Yellow Roadway Corporation

EXECUTIVE EQUITY OWNERSHIP GUIDELINES

 

1. DEFINITIONS & REFERENCES

 

1.1 Definitions. As used in these Executive Equity Ownership Guidelines (these
“Guidelines”), the following terms shall have the meanings given to them in this
Section 1, unless the context expressly requires the contrary:

 

“Base Salary” means the rate of annual base salary that the Company pays to a
Participant in effect on December 31 of the applicable measurement period,
which, for the avoidance of doubt, excludes any benefits, incentive awards,
bonuses, equity awards or any other component of compensation other than the
base salary amount.

 

“Board” means the Board of Directors of the Company.

 

“Committee” means the Compensation Committee of the Board or any successor
committee, or, if no such committee exists, the Board.

 

“Common Stock” means the Company’s Common Stock, $1.00 par value per share.

 

“Company” means Yellow Roadway Corporation, including its subsidiaries.

 

“Fair Market Value” means, as of any given date, the closing price of a share of
Common Stock as reported on the composite tape for the principal securities
market through which the Company’s common stock is traded as of that date, or if
the Common Stock was not traded on that date, then on the next preceding date
that the Common Stock was traded, all as reported by such source as the
Committee may select. Solely for the purposes of these Guidelines, the Fair
Market Value of restricted shares of Common Stock (sometimes referred to as
restricted stock) and rights to receive shares of Common Stock (sometimes
referred to as restricted stock units) shall be determined as if they were
unrestricted, fully vested shares of Common Stock; and the Fair Market Value of
options to purchase Common Stock shall be zero.

 

“Fourth Quarter Fair Market Value” means the greater of

 

  (a) the average Fair Market Value of a share of Common Stock for all Trading
Days during the fourth quarter of the calendar year for which the value is
calculated; and

 

  (b) the Fair Market Value on the last day in the fourth quarter of that year
that a Participant is able to purchase shares of Common Stock under the
Company’s insider trading “window” policy.

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“LTIP” means the Company’s Long-Term Incentive Plan or any successor to that
plan that the Committee designates.

 

“own” means, with respect to shares of Common Stock, shares of which the
Participant is the beneficial owner within the meaning of Rule 16a-1(a)(2) under
the Securities Exchange Act of 1934, as amended.

 

“Trading Day” means any day on which the principal securities market through
which the Company’s common stock is traded is open and the Common Stock is
traded through that market.

 

1.2 References. Unless the context expressly requires to the contrary, in these
Guidelines; references to “Sections” mean the sections of the Guidelines;
references to the singular, include the plural, and vice versa; references to
“persons” mean both natural persons and legal entities; and references to the
masculine includes the feminine and neuter and vice versa.

 

1.3 Headings. The headings included in these Guidelines are for convenience only
and shall not affect its interpretation or construction.

 

2. GENERAL TERMS

 

2.1 Purpose of these Guidelines. The purpose of these Guidelines is to promote
the interests of the Company and its shareholders by increasing key executive
ownership of Common Stock to more closely align their financial rewards with the
performance of the Company and to motivate these executives to manage the
Company for long-term growth and profitability.

 

2.2 Administration of the Program. The Committee shall administer these
Guidelines and shall have exclusive and absolute authority and discretion to
interpret these Guidelines, to establish and modify rules for the administration
of these Guidelines, to impose such conditions and restrictions as it determines
appropriate with respect to these Guidelines and to take such other actions and
make such other determinations as it may deem necessary or advisable for the
implementation and administration of these Guidelines. Notwithstanding any
provision in these Guidelines to the contrary, the Committee shall have the
authority to waive or modify any stock ownership requirement. All actions taken
and all interpretations and determinations that the Committee makes in good
faith shall be final and binding upon the Participants, the Company and all
other interested persons. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to these Guidelines.

 

2.3 Effective Date of the Program. These Guidelines are effective on January 1,
2005 (the “Effective Date”) and will continue in effect until the Committee
terminates or amends them.

 

2.4 Participation. Unless the Committee specifically excludes an executive from
participation, executives who actively participate in the LTIP shall be subject
to these guidelines.

 

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3. COMMON STOCK OWNERSHIP TARGETS

 

3.1 Final Stock Ownership Target. As of December 31 at the end of the sixth full
year in which a Participant has actively participated in the LTIP, the
Participant should own (and as of each December 31 thereafter, should maintain)
shares of Common Stock the Fourth Quarter Fair Market Value of which is not less
than the applicable “Ownership Multiple” for the applicable “Grade” (in each
case, as the table below designates) multiplied by the Participant’s
then-current Base Salary (the “Final Stock Ownership Target”).

 

Grade(s)

   Ownership Multiple

126

   5x

125

   4x

123-124

   3x

120-122

   2x

 

3.2 Interim Ownership Targets. As of December 31 at the end of each year until
the sixth full year in which a Participant has actively participated in the
LTIP, the Participant should own shares of Common Stock the Fourth Quarter Fair
Market Value of which is not less than the applicable Percentage (as the table
below designates) of the Participant’s then-current Final Stock Ownership Target
(the “Interim Stock Ownership Target”).

 

        December 31

   Percentage of Final
Stock Ownership Target    

1st yr

     10%    

2nd yr

     25%    

3rd yr

     45%    

4th yr

     65%    

5th yr

     85%    

6th yr & higher

   100%

 

3.3 Promotions. If the Company promotes a Participant to a higher Grade with a
higher Ownership Multiple, the Participant should reach the higher Final Stock
Ownership Target by the sixth anniversary of the December 31 date immediately
following the date of the promotion. With respect to the calendar year in which
the Company promotes the Participant, the Participant should continue to meet
the otherwise applicable Interim Stock Ownership Target or Total Stock Ownership
Target based on the Participant’s relevant Grade prior to the date of promotion.
With respect to the calendar years after the Company promotes the Participant,
the Participant should meet the greater of the following:

 

  (a) the otherwise applicable Interim Stock Ownership Target or Total Stock
Ownership Target based on the Participant’s relevant Grade prior to the date of
promotion; and

 

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  (b) the Interim Stock Ownership Target for the new Grade; and, for that
purpose, the Participant may restart the count of the anniversaries that are
used to determine the Percentage for the Interim Stock Ownership Target
beginning with the first anniversary of the December 31 date immediately
following the date of the promotion.

 

4. FAILURE TO ACHIEVE STOCK OWNERSHIP TARGETS

 

If a Participant does not meet the relevant Interim Stock Ownership Target on
December 31 at the end of the Participant’s second or third full year of
participation in the LTIP or second or third full year after a promotion, the
Committee may proportionately decrease the cash amount, and increase the equity
amount, of the Participant’s LTIP award for that year such that the equity
portion of the award is up to 75% of the award.

 

If a Participant does not meet or maintain the relevant Final Stock Ownership
Target on each December 31 at or after the end of the Participant’s sixth full
year of participation in the LTIP or sixth year after a promotion, the Committee
may proportionately decrease the cash amount, and increase the equity amount, of
the Participant’s LTIP award for that year such that the equity portion of the
award is up to 100% of the award.

 

The foregoing actions set forth in this Section 4 shall be the sole consequences
of a Participant’s failure to meet these Guidelines, and the Company shall not
consider a Participant’s failure to meet these Guidelines as cause for
termination of the Participant’s employment with the Company.

 

5. MISCELLANEOUS PROVISIONS

 

5.1 Termination and Amendment. The Committee may amend or terminate these
Guidelines at any time. Notwithstanding any amendment or termination of these
Guidelines, these Guidelines do not amend or affect any equity that the Company
has previously granted to any Participant, and a Participant may exercise the
Participant’s rights with respect to any equity grant, subject to its stated
terms and conditions and restrictions that applicable law imposes.

 

5.2 Choice of Law. The Guidelines, their validity, interpretation and
administration and the rights and obligations of all persons having an interest
in these Guidelines shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to it law of conflicts of
law.

 

5.3 No Employment Contract. These Guidelines shall not confer upon any
Participant any right to continued employment by the Company nor shall these
Guidelines in any way interfere with the right of the Company to terminate the
employment of any Participant at any time.

 

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