Participant shall not have any right
to transfer any rights under the Award, shall not have any rights of ownership
in the shares of Phantom Stock and shall not have any right to vote such shares.
3.8 Certain Terminations of Employment, Hardship and Approved Leaves of
Absence. Notwithstanding any other provision of this Article to the contrary,
in the event of Termination of Employment by reason of death,
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Disability, Retirement, early retirement or leave of absence approved by the
Committee, or in the event of hardship or other special circumstances, of a
Participant who holds an Option or a Stock Appreciation Right that is not
immediately and fully exercisable, any Restricted Stock as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, Deferred Stock as to which the Deferral Period is not complete, any
Phantom Stock as to which the applicable period provided in the Award Agreement
has not expired, any Performance Units that have not been fully earned, or any
shares of Stock that are subject to any transfer restriction pursuant to Section
3.4(c), the Committee may in its sole discretion take any action that it deems
to be equitable under the circumstances or in the best interests of the Company,
including without limitation waiving or modifying any limitation or requirement
with respect to any Award.
3.9 Fractional Shares. The Company shall not be required to issue any
fractional shares of Stock pursuant to the Plan. The Committee may provide for
the elimination of fractions or for the settlement thereof in cash.
3.10 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent Right may be made
by the Company in cash or shares of Stock (valued at Fair Market Value on the
date of payment) or any combination thereof as provided in the Award Agreement
or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right granted under
the Plan shall be payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
Dividend Equivalent Right; provided, however, that subsequent to the grant of a
Dividend Equivalent Right, the Committee, at any time before complete
termination of such Dividend Equivalent Right, may accelerate the time or times
at which such Dividend Equivalent Right may be paid in whole or in part.
3.11 Participation by Employees of a Less-Than-80% Subsidiary. As a
condition to the effectiveness of any grant to be made hereunder to a
Participant who is an employee of a Less-Than-80% Subsidiary, regardless whether
such Participant is also employed by the Company or another Subsidiary, the
Committee may require the Less-Than-80% Subsidiary to agree to transfer to the
Participant (as, if and when provided for under the Plan and any applicable
agreement entered into between the Participant and the Less-Than-80% Subsidiary
pursuant to the Plan) the shares of Stock that would otherwise be delivered by
the Company upon receipt by the Less-Than-80% Subsidiary of any consideration
then otherwise payable by the Participant to the Company. Any such grant may be
evidenced by an agreement between the Participant and the Less-Than-80%
Subsidiary, in lieu of the Company, on terms consistent with the Plan and
approved by the Committee and the Less-Than-80% Subsidiary. All shares of Stock
so delivered by or to a Less-Than-80% Subsidiary will be treated as if they had
been delivered by or to the Company for purposes of Section 2.2 and all
references to the Company in the Plan are deemed to refer to the Less-Than-80%
Subsidiary except with respect to the definitions of the Board and the Committee
and in other cases where the context otherwise requires.
ARTICLE IV
RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock
issued under the Plan shall be issued in the Participant's name, but, if the
Award Agreement so provides, the shares of Stock shall be held by a custodian
designated by the Committee (the "Custodian"). Each Award Agreement providing
for transfer of shares of Stock to the Custodian shall appoint the Custodian as
the attorney-in-fact for the Participant for the term specified in the Award
Agreement, with full power and authority in the Participant's name, place and
stead to transfer, assign and convey to the Company any shares of Stock held by
the Custodian for such Participant, if the Participant forfeits the shares under
the terms of the Award Agreement. During the period that the Custodian holds the
shares subject to this Section, the Participant shall be entitled to all rights,
except as provided in the Award Agreement, applicable to shares of Stock not so
held. Any dividends declared on shares of Stock held by the Custodian shall, as
the Committee may provide in the Award Agreement, be paid directly to the
Participant or, in the alternative, be
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retained by the Custodian until the expiration of the term specified in the
Award Agreement and shall then be delivered, together with any proceeds, with
the shares of Stock to the Participant or the Company, as applicable.
4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set forth
in any Award Agreement, in the event that the Participant violates a non
competition provision of the Award Agreement, all unexpired, unpaid forfeitable
or deferred Awards made pursuant to the Plan shall be forfeited; provided,
however, that the Company shall return to the Participant the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.
ARTICLE V
GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash payments made to a
Participant or other person under the Plan any taxes required to be withheld by
federal, state or local government. Whenever the Company proposes or is required
to issue or transfer shares of Stock under the Plan or upon the vesting of any
Award, the Company shall have the right to require the Participant or such other
person to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares or the vesting of such Award. The
Participant or such other person may pay the withholding tax in cash, or, if the
Award Agreement provides, the Participant or such other person may also elect to
reduce the number of shares of Stock he is to receive by, or with respect to an
Award, tender back to the Company, the smallest number of whole shares of Stock
which, when multiplied by the Fair Market Value of the shares determined as of
the Tax Date (defined below), is sufficient to satisfy federal, state and local,
if any, withholding taxes arising from exercise or payment of an Award (a
"Withholding Election"). The Participant or such other person may make a
Withholding Election only if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the date on which
the amount of tax required to be withheld is determined (the "Tax Date") by
executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable; provided, however,
the Committee may in its sole discretion approve and give no effect to the
Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant of Options,
Dividend Equivalent Rights, Performance Units, Phantom Stock, Stock Appreciation
Rights and Restricted Stock; the number of shares of Stock reserved for issuance
upon the exercise or payment, as applicable, of outstanding Options, Dividend
Equivalent Rights, Performance Units, Phantom Stock, Deferred Stock and Stock
Appreciation Rights and upon vesting or grant, as applicable, of Restricted
Stock Awards; the Exercise Price of each outstanding Option and the specified
number of shares of Stock to which outstanding Dividend Equivalent Rights,
Phantom Stock and Stock Appreciation Rights pertain may be proportionately
adjusted as the Committee in its sole discretion may in good faith determine to
be equitably required in order to prevent dilution or enlargement of the rights
of Participants that would otherwise result from any increase or decrease in the
number of issued shares of Stock resulting from a subdivision or combination of
shares or the payment of a stock dividend in shares of Stock to holders of
outstanding shares of Stock or any other increase or decrease in the number of
shares of Stock outstanding effected without receipt of consideration by the
Company.
(b) In the event of a merger, consolidation or other reorganization of the
Company or tender offer for shares of Stock, the Committee may make such
adjustments with respect to Awards and take such other action as it deems
necessary or appropriate to reflect or in anticipation of such merger,
consolidation, reorganization or tender offer, including, without limitation,
the kind of shares (including shares of another issuer) covered by an Award, the
substitution of new Awards, the termination or adjustment of outstanding Awards,
the acceleration of Awards or the removal of restrictions on outstanding Awards.
(c) The existence of the Plan and the Awards granted pursuant to the Plan
shall not affect in any way the right or power of the Company to make or
authorize any adjustment, reclassification, reorganization or other change in
its capital or business structure, any merger or consolidation of the Company,
any issue of debt or equity securities having preferences or priorities as to
the Stock or the rights thereof, the dissolution or liquidation of the Company,
any sale or transfer of all or any part of its business or assets, or any other
corporate act or proceeding.
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(d) The Committee may on or after the date of grant provide in the Award
Agreement that the Participant may elect to receive an equivalent award in
respect of securities of the surviving entity of any merger, consolidation or
other transaction or event having a similar effect, or the Committee may provide
that the Participant will automatically be entitled to receive such an
equivalent award. In any case, such substitution of securities shall not require
the consent of any person who is granted Awards pursuant to the Plan.
5.3 Foreign Employees. In order to facilitate the making of any grant or
combination of grants under the Plan, the Board may provide for such special
terms for awards to Participants who are foreign nationals or who are employed
by the Company or any subsidiary outside of the United States of America as the
Board may consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. Moreover, the Board may approve such supplements to
or amendments, restatements or alternative versions of the Plan as it may
consider necessary or appropriate for such purposes, without thereby affecting
the terms of the Plan as in effect for any other purpose, and the Secretary or
other appropriate officer of the Company may certify any such document as having
been approved and adopted in the same manner as the Plan. No such special terms,
supplements, amendments or restatements, however, shall include any provisions
that are inconsistent with the terms of the Plan as then in effect unless the
Plan could have been amended to eliminate such inconsistency without further
approval by the shareholders of the Company.
5.4 Compliance with Code. All Incentive Stock Options to be granted
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all Incentive Stock Options granted hereunder shall be construed in
such manner as to effectuate that intent.
5.5 Right to Terminate Employment. Nothing in the Plan or in any Award
shall confer upon any Participant the right to continue as an employee or
officer of the Company or any of its affiliates or affect the right of the
Company or any of its affiliates to terminate the Participant's employment at
any time.
5.6 Restrictions on Delivery and Sale of Shares; Legends. Each Award is
subject to the condition that if at any time the Committee, in its discretion,
shall determine that the listing, registration or qualification of the shares
covered by such Award upon any securities exchange or under any state or federal
law is necessary or desirable as a condition of or in connection with the
granting of such Award or the purchase or delivery of shares thereunder, the
delivery of any or all shares pursuant to such Award may be withheld unless and
until such listing, registration or qualification shall have been effected. If a
registration statement is not in effect under the Securities Act of 1933 or any
applicable state securities laws with respect to the shares of Stock purchasable
or otherwise deliverable under Awards then outstanding, the Committee may
require, as a condition of exercise of any Option or as a condition to any other
delivery of Stock pursuant to an Award, that the Participant or other recipient
of an Award represent, in writing, that the shares received pursuant to the
Award are being acquired for investment and not with a view to distribution and
agree that shares will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws. The Company may
include on certificates representing shares delivered pursuant to an Award such
legends referring to the foregoing representations or restrictions or any other
applicable restrictions on resale as the Company, in its discretion, shall deem
appropriate.
5.7 Right of First Refusal. At the time of grant, the Committee may
provide in connection with any grant made under the Plan that the shares of
Stock received as a result of such grant shall be subject to a right of first
refusal, pursuant to which the Participant shall be required to offer to the
Company any shares of Stock that the Participant wishes to sell, with the price
being the then Fair Market Value of the shares of Stock, subject to such other
terms and conditions as the Committee shall specify at the time of grant.
5.8 Reinvestment of Dividends. The reinvestment of dividends in additional
Restricted Stock (or in other types of Awards) at the time of any dividend
payment shall only be permissible if sufficient shares of Stock are available
under Section 2.2 for such reinvestment (taking into account then outstanding
Option Awards and other Awards granted under the Plan).
5.9 Beneficiary Designation. The Committee shall establish such procedures
as it deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of the Participant's death are to be paid.
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5.10 Proceeds and Expenses. The proceeds received by the Company from the
sale of shares of Stock pursuant to the exercise of Stock Options shall be used
for general corporate purposes. The Company shall bear any expenses associated
with the administration of the Plan.
5.11 Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Plan, but the Plan shall be construed and enforced
as if such illegal or invalid provision had never been included herein.
5.12 Exclusion from Certain Restrictions. Notwithstanding anything in the
Plan to the contrary, not more than 10% of the Maximum Plan Shares, adjusted in
accordance with the proviso in the second sentence of Section 2.2(a), may be
subject to awards pursuant to Article III:
(a) in the case of grants of Restricted Stock, which do not meet the
requirements of the last sentence of Section 3.4(b);
(b) in the case of grants of Restricted Stock, as to which the Committee
may accelerate or waive any restrictions imposed under Section 3.4(c);
(c) in the case of grants of Deferred Stock, which do not meet the
requirements of the last sentence of Section 3.5(c); or
(d) in the case of grants of Performance Units, which do not meet the
requirements of Section 3.6.
5.13 Non-alienation of Benefits. Other than as specifically provided in
Section 3.1(e), no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge; and any attempt to do so shall be void. No such benefit shall, prior to
receipt by the Participant, be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the Participant.
5.14 Amendments and Other Matters.
(a) The Board may at any time and from time to time amend the Plan in whole
or in part; provided, however, that any amendment which must be approved by the
shareholders of the Company in order to comply with applicable law or the rules
of any national securities exchange or national quotation system upon which the
Stock is traded or quoted will not be effective unless and until such approval
has been obtained. Presentation of the Plan or any amendment thereof for
shareholder approval may not be construed to limit the Company's authority to
offer similar or dissimilar benefits under other plans without shareholder
approval.
(b) The Committee shall not, without the further approval of stockholders
of the Company, authorize the amendment of any outstanding Option to reduce the
Exercise Price. Furthermore, no Option shall be canceled and replaced with
grants having a lower Exercise Price without the further approval of
stockholders of the Company.
5.15 Stockholder Approval. The Plan shall be submitted to the stockholders
of the Company for their approval within 12 months before or after the adoption
of the Plan by the Board. If such approval is not obtained, any Award granted
hereunder shall be void.
5.16 Choice of Law. The laws of the State of Delaware shall govern the
Plan, to the extent not preempted by federal law.
5.17 Effective Date of Plan. The Plan shall become effective upon the date
the Plan is approved by the stockholders of the Company.
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EXHIBIT B
ROADWAY EXPRESS NONEMPLOYEE DIRECTORS'
EQUITY AND DEFERRED COMPENSATION PLAN
The Roadway Express Nonemployee Directors' Compensation Plan ("Plan") is
effective as of April 1, 1998, subject to approval of shareholders at the 1998
annual meeting.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan they shall have the
meanings specified below unless the context clearly indicates to the contrary:
(a) "Account": A Deferred Fee Account and/or a Deferred Share Account,
as the context may require.
(b) "Accounting Date": December 31 of each year and the last day of
each calendar quarter.
(c) "Accounting Period": The period beginning on the date immediately
following an Accounting Date and ending the next following Accounting Date.
(d) "Administrator": The Compensation Committee of the Board or any
successor committee designated by the Board.
(e) "Beneficiary": The person or persons (natural or otherwise)
designated pursuant to Section 6.6.
(f) "Board": The Board of Directors of the Company.
(g) "Chairman": The Chairman of the Board.
(h) "Change of Control": The occurrence of any of the following
events:
(i) a filing pursuant to any federal or state law in connection
with any tender offer for shares of the Company (other than a tender
offer by the Company);
(ii) the merger, consolidation or reorganization of the Company
into or with another corporation or other legal person, if as a result
of such merger, consolidation or reorganization less than 50% of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock (as that term is hereafter
defined) of the Company immediately prior to such transaction by reason
of their ownership of Voting Stock of the Company;
(iii) the sale or transfer by the Company of all or substantially
all of its assets to another company or other legal person, if as a
result of such sale or transfer less than 50% of the combined voting
power of the then-outstanding securities of such company immediately
after such sale or transfer is held in the aggregate by the holders of
Voting Stock of the Company immediately prior to such sale or transfer
by reason of their ownership of Voting Stock of the Company;
(iv) the adoption of any resolution of reorganization or
dissolution of the Company by its shareholders;
(v) the filing of a report on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 50% or more of the combined voting power
of the then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock");
(vi) the filing of a report or proxy statement by the Company with
the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction;
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(vii) if during any period of two consecutive years, individuals
who at the beginning of such period constituted the directors of the
Company cease for any reason to constitute a majority thereof (unless
the election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected during such
period was approved by a vote of at least two-thirds of the directors
then still in office who were directors of the Company at the beginning
of any such period; or
(viii) the occurrence of any other event or series of events, which
event or series of events, in the opinion of the Board, will, or is
likely to, if carried out, result in a change in control of the Company;
provided, however, a "Change in Control" will not be deemed to have
occurred, either (i) solely because (A) the Company, (B) a subsidiary of
the Company, or (C) any Company-sponsored employee stock ownership plan
or any other employee benefit plan of the Company, either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14-D1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the
Exchange Act, disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 50% or otherwise, or because the Company
reports that a change in control of the Company has or may have occurred
or will or may occur in the future by reason of such beneficial
ownership, or (ii) solely because of a change in control of any
subsidiary. Notwithstanding the foregoing provisions of Paragraphs
(1)-(5) of this Subsection, if, prior to any event described in
Paragraphs (1)-(5) of this Subsection instituted by any person not an
officer or director of the Company, or prior to any disclosed proposal
instituted by any person not an officer or director of the Company which
could lead to any such event, management proposes any restructuring of
the Company which ultimately leads to an event described in Paragraphs
(1)-(5) of this Subsection pursuant to such management proposal, then a
"Change in Control" will not be deemed to have occurred for purposes of
the Plan. In any "Change in Control" is abandoned, the Board, may, by
notice of the Directors, nullify the effect thereof.
(i) "Code": The Internal Revenue Code of 1986, as amended.
(j) "Company": Roadway Express, Inc. or any successor or successors
thereto.
(k) "Deferral Commitment": An agreement made by a Director in a
Participation Agreement to have all or a specified portion of his or her
Fees, Required Retainer Shares and/or Voluntary Shares deferred under the
Plan for a specified period in the future.
(l) "Deferral Period": The Plan Year for which a Director has elected
to defer all or a portion of his or her Fees, Required Retainer Shares
and/or Voluntary Shares.
(m) "Deferred Fees": The Fees credited to a Director's Deferred Share
Account pursuant to Article IV and payable to a Director pursuant to
Article VI.
(n) "Deferred Shares": The Required Retainer Shares and Voluntary
Shares credited to a Director's Deferred Share Account pursuant to Articles
IV and V and payable to a Director pursuant to Article VI.
(o) "Deferred Share Account": The account maintained on the books of
the Company for each Director pursuant to Article V.
(p) "Director": An individual duly elected or chosen as a Director of
the Company who is not also an employee of the Company or any of its
subsidiaries.
(q) "Fair Market Value": With respect to a Share, the last transaction
price for a Share as quoted by the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for
a day specified herein for which such fair market value is to be
calculated, or if there was no transaction price of Shares so quoted for
such day, on the most recently preceding day on which there was such a so
quoted transaction price.
(r) "Fees": The portion of the Retainer and other Director
compensation payable in cash.
(s) "Participation Agreement": The agreement submitted by a Director
to the Administrator in which a Director may specify an amount of Voluntary
Shares, or may elect to defer receipt of all or any portion of his or her
Fees, Required Retainer Shares and/or Voluntary Shares for a specified
period in the future.
(t) "Plan": The Plan set forth in this instrument as it may from time
to time be amended.
(u) "Plan Year": The 12-month period beginning January 1 and ending
December 31.
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(v) "Retainer": The portion of a Director's annual compensation that
is payable without regard to number of Board or committee meetings attended
or committee positions.
(w) "Required Retainer Shares": An amount, payable in Shares,
constituting a portion of a Director's Retainer.
(x) "Settlement Date": The date on which a Director terminates as a
Director. Settlement Date shall also include with respect to any Deferral
Period the date prior to the date of termination as a Director selected by
a Director in a Participation Agreement for distribution of all or a
portion of the Fees, Required Retainer Shares and Voluntary Shares deferred
during such Deferral Period as provided in Section 6.3.
(y) "Shares": The Company's fully paid, non-assessable common shares,
par value $.01 per share. Shares may be shares of original issuance or
treasury shares or a combination of the foregoing.
(z) "Voluntary Shares": The meaning set forth in Section 3.1(a).
ARTICLE II
PURPOSE
The purpose of this Plan is to provide Directors with opportunities to
invest all or a portion of their cash compensation payable for services as a
Director in Shares, and to defer receipt of any or all of their compensation
payable for services as a Director in Shares or in cash.
ARTICLE III
VOLUNTARY SHARES
3.1 Voluntary Shares.
(a) Voluntary Shares. Prior to the commencement of any calendar
quarter, a Director may elect by the filing of a Participation Agreement
with the Administrator to have up to 100% of his or her Fees for such
quarter paid by the Company in the form of Voluntary Shares and in lieu of
the cash payment. Such election, unless subsequently modified, shall apply
to a Director's Fees for the remainder of the current Plan Year and each
subsequent Plan Year. Any subsequent election shall be made in a modified
Participation Agreement filed with the Administrator.
(b) Issuance of Shares. Promptly following each Accounting Date, the
Company shall issue to each Director who has made an election under Section
3.1(a) a number of Voluntary Shares equal to the portion of such Director's
Fees that such Director has elected to receive as Voluntary Shares for such
Accounting Period divided by the Fair Market Value on such Accounting Date
(less, in each case, the portion of the Required Retainer Shares and
Voluntary Shares the Director elected to defer under Section 4.3). To the
extent that the application of the foregoing formula would result in the
issuance of fractional Shares, no fractional Shares shall be issued, but
instead, the Company shall maintain two separate non-interest-bearing
accounts for each Director, which accounts shall be credited with the
amount of any Required Retainer Shares or Voluntary Shares, as the case may
be, not convertible into whole Shares, which amounts shall be combined with
Required Retainer Shares and Voluntary Shares, respectively, which are paid
for the next following Accounting Period. When whole Shares are issued by
the Company to the Director for such Accounting Period, the amounts in such
accounts shall be reduced by that amount which (when added to the Required
Retainer Shares and Voluntary Shares for such Director for such quarter)
results in the issuance of the maximum number of whole Shares to such
Director. The Company shall pay any and all fees and commissions incurred
in connection with the payment of Required Retainer Shares and Voluntary
Shares to a Director in Shares.
ARTICLE IV
DEFERRAL OF FEES, REQUIRED RETAINER SHARES AND VOLUNTARY SHARES
4.1 Deferral of Fees. A Director may elect to defer all or a specified
percentage of his or her Fees, and may change such percentage by filing a
Participation Agreement with the Administrator, which shall be effective as of
the first day of the Plan Year which commences after the date such Participation
Agreement is filed with the Administrator.
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4.2 Crediting of Deferred Fees. The portion of a Director's Fees that is
deferred pursuant to a Deferral Commitment shall be credited as Deferred Shares
promptly following each Accounting Date to the Director's Deferred Share Account
as of the date the corresponding non- deferred portion of his or her Fees would
have been paid to the Director. The number of Deferred Shares credited shall be
determined by dividing the dollar value of such portion by the Fair Market Value
on such crediting date.
4.3 Deferral of Required Retainer Shares and Voluntary Shares. A Director
may elect to defer all or a specified percentage of his or her Required Retainer
Shares and his or her Voluntary Shares, and may change such percentage by filing
a Participation Agreement with the Administrator, which shall be effective as of
the first day of the Plan Year which commences after the date such Participation
Agreement is filed with the Administrator.
4.4 Crediting of Deferred Shares. The portion of a Directors Required
Retainer Shares and Voluntary Shares that is deferred pursuant to a Deferral
Commitment shall be credited promptly following each Accounting Date to the
Director's Deferred Share Account as of the date the corresponding non-deferred
portion of his or her Required Retainer Shares and Voluntary Shares would have
been issued to the Director.
4.5 Initial Year of Participation. (a) For 1998, in the event that any
Director wishes, and (b) commencing in 1999, in the event that an individual
first becomes a Director during a Plan Year wishes, to make a Deferral
Commitment with respect to such Plan Year, a Participation Agreement must be
filed with the Administrator no later than April 30, 1998, or 30 days following
such individual's becoming a Director, respectively. Any Deferral Commitment
made in such Participation Agreement shall be effective only with regard to
Fees, Required Retainer Shares and Voluntary Shares earned following the date
the Participation Agreement is filed with the Administrator. If a Director does
not submit a Participation Agreement within such period of time, such Director
will not be eligible to participate in the Plan except in accordance with
Sections 4.1 and 4.3.
4.6 Withholding Taxes. If the Company is required to withhold any taxes or
other amounts from a Director's Deferred Fees or Deferred Shares pursuant to any
state, Federal or local law, such amounts shall, to the extent possible, be
deducted from the Director's Fees or Required Retainer Shares or Voluntary
Shares before such amounts are credited as described in Sections 4.2 and 4.4.
Any additional withholding amount required shall be paid by the Director to the
Company as a condition of crediting his or her Accounts.
ARTICLE V
DEFERRED SHARE ACCOUNT
5.1 Determination of Deferred Share Account. On any particular date, a
Director's Deferred Share Account shall consist of the aggregate number of
Deferred Shares credited thereto pursuant to Sections 4.2 and 4.4, plus any
dividend equivalents credited pursuant to Section 5.2, minus the aggregate
amount of distributions, if any, made from such Deferred Share Account.
5.2 Crediting of Dividend Equivalents. Each Deferred Share Account shall
be credited as of the end of each Accounting Period with additional Deferred
Shares equal in value to the amount of cash dividends paid by the Company during
such Accounting Period on that number of Shares equivalent to the number of
Deferred Shares in such Deferred Share Account during such Accounting Period.
The dividend equivalents shall be valued by dividing the dollar value of such
dividend equivalents by the Fair Market Value on the dividend payment date.
Until a Director or his or her Beneficiary receives his or her entire Deferred
Share Account, the unpaid balance thereof credited in Deferred Shares shall be
credited with dividend equivalents as provided in this Section 5.2.
5.3 Adjustments to Deferred Share Accounts. Each Director's Deferred Share
Account shall be immediately debited with the amount of any distributions under
the Plan to or on behalf of the Director or, in the event of his or her death,
his or her Beneficiary.
5.4 Statements of Deferred Share Accounts. As soon as practicable after
the end of each Plan Year, a statement shall be furnished to each Director or,
in the event of his or her death, to his or her Beneficiary showing the status
of his or her Deferred Share Account as of the end of the Accounting Period, any
changes in such Account since the end of the immediately preceding Accounting
Period, and such other information as the Administrator shall determine.
5.5 Vesting of Deferred Share Account. A Director shall be 100% vested in
his or her Deferred Share Account at all times.
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ARTICLE VI
DISTRIBUTION OF BENEFITS
6.1 Settlement Date. A Director, or in the event of such Director's death,
his or her Beneficiary shall be entitled to all or a portion of the balance in
such Director's Deferred Share Account, as provided in this Article VI,
following such Director's Settlement Date or Dates.
6.2 Amount to be Distributed. The amount to which a Director, or in the
event of such Director's death, his or her Beneficiary is entitled in accordance
with the following provisions of this Article VI shall be based on the
Director's adjusted balance in his or her Deferred Share Account determined as
of the Accounting Date coincident with or next following his or her Settlement
Date or Dates.
6.3 In-Service Distribution. A Director may irrevocably elect to receive a
pre-termination distribution of all or any specified percentage of his or her
Deferred Fees or Deferred Shares for any Plan Year on or commencing not earlier
than the beginning of the third Plan Year following the Plan Year such Fees and
Shares otherwise would have been payable. A Director's election of a
pre-termination distribution shall be made in a Participation Agreement filed
for the Plan Year as provided in Section 4.1 or Section 4.3. A Director shall
elect irrevocably to receive such Deferred Fees and/or Deferred Shares as a
pre-termination distribution under one of the forms provided in Section 6.4.
6.4 Form of Distribution -- Deferred Shares. As soon as practicable after
the end of the Accounting Period in which a Director's Settlement Date occurs,
but in no event later than 30 days following the end of such Accounting Period,
the Company shall distribute or cause to be distributed, to the Director a
number of Shares equal to the number of Deferred Shares in the Director's
Deferred Share Account as determined under Section 6.2, under one of the forms
provided in this Section 6.4. Notwithstanding the foregoing, if elected by the
Director, the distribution of all or a portion of the Director's Deferred Share
Account may be made or may commence at the beginning of the Plan Year next
following his or her Settlement Date. In the event of a Director's death, the
number of Shares equal to the number of Deferred Shares in his or her Deferred
Share Account shall be distributed to his or her Beneficiary in a single
distribution or in installments, as elected by the Director.
Distribution of a Director's Deferred Share Account shall be made in one of
the following forms as elected by the Director:
(a) by payment in Shares or cash in a single distribution;
(b) by payment in Shares or cash in not greater than ten annual
installments; or
(c) a combination of (a) and (b) above. The Director shall designate
the percentage payable under each option.
The Director's election of the form of distribution shall be made by written
notice filed with the Administrator at least one year prior to the Director's
voluntary retirement as a Director. Any such election may be changed by the
Director at any time and from time to time without the consent of any other
person by filing a later signed written election with the Administrator;
provided that any election made less than one year prior to the Director's
voluntary termination as a Director shall not be valid, and in such case payment
shall be made in accordance with the Director's prior election.
The number of Shares to be distributed in each installment shall be equal
to the quotient obtained by dividing the number of Deferred Shares in the
Director's Deferred Share Account as of the date of such installment payment by
the number of installment payments remaining to be made to or in respect of such
Director at the time of calculation. Fractional Shares shall be rounded down to
the nearest whole Share, and such fractional amount shall be re-credited as a
fractional Deferred Share in the Director's Deferred Share Account.
If a Director elects payment in a single distribution in cash, the amount
of the payout shall be equal to the Fair Market Value of the Deferred Shares in
the Director's Deferred Share Account on the Settlement Date. If such Director
elects payout in installments in cash, an amount equal to the Fair Market Value
of the Deferred Shares in the Director's Deferred Share Account on the
Settlement Date shall be transferred to the Director's Deferred Fee Account
pending distribution.
If a Director fails to make an election in a timely manner as provided in
this Section 6.4, distribution of the Director's Deferred Share Account shall be
made in Shares in a single distribution.
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6.5 Special Distributions. Notwithstanding any other provision of this
Article VI, a Director may elect to receive a distribution of part or all of his
or her Deferred Share Account in one or more distributions if (and only if) the
number of the Shares in the Director's Deferred Share Account subject to such
distribution is reduced by 10%. Any distribution made pursuant to such an
election shall be made within 60 days of the date such election is submitted to
the Administrator. The remaining 10% of the portion of the electing Director's
Deferred Share Account subject to such distribution shall be forfeited.
6.6 Beneficiary Designation. As used in the Plan the term "Beneficiary"
means:
(a) The person last designated as Beneficiary by the Director in
writing on a form prescribed by the Administrator;
(b) If there is no designated Beneficiary or if the person so
designated shall not survive the Director, such Director's spouse; or
(c) If no such designated Beneficiary and no such spouse is living
upon the death of a Director, or if all such persons die prior to the
distribution of the Director's balance in his or her Deferred Share
Account, then the legal representative of the last survivor of the Director
and such persons, or, if the Administrator shall not receive notice of the
appointment of any such legal representative within one year after such
death, the heirs-at-law of such survivor shall be the Beneficiaries to whom
the then remaining balance of such Accounts shall be distributed (in the
proportions in which they would inherit his or her intestate personal
property).
Any Beneficiary designation may be changed from time to time by the filing of a
new form. No notice given under this Section 6.6 shall be effective unless and
until the Administrator actually receives such notice.
6.7 Facility of Payment. Whenever and as often as any Director or his or
her Beneficiary entitled to payments hereunder shall be under a legal disability
or, in the sole judgment of the Administrator, shall otherwise be unable to
apply such payments to his or her own best interests and advantage, the
Administrator in the exercise of its discretion may direct all or any portion of
such payments to be made in any one or more of the following ways: (i) directly
to him or her; (ii) to his or her legal guardian or conservator; or (iii) to his
or her spouse or to any other person, to be expended for his or her benefit; and
the decision of the Administrator, shall in each case be final and binding upon
all persons in interest.
ARTICLE VII
ADMINISTRATION, AMENDMENT AND TERMINATION
7.1 Administration. The Plan shall be administered by the Administrator.
The Administrator shall have such powers as may be necessary to discharge its
duties hereunder. The Administrator may, from time to time, employ, appoint or
delegate to an agent or agents (who may be an officer or officers of the
Company) and delegate to them such administrative duties as it sees fit, and may
from time to time consult with legal counsel who may be counsel to the Company.
The Administrator shall have no power to add to, subtract from or modify any of
the terms of the Plan, or to change or add to any benefits provided under the
Plan, or to waive or fail to apply any requirements of eligibility for a benefit
under the Plan. No member of the Administrator shall act in respect of his or
her own Deferred Share Account. All decisions and determinations by the
Administrator shall be final and binding on all parties. No member of the
Administrator shall be liable for any such action taken or determination made in
good faith. All decisions of the Administrator shall be made by the vote of the
majority, including actions and writing taken without a meeting. All elections,
notices and directions under the Plan by a Director shall be made on such forms
as the Administrator shall prescribe.
7.2 Amendment and Termination. The Board may alter or amend this Plan from
time to time or may terminate it in its entirety; provided, however, that no
such action shall, without the consent of a Director, affect the rights in any
Shares issued or to be issued to such Director, in any Deferred Shares in a
Director's Deferred Share Account or in any amounts in a Director's Deferred Fee
Account; and further provided, that, any amendment which must be approved by the
shareholders of the Company in order to comply with applicable law or the rules
of any national securities exchange or national quotation system upon which the
Shares are traded or quoted will not be effective unless and until such approval
has been obtained.
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ARTICLE VIII
FINANCING OF BENEFITS
8.1 Financing of Benefits. The Shares and benefits payable in cash under
the Plan to a Director or, in the event of his or her death, to his or her
Beneficiary shall be paid by the Company from its general assets. The right to
receive payment of the Shares and benefits payable in cash represents an
unfunded, unsecured obligation of the Company. No person entitled to payment
under the Plan shall have any claim, right, security interest or other interest
in any fund, trust, account, insurance contract, or asset of the Company which
may be responsible for such payment.
8.2 Security for Benefits. Notwithstanding the provisions of Section 8.1,
nothing in this Plan shall preclude the Company from setting aside Shares or
funds in trust ("Trust") pursuant to one or more trust agreements between a
trustee and the Company. However, no Director or Beneficiary shall have any
secured interest or claim in any assets or property of the Company or the Trust
and all Shares or funds contained in the Trust shall remain subject to the
claims of the Company's general creditors.
ARTICLE IX
SHARES SUBJECT TO PLAN
9.1 Shares Subject to Plan. Subject to adjustment as provided in this
Plan, the total number of Shares which may be issued under this Plan shall be
100,000; provided however, that such Shares (i) may be supplemented by Shares
authorized but not granted under the following Company plans: Management
Incentive Stock Plan, 1996 Employee Stock Purchase Plan, Equity Ownership Plan
and Nonemployee Directors' Stock Option Plan ("stock related plans") and (ii)
shall be reduced by any shares authorized under this Plan designated to be used
to grant awards under any other stock related plan in excess of the shares
authorized under such other plan.
9.2 Adjustments. In the event of any change in the outstanding Shares by
reason of (a) any stock dividend, stock split, combination of shares,
recapitalization or any other change in the capital structure of the Company,
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing,
the number and kind of shares specified in Article III, the number or kind of
Shares that may be issued under the Plan as specified in Article IX and the
number of Deferred Shares in a Director's Deferred Share Account shall
automatically be adjusted so that the proportionate interest of the Directors
shall be maintained as before the occurrence of such event. Such adjustment
shall be conclusive and binding for all purposes with respect to the Plan.
ARTICLE X.
GENERAL PROVISIONS
10.1 Interests Not Transferable; Restrictions on Shares and Rights to
Shares. No rights to Shares or other benefits payable in cash shall be
assigned, pledged, hypothecated or otherwise transferred by a Director or any
other person, voluntarily or involuntarily, other than (i) by will or the laws
of descent and distribution, or (ii) pursuant to a domestic relations order
meeting the definition of a qualified domestic relations order under the Code.
No person shall have any right to commute, encumber, pledge or dispose of any
other interest herein or right to receive payments hereunder, nor shall such
interests or payments be subject to seizure, attachment or garnishment for the
payments of any debts, judgments, alimony or separate maintenance obligations or
be transferable by operation of law in the event of bankruptcy, insolvency or
otherwise, all payments and rights hereunder being expressly declared to be
nonassignable and nontransferable.
10.2 Governing Law. The provisions of this Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
10.3 Withholding Taxes. To the extent that the Company is required to
withhold Federal, state or local taxes in connection with any component of a
Director's compensation in cash or Shares, and the amounts available to the
Company for such withholding are insufficient, it shall be a condition to the
receipt of any Shares that the Director make arrangements satisfactory to the
Company for the payment of the balance of such taxes required to be withheld,
which arrangement may include relinquishment of the Shares. The Company and a
Director may also
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make similar arrangements with respect to payment of any other taxes derived
from or related to the payment of Shares with the respect to which withholding
is not required.
10.4 Miscellaneous. Headings are given to the sections of this Plan solely
as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of this Plan or any provisions thereof. The use of the singular
shall also include within its meaning the plural, and vice versa.
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EXHIBIT C
ROADWAY EXPRESS NONEMPLOYEE
DIRECTORS' STOCK OPTION PLAN
The Roadway Express Nonemployee Directors' Stock Option Plan (the "Plan")
is effective as of April 1, 1998, subject to approval of shareholders at the
1998 annual meeting.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in the Plan they shall have the
meanings specified below unless the context clearly indicates to the contrary:
(a) "Administrator": The Compensation Committee of the Board or any
successor committee designated by the Board.
(b) "Board": The Board of Directors of the Company.
(c) "Change in Control": The occurrence of any of the following
events:
(1) a filing pursuant to any federal or state law in connection
with any tender offer for shares of the Company (other than a tender
offer by the Company);
(2) the merger, consolidation or reorganization of the Company into
or with another corporation or other legal person, if as a result of
such merger, consolidation or reorganization less than 50% of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock (as that term is hereafter
defined) of the Company immediately prior to such transaction by reason
of their ownership of Voting Stock of the Company;
(3) the sale or transfer by the Company of all or substantially all
of its assets to another company or other legal person, if as a result
of such sale or transfer less than 50% of the combined voting power of
the then-outstanding securities of such company immediately after such
sale or transfer is held in the aggregate by the holders of Voting Stock
of the Company immediately prior to such sale or transfer by reason of
their ownership of Voting Stock of the Company;
(4) the adoption of any resolution of reorganization or dissolution
of the Company by its shareholders;
(5) the filing of a report on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 50% or more of the combined voting power
of the then-outstanding securities entitled to vote generally in the
election of directors of the Company ("Voting Stock");
(6) the filing of a report or proxy statement by the Company with
the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction;
(7) if during any period of two consecutive years, individuals who
at the beginning of such period constituted the directors of the Company
cease for any reason to constitute a majority thereof (unless the
election, or the nomination for election by the Company's shareholders,
of each director of the Company first elected during such period was
approved by a vote of at least two-thirds of the directors then still in
office who were directors of the Company at the beginning of any such
period; or
(8) the occurrence of any other event or series of events, which
event or series of events, in the opinion of the Board, will, or is
likely to, if carried out, result in a change in control of the Company;
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provided, however, a "Change in Control" will not be deemed to have
occurred, either (i) solely because (A) the Company, (B) a subsidiary of
the Company, or (C) any Company-sponsored employee stock ownership plan
or any other employee benefit plan of the Company, either files or
becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the
Exchange Act, disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 50% or otherwise, or because the Company
reports that a change in control of the Company has or may have occurred
or will or may occur in the future by reason of such beneficial
ownership, or (ii) solely because of a change in control of any
subsidiary. Notwithstanding the foregoing provisions of Paragraphs
(1)-(5) of this Subsection, if, prior to any event described in
Paragraphs (1)-(5) of this Subsection instituted by any person not an
officer or director of the Company, or prior to any disclosed proposal
instituted by any person not an officer or director of the Company which
could lead to any such event, management proposes any restructuring of
the Company which ultimately leads to an event described in Paragraphs
(1)-(5) of this Subsection pursuant to such management proposal, then a
"Change in Control" will not be deemed to have occurred for purposes of
the Plan. If any "Change in Control" is abandoned, the Board, may, by
notice to the Directors, nullify the effect thereof.
(d) "Code": The Internal Revenue Code of 1986, as amended.
(e) "Company": Roadway Express, Inc. or any successor or successors
thereto.
(f) "Director": An individual duly elected or chosen as a Director of
the Company who is not also an employee of the Company or any of its
subsidiaries.
(g) "Fair Market Value": With respect to a Share, the last transaction
price per Share as quoted by the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for
a day specified herein for which such fair market value is to be
calculated, or if there was no transaction price of Shares so quoted for
such day, on the most recently preceding day on which there was such a so
quoted transaction price.
(h) "Option": An option to purchase Shares granted pursuant to Section
4.1.
(i) "Participation Agreement": The agreement submitted by a Director
to the Administrator in which a Director may specify his election to invest
all or a portion of his Retainer in Options.
(j) "Plan": The Plan set forth in this instrument as it may from time
to time be amended.
(k) "Plan Year": The 12-month period beginning January 1 and ending
December 31; provided, however, that the first Plan Year shall begin on
April 1, 1998.
(l) "Retainer": The portion of a Director's annual compensation that
is payable in cash or Shares without regard to number of Board or committee
meetings attended or committee positions.
(m) "Shares": The Company's fully paid, non-assessable common stock,
par value $.01 per share. Shares may be shares of original issuance or
treasury shares or a combination of the foregoing.
(n) "Valuation Date": March 31, 1998 for the first Plan Year and the
preceding December 31 for each succeeding Plan Year.
ARTICLE II
PURPOSE
The purpose of the Plan is to provide Directors with opportunities to
invest amounts of their Retainer in Options in order to further align the
interests of Directors with the shareholders of the Company and thereby promote
the long-term success and growth of the Company.
ARTICLE III
ELECTION TO PARTICIPATE
3.1. Eligibility. All individuals who are Directors as of the first day of
a Plan Year may participate in the Plan for such Plan Year. A Director may elect
to participate for any Plan Year in accordance with Section 3.2. A
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Director's entitlement to participate as to future investments shall cease with
respect to the Plan Year following the Plan Year in which he ceases to be a
Director.
3.2. Election to Participate. A Director who desires to participate in the
Plan with respect to the Retainer payable for a Plan Year must complete and
deliver a Participation Agreement to the Administrator before the first day of
the Plan Year for which such Retainer would otherwise be paid. A Participation
Agreement that is timely delivered shall be effective for the succeeding Plan
Year and in addition, except as otherwise specified by a Director in his
Participation Agreement, shall continue to be effective from Plan Year to Plan
Year until revoked or modified by written notice to the Administrator or until
terminated automatically upon the termination of the Plan. In order to be
effective to revoke or modify a Participation Agreement with respect to the
Retainer for a Plan Year, a revocation or modification must be delivered prior
to the first day of the Plan Year for which such Retainer is payable.
3.3. Amount of Participation. A Director shall designate on the
Participation Agreement the dollar amount or number of Shares of his Retainer
that he has elected to invest in Options under the Plan.
3.4. Minimum Level of Participation For Investment in Options. A Director
shall be permitted to invest in Options under the Plan only if for the Plan Year
involved the total amount of the Retainer for the Director that is invested in
Options for the Plan Year equals at least 25% of the amount of the Retainer of
the Director for such Plan Year.
ARTICLE IV
OPTIONS
4.1. Grant of Options. To the extent a Director elects to invest all or a
portion of his Retainer for a Plan Year in Options, an Option shall be granted
on the first day of such Plan Year for that number of Shares equal to 100% (or
for Plan Years beginning on or after January 1, 1999, an amount not in excess of
120%, as determined by the Board at its last meeting before the beginning of
each Plan Year) of the amount of the Retainer invested divided by the value of
an Option for one Share on the Valuation Date. For this purpose, the value of an
Option shall be determined by the Black-Scholes option pricing model, as applied
by the Administrator, and the amount of the Retainer invested represented by
Shares shall be valued at their Fair Market Value on the Valuation Date. To the
extent that the application of the foregoing formula would result in an Option
covering a fractional Share, the number of Shares covered by the Option shall be
rounded up.
4.2. Written Agreement. Each grant of Options shall be evidenced by a
written agreement in such form as approved by the Administrator and shall be
subject to the additional terms and conditions set forth in this Article.
4.3. Exercisability of Options. Subject to the expiration or earlier
termination of the Option, 100% of the Option shall become exercisable on the
first anniversary of the date of grant.
4.4. Term. An Option shall expire ten years from the date the Option is
granted and shall be subject to earlier termination as hereinafter provided.
Once an Option becomes exercisable, it may thereafter be exercised, wholly or in
part, at any time prior to its expiration or termination. In the event of the
Director's termination from service on the Board, other than as provided in
Section 4.5, an outstanding Option may be exercised only to the extent it was
exercisable on the date of such termination and shall expire two years after
such termination, or on its stated expiration date, whichever occurs first.
Notwithstanding the above, in the event of a termination for cause as determined
by the Administrator, all unexercised Options shall be forfeited.
4.5. Early Vesting. Upon the occurrence of any of the following events,
the Option shall become immediately and fully exercisable: the death of the
Director, the disability of the Director, or a Change in Control. The Option
shall expire two years after such event, or on its stated expiration date,
whichever occurs first.
4.6. Exercise Price. The exercise price of an Option granted to a Director
shall be equal to the Fair Market Value per Share on the date of grant.
4.7. Payment. An Option may be exercised by a Director only upon payment
to the Company in full of the exercise price of the Option corresponding to the
portion of the Option to be exercised. Such payment shall be made in cash or in
Shares previously owned by the Director for more than six months, or in a
combination of cash and such Shares. The requirement of payment in cash will be
deemed satisfied if the Optionee has made arrangements satisfactory to the
Company with a bank or broker that is a member of the National Association of
Securities Dealers, Inc. to sell on the date of exercise a sufficient number of
Shares being purchased so that the net proceeds of the sale transaction will at
least equal the aggregate price of the Option and pursuant to which the bank or
broker
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undertakes to deliver the aggregate price of the Option to the Company not later
than the date on which the sale transaction will settle in the ordinary course
of business.
4.8. Transferability.
(a) The Option shall be neither transferable nor assignable by the
Director other than by will or by the laws of descent and distribution and
may be exercised, during the lifetime of the Director, only by the
Director, or in the event of his legal incapacity, by his guardian or legal
representative acting on behalf of the Director in a fiduciary capacity
under state law and court supervision.
(b) Notwithstanding the provisions of Subsection (a) of this Section,
the Administrator may, in its sole discretion, authorize all or a portion
of the rights to be granted to a Director in an Option to be on terms which
permit transfer by such Director to (i) the spouse, children or
grandchildren of the Director ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, (iii) a
partnership in which such Immediate Family Members are the only partners,
or (iv) other persons or entities, provided that (A) the agreement pursuant
to which such rights are transferred must be approved by the Administrator,
and must expressly provide for transferability in a manner consistent with
Subsection (a) of this Section, and (B) subsequent transfers of transferred
rights shall be prohibited except those in accordance with Subsection (a)
of this Section. Following transfer, any such rights shall continue to be
subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of this Article IV, the term
"Director" shall be deemed to refer to the transferee. The events of
termination set forth in this Article IV shall continue to be applied with
respect to the Director, following which the rights shall be exercisable by
the transferee only to the extent, and for the period specified in the
agreement pursuant to which such rights are granted.
4.9 Approval of Shareholders. The effectiveness of the Plan is conditioned
on its approval by an affirmative vote of the holders of Shares represented at a
meeting duly held in accordance with Delaware law. All grants under the Plan
shall be null and void if the Plan is not approved by such shareholders.
ARTICLE V
ADMINISTRATION, AMENDMENT AND TERMINATION
5.1. Administration. The Plan shall be administered by the Administrator.
The Administrator shall have such powers as may be necessary to discharge its
duties hereunder. The Administrator may, from time to time, employ, appoint or
delegate to an agent or agents (who may be an officer or officers of the
Company) and delegate to them such administrative duties as it sees fit, and may
from time to time consult with legal counsel who may be counsel to the Company.
The Administrator shall have no power to add to, subtract from or modify any of
the terms of the Plan, or to change or add to any benefits provided under the
Plan, or to waive or fail to apply any requirements of eligibility for a benefit
under the Plan. No member of the Administrator shall act in respect of his own
Retainer. All decisions and determinations by the Administrator shall be final
and binding on all parties. No member of the Administrator shall be liable for
any such action taken or determination made in good faith. All decisions of the
Administrator shall be made by the vote of the majority, including actions and
writing taken without a meeting. All elections, notices and directions under the
Plan by a Director shall be made on such forms as the Administrator shall
prescribe.
5.2. Amendment and Termination. The Board may alter or amend the Plan from
time to time or may terminate it in its entirety; provided, however, that no
such action, except for an acceleration of benefits, shall, without the consent
of a Director, impair the rights in any Shares issued or to be issued to such
Director, as a result of a grant of Options under the Plan; and further
provided, that any amendment that must be approved by the shareholders of the
Company in order to comply with applicable law or the rules of the principal
national securities exchange or system upon which the Shares are traded or
quoted shall not be effective unless and until such approval has been obtained
in compliance with such applicable law or rules. Presentation of the Plan or any
amendment hereof for shareholder approval shall not be construed to limit the
Company's authority to offer similar or dissimilar benefits through plans that
are not subject to shareholder approval.
5.3. Amendment of Options. The Administrator shall not, without the
further approval of the shareholders of the Company, authorize the amendment of
any outstanding Option to reduce the exercise price of the Option. Furthermore,
no Option shall be canceled and replaced with awards having a lower exercise
price without further
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approval of the shareholders of the Company. This Section is intended to
prohibit the repricing of "underwater" Options and shall not be construed to
prohibit the adjustments provided for in Section 6.2 of the Plan.
ARTICLE VI
SHARES SUBJECT TO PLAN
6.1. Shares Subject to Plan. Subject to adjustment as provided in the
Plan, the total number of Shares which may be issued under the Plan shall be
100,000; provided however, that such Shares (i) may be supplemented by Shares
authorized but not granted under the following Company plans: Management
Incentive Stock Plan, 1996 Employee Stock Purchase Plan, Equity Ownership Plan
and Nonemployee Directors' Equity and Deferred Compensation Plan ("stock related
plans") and (ii) shall be reduced by any shares authorized under this Plan
designated to be used to grant awards under any other stock related plan in
excess of the shares authorized under such other plan.
6.2. Adjustments. The Administrator may make or provide for such
adjustments in the (a) number of Shares covered by outstanding Options granted
or awarded hereunder, (b) prices per share applicable to such Options, and (c)
kind of shares covered thereby, as the Administrator in its sole discretion may
in good faith determine to be equitably required in order to prevent dilution or
enlargement of the rights of Directors that otherwise would result from (x) any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, (y) any merger, consolidation,
spin-off, spin-out, split-off, split-up, reorganization, partial or complete
liquidation of the Company or other distribution of assets, issuance of rights
or warrants to purchase securities of the Company, or (z) any other corporate
transaction or event having an effect similar to any of the foregoing. In the
event of any such transaction or event, the Administrator may provide in
substitution for any or all outstanding grants or awards under the Plan such
alternative consideration as it may in good faith determine to be equitable
under the circumstances and may require in connection therewith the surrender of
all awards so replaced. Moreover, the Administrator may on or after the date of
grant provide in the agreement evidencing any grant or award under the Plan that
the holder of the grant or award may elect to receive an equivalent grant or
award in respect of securities of the surviving entity of any merger,
consolidation or other transaction or event having a similar effect, or the
Administrator may provide that the holder will automatically be entitled to
receive such an equivalent grant or award. The Administrator may also make or
provide for such adjustments in the number of shares specified in Section 6.1 of
the Plan as the Administrator in its sole discretion may in good faith determine
to be appropriate in order to reflect any transaction or event described in this
Section. This Section shall not be construed to permit the re-pricing of any
Options in the absence of any of the circumstances described above in
contravention of Section 5.3 of the Plan.
ARTICLE VII
GENERAL PROVISIONS
7.1. Governing Law. The provisions of the Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
7.2. Miscellaneous. Headings are given to the sections of the Plan solely
as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of the Plan or any provisions thereof. The masculine gender,
where appearing in the Plan, includes the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary.
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EXHIBIT D
ROADWAY EXPRESS, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
This 1996 Employee Stock Purchase Plan (the "Plan") is intended to advance
the interests of Roadway Express, Inc. (the "Company") and its stockholders by
strengthening the Company's ability to attract and retain employees who have the
training, experience and ability to enhance the profitability of the Company and
to reward employees of the Company and its subsidiaries upon whose judgment,
initiative and effort the successful conduct and development of their business
largely depend. It is further intended that options issued pursuant to this Plan
shall constitute options issued pursuant to an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code").
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors or such other committee of not less than two members of the Board
of Directors appointed by the Board of Directors (the "Committee"). The majority
of the Committee shall constitute a quorum, and the action of a majority of the
members of the Committee present at any meeting at which a quorum is present, or
acts unanimously approved in writing, shall be the acts of the Committee.
The interpretation and construction by the Committee of any provision of
the Plan or of any option granted under it shall be final. The Committee may
establish any policies or procedures which in the discretion of the Committee
are relevant to the operation and administration of the Plan and may adopt rules
for the administration of the Plan. No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted under it.
SECTION 3. ELIGIBILITY
All employees (as defined below) of the Company or of any subsidiary (as
defined below) of the Company who are not executive officers (as defined below)
and who have been employed by the Company or by a subsidiary of the Company for
6 months or more on the date of any grant of options pursuant to the Plan shall
be offered options under the Plan to purchase the Company's common stock, $.01
par value per share ("Common Stock"), except that no employee shall be granted
an option under the Plan if, immediately after the option was granted, such
employee would own stock possessing 5 percent or more of the total combined
voting power or value of all classes of stock of the Company or of any
subsidiary of the Company. For purposes of this paragraph, stock ownership of an
individual shall be determined under the rules of Section 424(d) of the Code,
and stock which the employee may purchase under outstanding options shall be
treated as owned by the employee.
For purposes of the Plan, the term "employee" shall not include an employee
whose customary employment is less than 20 hours per week. For purposes of the
Plan, the term "subsidiary" shall mean any corporation that the Company
controls, through one or more intermediaries, by ownership of 50 percent or more
of such corporation's outstanding voting securities, and the term "executive
officer" shall mean any employee who is subject to the requirements of Section
16(a) of the Securities Exchange Act of 1934.
SECTION 4. STOCK
The stock subject to the options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. The aggregate number of
shares which may be purchased under the Plan shall not exceed 800,000 shares of
Common Stock; provided, however, that such shares (1) may be supplemented by
shares of Stock authorized but not granted under the following Company plans:
Management Incentive Stock Plan, Equity Ownership Plan, Nonemployee Directors'
Stock Option Plan and Nonemployee Directors' Equity and Deferred Compensation
Plan ("stock related plans") and (2) shall be reduced by any shares authorized
under this Plan designated to be used to grant awards under any other stock
related plan in excess of the shares authorized under such other plan. In the
event that the number of shares subject to options to be granted pursuant to any
offering under the Plan exceeds the number of shares available to be purchased
under the Plan, the shares available to be purchased shall be allocated on a pro
rata basis among the options to be granted.
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SECTION 5. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall from time to time approve, provided that all
employees granted such options shall have the same rights and privileges (except
as otherwise provided in subparagraphs (a) and (e) below), and provided further
that such options shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares. Each option granted hereunder shall state the
number of shares to which it pertains, which number shall be determined,
prior to the date of granting of such option, with respect to the employee
to whom such option is offered, in accordance with uniform policies and
procedures established by the Committee; provided, however, that the number
of shares to which any option may pertain shall not exceed a maximum number
to be computed in accordance with the following formula:
Each eligible employee shall be granted an option to purchase up to the
number of shares, 85 percent of the fair market value of which on the
date of grant of the option is equal to 10 percent of the basic
compensation (as hereinafter defined) earned by the employee. If the
number of shares computed in accordance with the foregoing includes a
fraction, such number shall be rounded down to the next whole number.
For purposes of this paragraph, the term "basic compensation" is the
yearly cash compensation of the employee (assuming equal payments over a
12- month period) excluding, without limitation, any bonuses or awards
under the Company's management incentive program, but including any
quotas set in connection with any sales incentive compensation plan, to
be determined as of the pay period immediately preceding a date 30 days
prior to the date of grant of such option.
Notwithstanding the above, the Committee shall, in its discretion,
have the authority to exclude, with respect to all employees, any other
form of compensation from the definition of "basic compensation," provided
such exclusion shall comply with Section 423(b)(5) of the Code. In
addition, the Committee shall, in determining the number of shares subject
to an option, have the authority, prior to the date of grant of such
option, to adjust the percentage to a percentage from 1 percent to 10
percent, both inclusive. Further, the Committee may, in its discretion,
prior to any offering pursuant to the Plan, set a maximum aggregate number
of shares (subject to Section 4 of the Plan) which may be purchased under
options granted pursuant to the offering. In the event employees elect to
withhold funds from their compensation and/or to reinvest dividends
sufficient to purchase shares in excess of such maximum number, the number
of shares purchased by employees under each such option shall be reduced on
a pro rata basis.
(b) Option Price. Each option shall state the option price, which
shall be determined by the Committee; provided, however, that such option
price shall not be an amount less than the lesser of 85 percent of the fair
market value of the shares of Common Stock on the date of the granting of
the option or 85 percent of the fair market value of such stock on the
exercise date (as defined in Section 5(d) of the Plan). During such time as
the Common Stock is quoted as a National Market Issue on the National
Association of Securities Dealers Automated National Market Quotation
System, the fair market value per share shall be the closing price of the
Common Stock as quoted by NASDAQ on the last trading day before the day the
option is exercised. Subject to the foregoing, the Committee shall have
full authority and discretion in fixing the option price.
(c) Medium and Time of Payment. The option price shall be payable in
full in United States dollars, pursuant to uniform policies and procedures
established by the Committee, not later than the exercise date (as defined
in Section 5(d) of the Plan) of such option. The funds required for such
payment shall be derived from (i) dividends paid on any shares under the
Plan which the employee has elected to use for the payment and (ii) regular
withholding from an employee's compensation in approximately equal
installments over the term of the option or such other period as may be
approved by the Committee. Any such dividends to be used for payment or
funds withheld from an employee's compensation in excess of the actual
option price shall be refunded to the employee. No interest shall accrue on
the employee funds held by the Company. An employee shall have the right at
any time to terminate the use of dividends for payment or to terminate the
withholding from his compensation of amounts to be paid toward the option
price, or to decrease the amount so withheld, by submitting a written
request to the Company. An employee shall have the right to cancel his
option in whole or in part and to obtain a refund of dividend amounts or
amounts withheld from his compensation by the Company by submitting a
written request to the Company which must be received by the Company prior
to the exercise date. Such withheld amounts shall thereafter be paid to the
employee within a reasonable period of time. No interest shall accrue on
such amounts.
D-2
<PAGE> 54
(d) Term of Option. The date on which the Common Stock to which an
option pertains is to be purchased by the optionee (the "exercise date")
shall be the last day of the term of the option, except as otherwise
provided in the Plan. The Committee shall, in its discretion, establish the
term of each option granted hereunder, except that in no event shall any
term be in excess of 1 year or be less than 1 month from the date of grant,
and except that all options granted to employees pursuant to any offering
under the Plan must be for the same term. Except to the extent an option
has been canceled by the optionee prior to the exercise date, it shall be
deemed automatically exercised on the exercise date to the extent of
payments received from the optionee.
(e) Accrual Limitation. No option shall permit the rights of an
optionee to purchase stock under all "employee stock purchase plans" (as
defined in the Code) of the Company to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the time the
option is granted) for each calendar year in which the option is
outstanding at any time. For purposes of this Section 5(e)-(i) the right to
purchase stock under an option accrues when the option (or any portion
thereof) first becomes exercisable during the calendar year, (ii) the right
to purchase stock under an option accrues at the rate provided in the
option, but in no case may such rate exceed $25,000 of fair market value of
such stock (determined at the time such option is granted) for any one
calendar year and (iii) a right to purchase stock which has accrued under
an option granted pursuant to the Plan may not be carried over to any other
option.
(f) Termination of Employment. In the event that an optionee shall
cease to be employed by the Company or any subsidiary of the Company for
any reason (including death) before the exercise date such optionee's right
to have his option exercised shall be terminated. Any dividends to be used
for payment or amounts withheld from the optionee's compensation for
purposes of the Plan which remain in an employee's account shall be
refunded. No interest shall accrue on such amount.
(g) Transfer of Option. No option shall be transferrable by an
optionee.
(h) Adjustments. The Committee may make or provide for such
adjustments in the option price and in the number or kind of shares of the
Common Stock or other securities covered by outstanding options as the
Committee in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
optionees that would otherwise result from (a) any stock dividend, stock
split, combination of shares, recapitalization or other change in the
capital structure of the Company, (b) any merger, consolidation, spin-off,
split-off, spin-out, split-up, separation, reorganization, partial or
complete liquidation, or other distribution of assets, issuance of rights
or warrants to purchase stock, or (c) any other corporate transaction or
event having an effect similar to any of the foregoing. Moreover, in the
event of any such transaction or event, the Committee, in its discretion,
may provide in substitution for any or all outstanding awards under this
Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith
the surrender of all awards so replaced, except that in no event shall the
Committee substitute such alternative consideration that would disqualify
this Plan as an "employee stock purchase plan" within the meaning of
Section 423 of the Code. The Committee may also make or provide for such
adjustments in the number or kind of shares of the Common Stock or other
securities which may be sold under the Plan as the Committee in its sole
discretion, exercised in good faith, may determine is appropriate to
reflect any transaction or event described in clause (a) of the preceding
sentence.
The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell
or transfer all or any part of its business or assets.
(i) Rights as a Stockholder. An optionee shall have no rights as a
stockholder with respect to any Common Stock covered by his option until
the exercise date following payment in full. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date
is prior to the date of such exercise, except as provided in Section 5(h)
of the Plan.
(j) Nondistribution Purpose. Unless the Common Stock subject to
options under the Plan is registered under the Securities Act of 1933, as
amended (the "Securities Act"), each option under the Plan shall be granted
on the condition that the purchases of stock thereunder shall not be made
with a view to resale or distribution or any participation therein. Resales
of such stock without registration under the Securities Act
D-3
<PAGE> 55
may not be made unless, in the opinion of counsel for the Company, such
resale is permissible under the Securities Act and any other applicable
law, regulation or rule of any governmental agency.
(k) Fractional Shares. An employee's option may be exercised to
purchase fractional shares of Common Stock under the Plan. The Company,
however, shall have the right to pay cash in lieu of any fractional shares
of Common Stock to be distributed from an employee's account under the
Plan.
(l) Other Provisions. The option agreements authorized under the Plan
shall contain such other provisions as the Committee may deem advisable,
provided that no such provisions may in any way be in conflict with the
terms of the Plan.
SECTION 6. TERM OF PLAN
Options granted pursuant to the Plan shall be granted within a period of 10
years from the date the Plan is adopted by the Board of Directors.
SECTION 7. AMENDMENT OR TERMINATION OF THE PLAN
The Plan may be amended from time to time by the Board of Directors of the
Company, but without further approval of the stockholders, no such amendment
shall increase the aggregate number of shares of Common Stock that may be issued
and sold under the Plan (except that adjustments authorized by the last sentence
of the first paragraph of Section 5(h) of the Plan shall not be limited by this
provision) or change the designation of Section 3 of the class of employees
eligible to receive options. Furthermore, the Plan may not, without further
approval of the stockholders, be amended in any manner that would cause options
issued under it to fail to meet the requirements applicable to "employee stock
purchase plans" as defined in Section 423 of the Code. The Plan may be
terminated at any time by the Board of Directors of the Company, subject to the
rights of outstanding optionees.
SECTION 8. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan shall be used for general corporate purposes.
SECTION 9. APPROVAL OF STOCKHOLDERS
The Plan shall not take effect until adopted by the unanimous written
consent of the holders of all of the shares of Common Stock, or the affirmative
vote of the holders of a majority of the shares of Common Stock actually voting
on the Plan in person or by proxy at a meeting at which a quorum representing a
majority of the outstanding Common Stock is present in person or by proxy, which
approval must occur within the period of 12 months before and 12 months after
the date the Plan is adopted by the Board of Directors.
D-4
<PAGE> 56
<TABLE>
ROADWAY EXPRESS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
[ ]
<CAPTION>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors / / / / / / 2. Approval of the Equity Ownership Plan. / / / / / /
Director Nominees: DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 2.
------------------
Frank P. Doyle, Dale F. Frey, Phillip J. Meek, 3. Approval of the Nonemployee Directors' / / / / / /
Robert E. Mercer, Carl W. Schafer, Sarah Roush Equity and Deferred Compensation Plan.
Werner and Michael W. Wickham DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 3.
Nominee Exception
----------------------------------------------
4. Approval of the Nonemployee Directors' / / / / / /
Stock Option Plan.
DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 4.
5. Approval of the amendment to the 1996 / / / / / /
Employee Stock Purchase Plan.
DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 5.
6. Ratification of Ernst & Young LLP as / / / / / /
independent auditors.
DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 6.
YES
CONFIDENTIAL VOTE REQUESTED / /
Date:
- ----------------------------------- , 1998
Signature(s)-----------------------------------------------------
Signature(s)-----------------------------------------------------
Note: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
...................................................................................................................................
/\ FOLD AND DETACH HERE /\
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE
</TABLE>
<PAGE> 57
PROXY PROXY
ROADWAY EXPRESS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MARCH 25, 1998.
The undersigned hereby appoints R. E. Mercer, M. W. Wickham and J. D.
Cunningham, or any of them or their substitutes, as Proxies, each with the power
to appoint his substitutes, and hereby authorizes them to represent and vote all
the shares of common stock of Roadway Express, Inc. held of record by the
undersigned at the close of business on February 10, 1998, at the Annual Meeting
of Stockholders to be held at the Sheraton Suites Hotel, located at 1989 Front
Street, Cuyahoga Falls, Ohio, on Wednesday, March 25, 1998, at 9:00 a.m., and at
any adjournments or postponements thereof, in their discretion, the Proxies are
authorized to vote in accordance with their judgment upon such other business as
may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR the election as directors of the nominees listed; FOR the approval of
the Equity Ownership Plan; FOR the approval of the Nonemployee Directors' Equity
and Deferred Compensation Plan; FOR the approval of the Nonemployee Directors'
Stock Option Plan; FOR the approval of the amendment to the 1996 Employee Stock
Purchase Plan; and FOR the ratification of the independent auditors of the
Company for 1998.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
..............................................................................
/\ FOLD AND DETACH HERE /\
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 58
<TABLE>
ROADWAY EXPRESS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
[ ]
<CAPTION>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors / / / / / / 2. Approval of the Equity Ownership Plan. / / / / / /
Director Nominees: DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 2.
------------------
Frank P. Doyle, Dale F. Frey, Phillip J. Meek, 3. Approval of the Nonemployee Directors' / / / / / /
Robert E. Mercer, Carl W. Schafer, Sarah Roush Equity and Deferred Compensation Plan.
Werner and Michael W. Wickham DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 3.
Nominee Exception
----------------------------------------------
4. Approval of the Nonemployee Directors' / / / / / /
Stock Option Plan.
DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 4.
5. Approval of the amendment to the 1996 / / / / / /
Employee Stock Purchase Plan.
DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 5.
6. Ratification of Ernst & Young LLP as / / / / / /
independent auditors.
DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 6.
YES
CONFIDENTIAL VOTE REQUESTED / /
Date:
- ----------------------------------- , 1998
Signature(s)-----------------------------------------------------
Signature(s)-----------------------------------------------------
Note: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
...................................................................................................................................
/\ FOLD AND DETACH HERE /\
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE
</TABLE>
<PAGE> 59
PROXY PROXY
ROADWAY EXPRESS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MARCH 25, 1998.
To Key Trust Company of Ohio, N.A., Trustee of the Roadway Express, Inc. 401(k)
Stock Savings Plan (the "Plan"): The undersigned, a participant in the Plan,
hereby directs the Trustee to vote in person or by proxy (a) all common shares
of Roadway Express, Inc. credited to the undersigned's account under the Plan on
the record date ("allocated shares"); and (b) the proportionate number of common
shares of Roadway Express, Inc. allocated to the accounts of other participants
in the Plan, but for which the Trustee does not receive valid voting
instructions ("non-directed shares") and as to which the undersigned is entitled
to direct the voting in accordance with the Plan provisions. Under the Plan,
shares allocated to the accounts of participants for which the Trustee does not
receive timely directions in the form of a signed voting instruction card are
voted by the Trustee as directed by the participants who timely tender a signed
voting instruction card. By completing this Confidential Voting Instruction Card
and returning it to the Trustee, you are authorizing the Trustee to vote
allocated shares and a proportionate amount of the non-directed shares held in
the Plan. The number of non-directed shares for which you may instruct the
Trustee to vote will depend on how many other participants exercise their right
to direct the voting of their allocated shares. Any participant wishing to vote
the non-directed shares differently from the allocated shares may do so by
requesting a separate voting instruction card from the Trustee at
1-800-991-8947.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
..............................................................................
/\ FOLD AND DETACH HERE /\
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
YOU ARE ENCOURAGED TO HAVE YOUR VOTE SUBMITTED NO LATER THAN MARCH 23, 1998 TO
ALLOW SUFFICIENT TIME FOR TABULATION.
