Document:

exv10w9

 

Exhibit 10.9

Summary of Certain Compensation Arrangements

			
	I.	 	Arrangements Made on May 25, 2005 and Disclosed in a Report on Form 8-K Filed on May 26, 2005

On April 25, 2005, Douglas W. Stotlar was appointed President and Chief
Executive Officer of the Company. At that time, the Company’s Compensation
Committee, together with the other independent members of the Board of
Directors, approved Mr. Stotlar’s compensation, including an annual base
salary of $650,000, a target incentive compensation award equal to 100% of
base salary, stock options and restricted stock grants, and a relocation
package, including a mortgage subsidy in an amount and for a term to be
determined. These events were reported in the Company’s Report on Form 8-K
filed on April 28, 2005.

On May 25, 2005, the mortgage subsidy to be provided by the Company to Mr.

Stotlar was established for a period of six years, as follows:

Years 1 and 2 $10,000 per month

Years 3 and 4 $ 8,000 per month

Years 5 and 6 $ 6,000 per month

The mortgage subsidy will be paid annually in advance to Mr. Stotlar’s
mortgage lender, on a present value basis. For example, in year 1 the
Company will pay to the mortgage lender the present value of 12 monthly
payments of $10,000 each. The value of the mortgage subsidy will be
includable in Mr. Stotlar’s gross income for tax purposes.

			
	II.	 	Arrangements Made on June 3, 2005 and Disclosed in a Report on Form 8-K Filed on June 6, 2005

A. Changes to Compensation for David S. McClimon and Bryan M. Millican

In connection with the organizational alignment described below under
“Departure of Directors or Principal Officers; Elections of Directors;
Appointment of Principal Officers,” on June 3, 2005, the Company’s
Compensation Committee approved the following changes to the compensation
paid to David S. McClimon and Bryan M. Millican:

David S. McClimon

Senior Vice President, CNF Inc.

President, Con-Way Transportation Services, Inc.

	 	1.	 	Increase in annual base salary from $343,096 to $395,044.
	 
	 	2.	 	Increase in target 2005 incentive compensation award from 60% to

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	 	 	 	75% of annual base salary (subject to a maximum equal to 150% of
annual base salary). Actual payout (i) to be determined based upon
actual 2005 pre-tax, pre-incentive income of Con-Way Transportation
Services, Inc. and (ii) to be prorated based upon 60% target award
for the period from January 1, 2005 until June 4, 2005, and 75%
target award for the period from June 5, 2005 through
December 31, 2005.
	 
	 	3.	 	Grant of 15,000 stock options.
	 
	 	4.	 	Target Value Management Plan award equal to 115% of annual base
salary for three-year cycles commencing after January 1, 2005.

Bryan M. Millican

Senior Vice President of Sales and Marketing, CNF Inc.

	 	1.	 	Increase in annual base salary from $268,112 to $295,000.
	 
	 	2.	 	Increase in target 2005 incentive compensation award from 60% to
75% of annual base salary (subject to a maximum equal to 150% of
annual base salary). Actual payout to be pro rated and determined
based upon (i) 60% target award and actual 2005 pre-tax,
pre-incentive income of Con-Way Transportation Services, Inc.,
for the period from January 1, 2005 until June 4, 2005, and (ii)
75% target award and actual 2005 pre-tax, pre-incentive income of
CNF Inc., for the period from June 5, 2005 through
December 31, 2005, based on 75% factor.
	 
	 	3.	 	Grant of 7,100 stock options.
	 
	 	4.	 	Target Value Management Plan award equal to 115% of annual base
salary for three-year cycles commencing after January 1, 2005.

In addition, each of Mr. McClimon and Mr. Millican is entitled to receive
severance benefits under agreements to be entered into with the Company, and
Mr. McClimon is entitled to receive benefits under an agreement to be entered
into with Con-Way Transportation Services, Inc. These severance agreements
will replace the existing agreements that these officers have with the
Company and with Con-Way Transportation Services, Inc.

Each severance agreement with the Company will provide that if such officer’s
employment is actually or constructively terminated within two years of a
change in control (as defined in the severance agreement) of the Company or
prior to a change in control at the direction of a person or entity which
subsequently acquires control of the Company, the officer generally will
receive from the Company, among other things, (i) a lump sum cash payment
equal to three times the officer’s base salary as of the date of
termination (or as of the change of control, if higher); (ii) a lump sum
cash payment equal to three times the officer’s average annual bonus over
the three years prior to the termination of employment; and (iii) life,
disability, health, dental, and accidental insurance benefits

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for three years.

Mr. McClimon’s severance agreement with Con-Way Transportation Services, Inc.
will provide generally that he will be entitled to receive from that company
the payments and benefits described above if his employment is actually or
constructively terminated with two years following a sale or other
disposition of Con-Way Transportation Services, Inc. by the Company.

B. Employment Agreement with John H. Williford

On April 25, 2005, the Company announced that John H. Williford would no
longer serve as President and Chief Executive Officer of Menlo Worldwide, LLC
or as Senior Vice President of the Company, but would continue to serve as an
advisor to the Company. The press release announcing these events was
attached to the Company’s Report on Form 8-K that was filed on April 28,
2005.

On June 6, 2005, Mr. Williford entered into an Employment Agreement with the
Company, pursuant to which Mr. Williford has agreed to serve as an advisor to
the Company until January 6, 2006. The Employment Agreement is effective
as of June 4, 2005.

As compensation for his services, Mr. Williford is entitled (i) to receive an
annual base salary of $526,240; (ii) to participate in the incentive
compensation plans of Menlo Worldwide, LLC (for the period from January 1,
2005 until June 4, 2005) and of the Company (for the period from June 5, 2005
until December 31, 2005), with a target payout equal to 100% of his 2005
salary (i.e., performance at target levels under both plans would entitle Mr.
Williford to receive an aggregate payment under the two plans equal to his
2005 salary); and (iii) to receive certain other benefits, as described in
the Employment Agreement.

The Company also agreed to pay to Mr. Williford a lump sum payment equal to
$3,150,000 at the end of the term of the Agreement. Mr. Williford would
forfeit his right to this payment if he was to terminate the Employment
Agreement prior to the end of its term other than for good reason, or if he
breached his obligations under the Employment Agreement. These obligations
include non-solicitation of employees of the Company and its subsidiaries for
a period of one year, commencing on the date of the Employment Agreement.

Mr. Williford currently holds approximately 130,000 stock options and 86,500
restricted stock grants that are not vested. Under the terms of the
applicable award agreements, approximately 93,000 of the unvested stock
options and 55,500 shares of the unvested restricted stock will vest on or
before January 1, 2006, provided Mr. Williford remains an employee of the
Company. The balance of the unvested stock options and restricted stock

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grants will be forfeited when the Employment Agreement terminates on January
6, 2006, unless such grants have vested pursuant to their terms for other
reasons (e.g., death, disability, change in control).

The Employment Agreement also provides that the Company’s Board of Directors
may, in its sole discretion, release Mr. Williford from his obligations under
the Employment Agreement in order to obtain employment with another company,
provided that the Board determines that such other company does not compete
with the Company or its affiliates. If this were to occur, Mr. Williford
would be entitled to the lump sum payment of $3,150,000, but would forfeit
any other ongoing benefits available to him under the Employment Agreement.

C. Mortgage Subsidy for Kevin C. Schick

On January 24, 2005, Kevin C. Schick was appointed Senior Vice President and
Chief Financial Officer of the Company, effective March 31, 2005. On March
1, 2005, the Company’s Compensation Committee approved Mr. Schick’s
compensation, including an annual base salary of $310,000, a target incentive
compensation award equal to 75% of base salary, and stock option grants.
These events were reported in the Company’s Reports on Form 8-K filed on
January 28, 2005 and March 4, 2005.

On June 3, 2005, the Company’s Compensation Committee approved a mortgage
subsidy to be provided by the Company to Mr. Schick, who is relocating from
Michigan to California in connection with his promotion to Senior Vice
President and Chief Financial Officer. The mortage subsidy was established
for a period of six years, as follows:

Years 1 and 2 $ 8,000 per month

Years 3 and 4 $ 6,000 per month

Years 5 and 6 $ 4,000 per month

The mortgage subsidy will likely commence in 2006, at which time Mr. Schick
expects to acquire a residence in California. It is expected that the
mortgage subsidy will be paid annually in advance to Mr. Schick’s mortgage
lender, on a present value basis. For example, in year 1 the Company will
pay to the mortgage lender the present value of 12 monthly payments of $8,000
each. The value of the mortgage subsidy will be includable in Mr. Schick’s
gross income for tax purposes.

D. Termination of Severance Agreement Between Con-Way Transportation Services, Inc. and Douglas W. Stotlar

On June 3, 2005, the Severance Agreement dated March 1, 2005 between Con-Way
Transportation Services, Inc. and Douglas W. Stotlar was terminated, since
Mr. Stotlar is no longer employed by that company. The Severance Agreement

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dated March 1, 2005 between the Company and Mr. Stotlar remains in effect.

E. Employment Agreement with Gerald L. Detter

On December 6, 2004, Gerald L. Detter retired from his position as President
and Chief Executive Officer of Con-Way Transportation Services, Inc. and
entered into an Employment Agreement with the Company, pursuant to which Mr.
Detter agreed to serve as an advisor to the Company until January 31, 2006.
These events were reported in, and a copy of the Employment Agreement was
filed as an exhibit to, the Company’s Report on Form 8-K filed on December 8,
2004.

Mr. Detter subsequently elected to retire from the Company, effective May 31,
2005. Effective upon his retirement, Mr. Detter’s obligation to serve as an
advisor ceased, as did the Company’s obligation to pay Mr. Detter the salary
specified in the Employment Agreement.

In addition, effective upon Mr. Detter’s retirement:

	 	(1)	 	under the terms of his restricted stock agreements with the Company,
all of his restricted stock grants that were unvested as of May 31,
2005 lapsed;
	 
	 	(2)	 	under the terms of his stock option agreements with the Company, and
because he retired pursuant to the terms of the Company’s defined
benefit pension plan, all of his outstanding stock options that were
unvested as of May 31, 2005 vested, and Mr. Detter will have a period
of three years following his retirement in which to exercise his
stock options;
	 
	 	(3)	 	under the terms of the Company’s incentive compensation plan, and
because he retired pursuant to the terms of the Company’s defined
benefit pension plan, Mr. Detter is entitled to receive a pro rata
portion of the 2005 incentive compensation award payment (if any)
that he would have received had he remained employed by the Company
for all of 2005;
	 
	 	(4)	 	under the terms of the Company’s value management plan, and because
he retired pursuant to the terms of the Company’s defined benefit
pension plan, Mr. Detter is entitled to receive, for each of the 2003
and 2004 value management award cycles, the payment (if any) called
for under the value management plan based on the performance of Con-
Way Transportation Services, Inc. from the beginning of the
applicable award cycle through the end of 2005; and
	 
	 	(5)	 	under the terms of the Employment Agreement, Mr. Detter received

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	 	 	 	title to his Company automobile.

			
	III.	 	Arrangements Made on September 25, 2005 and Disclosed in a Report on Form 8-K Filed on
September 29, 2005

A. Plans

The Company maintains a number of compensation plans in which the named
executive officers of the Company are eligible to participate. Among these
plans are the Company’s 1997 Equity and Incentive Plan, Value Management Plan
and 2005 Deferred Compensation Plan for Executives. At a meeting held on
September 25, 2005, the Compensation Committee of the Board of Directors of
the Company approved amendments to the plans referred to above, as described
below.

1997 Equity and Incentive Plan. The definition of the term “Change in
Control” in the 1997 Equity and Incentive Plan was amended (i) by deleting
clause (v) of the definition (which provided that a sale or other disposition
of two of the Company’s three primary business units would constitute a
Change in Control for grantees employed by CNF Inc.) and (ii) by changing the
date referenced in clause (ii) of the definition from January 1, 2003 to
January 1, 2006, so that a Change in Control generally occurs if individuals
who on January 1, 2006 constitute the Board cease for any reason to
constitute a majority of the number of directors.

Value Management Plan. The Value Management Plan was amended to provide that:

	 	(i)	 	a Plan participant who, as a result of a transfer or transfers, is
employed by more than one business unit during a three-year Plan cycle
will receive a prorated payment (if any) for that cycle based on (A)
the performance of the respective business units during the periods of
time in which he or she was employed by the business units and (B) the
length of time employed by each business unit during the three-year
Plan cycle (with the amount of time determined by measuring from the
first day of the month following the month in which the transfer is
effective in the Company’s payroll records);
	 
	 	(ii)	 	for purposes of determining the payment (if any) to which a Plan
participant is entitled for a three-year Plan cycle, a pay increase
that is associated with a promotion and that occurs within three months
following the beginning of the Plan cycle will be given effect;
	 
	 	(iii)	 	the term “Change in Control” has the meaning specified in the Company’s
1997 Equity and Incentive Plan, as amended.

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The amendments described in clauses (i) and (ii) above are effective
commencing with the 2005 Plan cycle, except that the amendments are not
effective as to covered employees within the meaning of Section 162(m) of the
Internal Revenue Code with respect to a Plan cycle commencing before January
1, 2006.

2005 Deferred Compensation Plan for Executives. The 2005 Deferred
Compensation Plan was amended to provide that for those Plan participants who
will be paid out in cash for their Phantom Stock Units at the time of
distribution, the valuation of the Phantom Stock Units will be based on the
Company’s common stock price on (1) the date of separation from service, for
those who elected to receive their distribution in a lump sum upon separation
from service, and (2) the date that is ten (10) days prior to the end of each
calendar quarter for those who elected to receive their distribution in
quarterly installments.

In addition to the amendments to the 2005 Deferred Compensation Plan for
Executives, the Compensation Committee delegated to the Company’s Chief
Executive Officer, Chief Financial Officer and General Counsel (any one of
whom may act alone), the duty to elect, in his or her sole discretion, to
make all or part of distributions from a participant’s Phantom Stock Account
in the 2005 Deferred Compensation Plan for Executives in cash or in Company
stock, provided that none of the specified officers may make the election as
to his or her own Phantom Stock Account. The Committee made the same
delegation with respect to the Company’s Deferred Compensation Plan for
Executives that governs deferrals made prior to January 1, 2005. The
Committee also adopted the claims procedures set forth in the Value
Management Plan for purposes of deciding all claims under the Company’s 1997
Equity and Incentive Plan.

B. Severance Agreements

The Company is party to severance agreements with each of the following
executive officers, which agreements prescribe certain severance benefits to
be provided to the executives in the event of a change in control (as
defined) of the Company.

Douglas W. Stotlar            President and Chief Executive Officer

Kevin C.
Schick                Senior Vice President and Chief Financial Officer

Jennifer W. Pileggi            Senior Vice President and General Counsel

David S. McClimon           Senior Vice President

Bryan M.
Millican             Senior Vice President — Sales and Marketing

In addition, Mr. McClimon is party to a severance agreement with Con-Way
Transportation Services, Inc., which agreement prescribes certain severance
benefits to be provided to Mr. McClimon in the event of a change in control

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(as defined) of Con-Way Transportation Services, Inc..

Copies of the severance agreements with Messrs. Stotlar and Schick and Ms.
Pileggi are filed as exhibits to the Company’s Form 8-K filing dated March 4,
2005. Copies of the severance agreements with Messrs. McClimon, Millican and
Schick are filed as exhibits to the Company’s Form 10-Q filing dated August
5, 2005.

Each of the severance agreements described above is currently scheduled to
terminate on December 31, 2006. However, each agreement also contains an
“evergreen” provision that will automatically extend the term of the
agreement for an additional year on January 1 of each year unless, not later
than September 30 of the preceding year, the executive officer, on the one
hand, or the Company or Company subsidiary, as applicable, on the other hand,
gives written notice to the other party of an intention not to extend the
term of the agreement. As a result, absent any such notice, on January 1,
2006 the term of each of the severance agreements described above would
automatically be extended to December 31, 2007.

At a meeting held on September 25, 2005, the Compensation Committee of the
Board of Directors of the Company authorized and directed the Company and the
Company subsidiaries to give the notices not to extend the terms of the
severance agreements described above, and such notices have been sent to the
executive officers. However, at the same meeting the Compensation Committee
authorized the Company to enter into new severance agreements with the
executive officers named above, subject to the Committee’s prior approval of
the terms of the new agreements. The Company currently expects that these
new agreements will be entered into before the end of calendar year 2005.

			
	IV.	 	Arrangements Made on November 17, 2005 and Disclosed in a Report on Form 8-K Filed on
November 17, 2005

Bryan M. Millican, Senior Vice President — Sales and Marketing, retired from
the Company effective October 28, 2005. In connection with his retirement,
Mr. Millican entered into a Separation Agreement and General Release, a copy
of which was filed as an exhibit to the above-referenced 8-K. The following
description of the Agreement is qualified in its entirety by reference to
such exhibit.

The Agreement provides that for a period of six months following his
retirement, Mr. Millican will assist the Company in the transition of his
responsibilities. The Agreement also confirms that Mr. Millican is entitled
to and will retain any stock options that were granted to him prior to the
effective date of the Agreement and that were vested as of, or will vest
following, the date of his retirement from employment, in accordance with
their terms, as well as certain other rights and benefits under certain of

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the Company’s plans.

			
	V.	 	Arrangements Made on December 3, 2005 and Disclosed in a Report on Form 8-K Filed on December
6, 2005

As reported in the Company’s Report on Form 8-K filed on September 29, 2005,
in September 2005 the Compensation Committee of the Board of Directors of the
Company approved certain changes to the Company’s 1997 Equity and Incentive
Plan, Value Management Plan and 2005 Deferred Compensation Plan for
Executives. The Committee also approved the giving of notice to the
Company’s senior executive officers that the term of the severance agreements
to which they are parties, which currently runs through December 31, 2006,
will not be extended for an additional year on January 1, 2006; however, the
Committee authorized the Company to enter into new severance agreements with
the senior executive officers, subject to the Committee’s approval of the
terms of the new severance agreements.

As described in further detail below, at a meeting held on December 5, 2005,
the Compensation Committee approved the terms of the new severance agreements
for the Company’s senior executives and certain other severance arrangements,
and approved amendments to certain of the
Company’s executive compensation plans, including additional amendments to
the 1997 Equity and Incentive Plan, Value Management Plan and 2005 Deferred
Compensation Plan for Executives. The Committee also approved changes to the
form of Stock Option Agreement and Restricted Stock Award Agreement used to
evidence awards granted to executives of the Company, and delegated authority
to the Company’s Chief Executive Officer to award discretionary bonuses to
employees.

  A. Severance Arrangements

At the December meeting, the Committee approved (i) the terms of the new
severance agreements (the “Tier I Agreements”) for the senior executives (the
“Tier I Executives”), (ii) the terms of new severance agreements (the “Tier
II Agreements”) for an additional group of approximately 10 executives (the
“Tier II Executives”), (iii) the terms of a new severance agreement (the
“Tier II Vector Agreement”) pursuant to which the Company would provide
severance payments and benefits to Tier II executives employed by Vector SCM,
LLC (“Vector”), the Company’s joint venture with General Motors Corporation
(although the Company currently anticipates that Vector will not employ any
Tier II executives as of January 1, 2006, the effective date of the new
severance agreements), and (iv) the terms of a new executive severance plan
(the “Severance Plan”) , in which an additional group of approximately 39
executives (the “Tier III Executives”) are eligible to participate, provided
that the employers of the Tier III Executives adopt the Severance Plan. Each

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of the severance agreements, and the new severance plan, are to be effective
as of January 1, 2006. Upon the effective date of a new severance agreement,
all prior severance agreements between the executive and his or her employer
will be superseded. Each severance agreement (other than Tier II Vector
Agreements) will be entered into by the company that employs the applicable
executive, and that company will have the obligation to provide the severance
payments and benefits provided for in the agreement; provided that, in the
event that (a) there is a change in control of the Company and (b) an
employer (other than the Company) fails to provide the severance payments and
benefits, the Company has agreed to do so. Upon adoption of the Severance
Plan, each employer will become liable to provide the severance payments and
benefits to the Tier III Executives which it employs, although the Company
has agreed to provide the severance payments and benefits in the event of a
change in control of the Company, if the employer fails to do so. The
Severance Plan also provides that the Company will provide severance payments
and benefits to Tier III Executives employed by Vector. Vector currently
employs three Tier III Executives.

Each of the Tier I Agreements provides that in the event that (i) there is a
Change in Control (as defined in the Agreement) and (ii) within two years
following the Change in Control the applicable executive’s employment is
terminated by the employer without cause or by the executive with Good Reason
(as defined in the Agreement), the employer will pay to the executive a lump
sum equal to three times the sum of his or her salary and target annual
bonus, and will also provide outplacement services and certain health,
insurance and other benefits. The employer will also pay any excise taxes
that may be owing under Section 280G of the Internal Revenue Code. Each of
the Tier II agreements provide for similar payments and benefits under the
same circumstances, except that the applicable executive is entitled to
receive a lump sum equal to two times the sum of his or her salary and target
annual bonus. The Severance Plan provides in the event that (i) there is a
Change in Control (as defined in the Severance Plan) and (ii) within one year
following the Change in Control the applicable executive’s employment is
terminated by the employer without cause or by the executive with Good Reason
(as defined in the Severance Plan), the employer will pay to the executive a
lump sum equal to one times the sum of the applicable Tier III executive’s
salary and target annual bonus and will provide certain other benefits.
However, the Severance Plan does not provide for the employer to pay any
excise taxes that may be owing under Section 280G of the Internal Revenue
Code.

Tier I Agreements have been entered into by the following senior executives

of the Company:

Douglas W. Stotlar            President and Chief Executive Officer

Kevin C. Schick            Senior Vice President and Chief Financial Officer

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Jennifer W. Pileggi            Senior Vice President and General Counsel

David S. McClimon            Senior Vice President

Each of the agreements is dated as of and effective as of January 1, 2006,
and has been entered into by the Company as employer, except for the Tier I
Agreement of David S. McClimon, which has been entered into by Con-Way
Transportation Services, Inc. as employer.

Attached as Exhibits 99.1 through 99.6 to the above-referenced 8-K are copies of the form of Tier I
Agreement used by the Company, the form of Tier I Agreement used by employers of Tier I Executives
other than the Company, the form of Tier II Agreement
used by the Company, the form of Tier II Agreement used by employers of Tier
II Executives other than the Company, the form of Tier II Vector Agreement,
and the amended and restated CNF Inc. Executive Severance Plan. The
foregoing description of the severance arrangements, agreements and plan
approved by the Compensation Committee is qualified in its entirety by
reference to Exhibits 99.1 through 99.6.

The Committee also authorized the Company’s Chief Executive Officer to enter
into Tier I Agreements and Tier II Agreements with executives (other than the
Chief Executive Officer) who become Tier I Executives or Tier II Executives
through hiring or promotion.

  B. 1997 Equity and Incentive Plan

In September 2005, the Compensation Committee approved certain changes to the
definition of the term “Change in Control” in the 1997 Equity and Incentive
Plan (the “EIP”). At the December meeting, the Committee approved a number
of additional changes to the EIP which are largely clarifying and/or
technical in nature. Among the substantive changes to the EIP approved by
the Committee are (i) the deletion of the sale of two of the three primary
business units of the Company from the definition of the term “Change in
Control;” (ii) the exclusion of a public offering or liquidation of a
business unit from the definition of the term “Change on Control;” and (iii)
the inclusion of the sale of any business unit (as opposed to specifically
named business units) within the definition of the term “Change in Control.”

A copy of the amended and restated 1997 Equity and Incentive Plan is attached

as Exhibit 99.7 to the above-referenced 8-K. The foregoing description of the EIP is qualified
in its entirety by reference to Exhibit 99.7.

  C. Value Management Plan

In September 2005, the Compensation Committee approved certain changes to the
Value Management Plan, including that the term “Change in Control” has the
meaning specified in the amended 1997 Equity and Incentive Plan. At the

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December meeting, the Committee approved a number of additional changes to
the Value Management Plan which are largely clarifying and/or technical in
nature. A copy of the amended and restated Value Management Plan is attached
to the above-referenced 8-K as Exhibit 99.8. The foregoing description of the Plan is qualified
in its entirety by reference to Exhibit 99.8.

  D. 2005 Deferred Compensation Plan for Executives

In September 2005, the Compensation Committee approved certain changes to the
2005 Deferred Compensation Plan for Executives. At the December meeting, the
Committee approved a number of additional changes to the 2005 Deferred
Compensation Plan for Executives that are largely clarifying and/or
technical in nature, including amendments relating to changes in deferral
elections after the commencement of a performance period and to the crediting
of returns to account balances. A copy of the amended and restated 2005
Deferred Compensation Plan for Executives is attached to the above-referenced 8-K as Exhibit 99.9.
The foregoing description of the Plan is qualified in its entirety by
reference to Exhibit 99.9.

  E. Form of Stock Option Agreement and Restricted Stock Award Agreement

At the December meeting, the Compensation Committee approved a number of
changes, which are largely clarifying and/or technical in nature, to the form
of Stock Option Agreement and to the form of Restricted Stock Award Agreement
used to evidence awards of stock options and restricted stock made to
executives under the 1997 Equity and Incentive Plan. Among the substantive
changes were changes to certain vesting provisions and exercise provisions
made to conform to changes made to the definition of the term “Change in
Control” in the 1997 Equity and Incentive Plan. Copies of the amended form
of Stock Option Agreement and Restricted Stock Award Agreement are attached
to the above-referenced 8-K as Exhibits 99.10 and 99.11. The foregoing description of the
agreements is qualified in its entirety by reference to Exhibits 99.10 and
99.11.

F. Discretionary Bonus Authority

At the December meeting, the Compensation Committee delegated authority to
the Company’s Chief Executive Officer to award discretionary bonuses to
employees, subject to the following conditions:

	 	1.	 	The Chief Executive Officer may not award discretionary bonuses to
executive officers who are in positions that are classified within
the Company’s executive level salary grade structure as Grade 1 or
Grade 2 officers. Based on the current grade structure, the Chief
Executive Officer does not have the authority to grant
discretionary bonuses to himself, the Chief Financial Officer, the

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	 	 	 	General Counsel or the President of the Company’s Con-Way
Transportation Services, Inc. subsidiary.
	 
	 	2.	 	A discretionary bonus may be awarded only in circumstances in
which the Chief Executive Officer determines that an employee’s
efforts have resulted in a substantial benefit to the Company.
	 
	 	3.	 	Each discretionary bonus cannot exceed, on a pre-tax basis, the
greater of $50,000 or 50% of the employee’s target annual
incentive compensation plan award for the calendar year in which
the discretionary bonus is awarded.
	 
	 	4.	 	The discretionary bonus may be awarded in the form of cash,
nonqualified stock options, or a combination of the two.
	 
	 	5.	 	The aggregate amount of discretionary bonuses awarded by the Chief
Executive Officer pursuant to this authority in a calendar year
may not exceed $250,000.
	 
	 	6.	 	The Chief Executive Officer will report at least annually to the
Compensation Committee regarding discretionary bonuses made under
this authority.

			
	VI.	 	Arrangements Made on January 23, 2006 and Disclosed in a Report on Form 8-K Filed on January
25, 2006

A. Executive Compensation. On January 22 and 23, 2006, the Company’s
Compensation Committee, together with (in the case of the compensation of the
Company’s Chief Executive Officer), the other independent members of the
Board of Directors, approved the following:

Salary Increases:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Officer	 	Title	 	Current Salary	 	% Increase	 	New Salary
	Douglas W. Stotlar (1)
	 	President and Chief Executive Officer	 	$	650,000	 	 	 	3.85	%	 	$	675,012	 
	Robert L. Bianco (2)
	 	President, Menlo Worldwide, LLC	 	$	339,976	 	 	 	6.0	%	 	$	360,412	 
	John G. Labrie (3)
	 	President, ConWay Supply Chain Services, LLC	 	$	325,000	 	 	 	5.0	%	 	$	341,276	 

13

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Officer	 	Title	 	Current Salary	 	% Increase	 	New Salary
	David S. McClimon (4)
	 	President, ConWay Transportation Services, Inc.	 	$	395,044	 	 	 	6.0	%	 	$	418,756	 
	Jennifer W. Pileggi
	 	Senior Vice President, General Counsel & Secretary	 	$	310,024	 	 	 	5.0	%	 	$	325,572	 
	Kevin C. Schick (5)
	 	Senior Vice President and Chief Financial Officer	 	$	310,024	 	 	 	12.9	%	 	$	350,012	 

 

			
	(1)	 	Mr. Stotlar was appointed President and Chief Executive Officer of CNF Inc. on April 25, 2005.
	 
	(2)	 	Mr. Bianco is also Vice President of CNF Inc.
	 
	(3)	 	Mr. Labrie is also Vice President of CNF Inc.
	 
	(4)	 	Mr. McClimon is also Senior Vice President of CNF Inc.
	 
	(5)	 	Mr. Schick was appointed Senior Vice President and Chief Financial Officer, effective April 1, 2005.

2006 Incentive Compensation Awards. The annual incentive compensation awards
are based upon performance objectives approved by the Compensation Committee.
The 2006 awards to Messrs. Stotlar and Schick and Ms. Pileggi are based on
the pre-tax, pre-incentive income of the Company; the award to Mr. Bianco is
based in part on the pre-incentive operating income of Menlo Worldwide, LLC
and in part on the pre-tax, pre-incentive income of the Company; the award to
Mr. McClimon is based in part on the pre-incentive operating income of Con-
Way Transportation Services, Inc. and in part on the pre-tax, pre-incentive
income of the Company; and the award to Mr. Labrie is based in part on the
pre-incentive operating income of Con-Way Supply Chain Services, LLC and in
part on the pre-tax, pre-incentive income of the Company. The maximum
incentive compensation for any officer is equal to twice his or her target
award.

14

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Target Award,	 	 	 	 
	 	 	 	 	 	 	as Percentage	 	Target Award	 	Maximum
	Officer	 	Title	 	of Salary	 	($)	 	Award ($)
	Douglas W. Stotlar
	 	President and Chief Executive Officer	 	 	100	%	 	$	675,012	 	 	$	1,350,024	 
	Robert L. Bianco
	 	President, Menlo Worldwide, LLC	 	 	60	%	 	$	216,247	 	 	$	432,494	 
	John G. Labrie
	 	President, Con-Way Supply Chain Services, LLC	 	 	60	%	 	$	204,766	 	 	$	409,532	 
	David S. McClimon
	 	President, Con-Way Transportation Services, Inc.	 	 	75	%	 	$	314,067	 	 	$	628,134	 
	Jennifer W. Pileggi
	 	Senior Vice President, General Counsel & Secretary	 	 	75	%	 	$	244,179	 	 	$	488,358	 
	Kevin C. Schick
	 	Senior Vice President and Chief Financial Officer	 	 	75	%	 	$	262,509	 	 	$	525,018	 

Value Management Plan Awards for Three-Year Cycle Ending December 31, 2008.
Value Management awards are governed by the terms of the Company’s Value
Management Plan. Two-thirds of each award is based upon the “absolute
performance” of one or more business units, as measured by EBITDA (earnings
before interest, taxes, depreciation and amortization) and by ROCE (return on
capital employed), and one-third on CNF’s relative total shareholder return
for the three-year cycle. The performance objectives are approved by the
Compensation Committee.

For the 2006-2008 cycle, Mr. McClimon’s award is based in part on the
performance of Con-Way Transportation Services, Inc. and in part on the
performance of the Company, Mr. Labrie’s award is based in part on the
performance of Con-Way Transportation Services, Inc. and in part on the
performance of the Company, and Mr. Bianco’s award is based in part on the
performance of Menlo Worldwide, LLC and in part on the performance of the
Company. Payments on the awards set forth in the table below are payable in
2009, based on actual performance for the three-year period commencing
January 1, 2006 and ending December 31, 2008. The maximum Value Management
Plan award for any officer is equal to twice his or her target award. A copy

15

 

of the amended and restated Value Management Plan is attached to the above-referenced 8-K as
Exhibit 99.1. The foregoing description of the Value Management Plan is
qualified in its entirety by reference to such exhibit.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Target Award	 	Target Award	 	Maximum 
	Officer	 	Title	 	(% of Salary)	 	($)	 	Award ($)
	Douglas W. Stotlar
	 	President and Chief Executive Officer	 	 	200	%	 	$	1,350,024.00	 	 	$	2,700,048.00	 
	Robert L. Bianco
	 	President, Menlo Worldwide, LLC	 	 	62.5	%	 	$	225,257.50	 	 	$	450,515.00	 
	John G. Labrie
	 	President, Con-Way Supply Chain Services, LLC	 	 	62.5	%	 	$	213,297.50	 	 	$	426,595.00	 
	David S. McClimon
	 	President, Con-Way Transportation Services, Inc.	 	 	112.5	%	 	$	471,100.50	 	 	$	942,201.00	 
	Jennifer W. Pileggi
	 	Senior Vice President, General Counsel & Secretary	 	 	112.5	%	 	$	366,268.50	 	 	$	732,537.00	 
	Kevin C. Schick
	 	Senior Vice President and Chief Financial Officer	 	 	112.5	%	 	$	393,763.50	 	 	$	787,527.00	 

Stock Option Awards. Each stock option award described in the table below is
made pursuant to, and is governed by the terms of, the Company’s 1997 Equity
and Incentive Plan and a stock option agreement in the form attached hereto
as Exhibit 99.2 entered into by the Company and the executive. These
documents provide that the options have a term of ten years, will vest in
equal annual installments over three years, commencing January 1, 2007, or
earlier in certain circumstances (including in the event of death or
disability or upon a Change in Control). Upon retirement at age 65 or
pursuant to the “Rule of 85” (providing for an unreduced retirement benefit
upon early retirement), the options continue to vest in accordance with their
terms.

16

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Non-	 	 	 	 	 	 
	 	 	 	 	 	 	Qualified	 	Incentive	 	Total	 	 
	 	 	 	 	 	 	Option	 	Stock Option	 	Option	 	Exercise
	Officer	 	Title	 	Shares	 	Shares	 	Shares	 	Price
	Douglas W. Stotlar
	 	President and Chief Executive Officer	 	 	53,189	 	 	 	1,811	 	 	 	55,000	 	 	$	55.20	 
	Robert L. Bianco
	 	President, Menlo Worldwide LLC	 	 	8,700	 	 	 	0	 	 	 	8,700	 	 	$	55.20	 
	John G. Labrie
	 	President, Con-Way Supply Chain Services, LLC	 	 	8,700	 	 	 	0	 	 	 	8,700	 	 	$	55.20	 
	David S. McClimon
	 	President, Con-Way Transportation Services, Inc.	 	 	16,589	 	 	 	1,811	 	 	 	18,400	 	 	$	55.20	 
	Jennifer W. Pileggi
	 	Senior Vice President, General Counsel & Secretary	 	 	14,189	 	 	 	1,811	 	 	 	16,000	 	 	$	55.20	 
	Kevin C. Schick
	 	Senior Vice President and Chief Financial Officer	 	 	14,189	 	 	 	1,811	 	 	 	16,000	 	 	$	55.20	 

B. Adjustment to Value Management Plan Award Performance Goals

In December 2004, the Company closed the sale of its Menlo Worldwide
Forwarding subsidiary (“Forwarding”) to United Parcel Service, Inc. At its
January 22, 2006 meeting, the Compensation Committee exercised its discretion
under the terms of the Value Management Plan to amend the performance goals
applicable to awards made to executives employed by the Company and by Menlo
Worldwide for the 2004-2006 award cycle, in order to reflect the sale of
Forwarding.

17

 

Under the Value Management Plan, two-thirds (2/3) of each award is based upon
the “absolute performance” of one or more business units, as measured by
EBITDA (earnings before interest, tax, depreciation and amortization) and by
ROCE (return on capital employed). The performance goals originally approved
by the Committee and applicable to awards made to executive employed by CNF
and by Menlo Worldwide included EBITDA and ROCE for Forwarding for the entire
three-year cycle; however, following the December 2004 sale Forwarding no
longer contributed to EBITDA and ROCE. As a result, the Committee elected to
amend the performance goals for the 2004-2006 cycle so as to remove
Forwarding from the goals for the 2005 and 2006 (but not 2004) calendar
years.

C. Value Management Plan

In 2005, the Compensation Committee approved certain changes to the Value
Management Plan, including changes providing for executives who transfer from
one business unit to another during a Value Management Plan award cycle to
receive a pro rata payment for that award cycle, based on the performance of
each of the business units which employed that executive during the cycle. At
its January 22, 2006 meeting, the Committee amended the Value Management Plan
to provide that the pro rata payment will be received by each affected
executive unless the Committee determines otherwise. The Committee also
determined that Mr. Stotlar will not receive a pro rata payment for the 2005-
2007 award cycle (but instead will receive a payment based solely on the
performance of Con-Way Transportation Services, Inc. for the cycle), even
though he transferred from Con-Way Transportation Services, Inc. to the
Company upon his promotion to President and CEO in April 2005.

D. Form of Stock Option Agreement

At the January 22, 2006 December meeting, the Compensation Committee approved
certain amendments, which are largely clarifying and/or technical in nature,
to the form of Stock Option Agreement used to evidence awards of stock options
made to executives under the 1997 Equity and Incentive Plan. The amendments
(i) clarify that all unvested options automatically vest upon the death or
disability (as defined) of an executive who at the time of death or disability
is an active full-time employee; (ii) provide that all unvested options held
by retired executives automatically vest upon the executive’s death;
(iii) amend the definition of the term “disability;” and (iv) provide that
options continue to be exercisable for a period of one year following an option
holder’s death (but not beyond the ten-year term of the option).

E. Director Compensation

On January 23, 2006 the Board of Directors, based on the recommendation of

18

 

the Director Affairs Committee, approved a supplemental chair retainer of
$200,000 for Dr. W. Keith Kennedy, Jr., the Chairman of the Company’s Board
of Directors, in calendar year 2006. In addition to the supplemental chair
retainer, Dr. Kennedy also will receive the annual cash retainer of $70,000
paid to all members of the Board of Directors. Each of these retainers is
payable quarterly in advance. In 2006, Dr. Kennedy also will receive a grant
of restricted stock having a value at the time of grant of $65,000. The
restricted stock grant will be made in April 2006, after directors are
elected at the Company’s annual meeting of shareholders. In 2005, Dr. Kennedy
received an annualized chair retainer of $750,000 during the period from
April 25, 2005 (when he stepped down as interim Chief Executive Officer of
the Company) through December 31, 2005, in recognition of his increased
responsibilities and time commitment as Chair to ensure that the Board’s
strategic direction was communicated to and embraced by the new Chief
Executive Officer, Mr. Stotlar, during the first few months following
his assumption of such executive responsibilities.

19exv10w13

 

Exhibit 10.13

CNF INC.

SUMMARY OF INCENTIVE COMPENSATION PLANS FOR

2006

For 2006, CNF Inc. and certain of its subsidiaries (each a “CNF Company”) have adopted short-term
incentive compensation plans that provide for annual incentive compensation to be paid to plan
participants if certain performance goals are met by the applicable CNF Company. This document
summarizes the general terms of those plans. The plans vary in terms of the performance measures
to be met, and the amount of compensation to be paid, but generally contain the terms as described
below.

THE PLANS

In order to motivate eligible employees to perform more effectively and efficiently, each CNF
Company has established a short-term incentive compensation plan (Plan), under which participants
are eligible to receive short-term incentive compensation payments based upon calendar year 2006
Incentive Performance Goals.

DESIGNATION OF PARTICIPANTS

Participation in each Plan is primarily limited to full-time non-contractual employees of the
applicable CNF Company. A master list of each Plan’s participants is maintained in the office of
the President of the applicable CNF Company.

ELIGIBILITY FOR PAYMENT

Participants generally commence participation in the Plans on January 1, 2006. Eligible employees
who are employed by a CNF Company after January 1 commence participation at the beginning of the
first full calendar quarter after joining the CNF Company. Calendar quarters begin January 1,
April 1, July 1, and October 1 or the

first working day thereafter. A participant who commences participation in the Plan during the
2006 Plan year, and who participates less than four full quarters, receives a pro rata payment
based on the number of full calendar quarters of Plan participation.

Subject to the following exceptions, no participant is eligible to receive any payment under a Plan
unless on the date the payment is actually made that person is then currently (i) employed by a CNF
Company and (ii) a Plan participant.

EXCEPTION 1. A Plan participant who is employed by a CNF Company through December 31, 2006, but
leaves that employment or otherwise becomes ineligible after December 31, 2006 but before the
final payment is made relating to 2006, unless terminated for cause, is entitled to receive
payments under the Plan.

 

 

EXCEPTION 2. An appropriate pro rata payment will be made (1) to a Plan participant who retires
prior to December 31, 2006 pursuant to the CNF Inc. Retirement Plan and who, at the time of
retirement, was a participant in the Plan, (2) to the heirs, legatees, administrators or
executors of a Plan participant who dies prior to December 31, 2006 and who, at the time of
death, was a
participant in the Plan, (3) to a Plan participant who is placed on an approved leave prior
to December 31, 2006, or (4) to a Plan participant who is transferred to another CNF
Company and who remains an employee through December 31, 2006.

METHOD OF PAYMENT

Each Plan participant is assigned an incentive participation factor as a percent of
annual compensation. The incentive participation factor is indexed to specific performance goals
such as revenue, profit, etc.

Minimum and incentive factor performance goals are established separately for each Plan.
Participants are not entitled to any payments under the Plan until the minimum performance goal
is achieved. Incentive compensation for the assigned goals will be earned on a pro rata basis
for accomplishments between the minimum level and the incentive plan goals and may be earned at a
different rate for performance over the incentive plan goal.

The maximum payment that any Plan participant may receive is 200% of incentive compensation factor.
In addition, the aggregate amount of payments to all participants is limited to the amount of a
specified pool of funds.

DATE OF PAYMENT

The President of each CNF Company may authorize a partial payment of the estimated annual incentive
compensation earned under the Plan to be made in December 2006. The final payment to
participants, less any previous partial payment, is to be made on or before March 15, 2007.

INCENTIVE PERFORMANCE GOALS

Incentive Performance Goals are defined by each Plan but generally consist of profits equal to
earnings before deducting any amounts expensed for Loss and Damage, Workers Compensation, Company
and/or qualified subsidiary incentive plans, income taxes and for some plans interest income and
expense. Incentive Performance Goals may also include specific levels of revenue, profit, or other
measurable factors. The Compensation Committee of the CNF Board of Directors reserves the right to
define and determine whether an extraordinary item is to be included in the calculated profit
figure.

 

 

ANNUAL COMPENSATION

Annual Compensation for incentive purposes for each Plan participant is that participant’s
annualized salary before any incentive or other special compensation (including, but not limited
to, short and long term disability insurance plan payments) as of February 1st 2006 for
participants eligible as of the beginning of the year. Participants will receive the benefit of
promotional increases from the week it becomes effective. For those qualifying in subsequent
quarters, the first pay period following the date the participant becomes eligible to participate
in this Plan will be used. The term “special compensation” used herein does not include deferred
salary arrangements wherein the participant could have chosen to receive the deferred salary in
the Plan year.

LAWS GOVERNING PAYMENTS

No payment shall be made under this Plan in an amount that is prohibited by law.

AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN

The Board of Directors of the CNF Company may at any time amend, suspend, or terminate the
operation of the Plans, by thirty-day written notice to the Plan participants, and has full
discretion as to the administration and interpretation of this Plan. No participant in this Plan
shall at any time have any right to receive any payment under this Plan until such time, if any, as
any payment is actually made.

DURATION OF PLANS

The Plans are for the calendar year 2006 only.

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