CON-WAY INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Notice of Annual Meeting

and

Proxy Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Meeting of Shareholders

MAY 10, 2011

Con-way Inc.

 

Con-way Inc.

ANN ARBOR, MICHIGAN 48105

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May 10, 2011
9:00 A.M., local time
Con-way Inc., 2211 Old Earhart Road, Ann Arbor, Michigan

 

FELLOW SHAREHOLDER:

 

The Annual Meeting of Shareholders of Con-way Inc. will be held at 9:00 A.M., local time, on Tuesday, May 10, 2011, to:

 

 

Shareholders of record at the close of business on March 21, 2011, are entitled to notice of and to vote at the meeting.

 

Your vote is important. Whether or not you plan to attend, I urge you to vote your shares following the instructions found under “Proxy Voting Convenience” in the attached Proxy Statement in order that as many shares as possible will be represented at the meeting. If you attend the meeting and prefer to vote in person, you will be able to do so and your vote at the meeting will revoke any proxy you may submit.

 

Sincerely,

 

JENNIFER W. PILEGGI

Secretary

 

April 5, 2011

 

TABLE OF CONTENTS

 

 

Con-way Inc.

2211 OLD EARHART ROAD, SUITE 100
ANN ARBOR, MICHIGAN 48105
TELEPHONE: 734/757-1444

 

 

 

The proxy statement and annual report, including Form 10-K,
are available at: http://investors.con-way.com

 

Also available on the Web site are the Company’s proxy card, as well as
an instruction card for voting shares of common
stock held in the Company’s 401(k) plans.

 

 

 

April 5, 2011

 

The Annual Meeting of Shareholders of Con-way Inc. (the “Company”) will be held on Tuesday, May 10, 2011. Shareholders of record at the close of business on March 21, 2011 will be entitled to vote at the meeting. This proxy statement and accompanying proxy are first being sent to shareholders on or about April 5, 2011.

 

The Board of Directors of the Company is soliciting your proxy for use at the meeting and any adjournment or postponement of the meeting. The Board recommends a vote “FOR” the election of the nominees for directors described below, “FOR” approval of the Con-way Inc. Amended and Restated 2006 Equity and Incentive Plan, “FOR” the approval, on an advisory basis, of the Company’s executive compensation, and “FOR” ratification of the appointment of KPMG LLP as independent auditors. The Board also recommends that shareholders select “ONE YEAR” for the frequency of future advisory votes on executive compensation.

 

To be effective, your vote, whether by properly signed proxies or telephone or Internet voting, must be received by the Company prior to the meeting. The shares represented by your proxy will be voted in accordance with your instructions. However, if you return a signed proxy card and no instructions are given, your shares will be voted in accordance with the recommendations of the Board.

 

A majority of the votes attributable to all voting shares must be represented in person or by proxy at the meeting to establish a quorum for action at the meeting. A nominee for director will be elected to the Board of Directors if the votes cast for the nominee’s election exceed the votes cast against the nominee’s election. Any incumbent director who fails to receive the required number of votes for re-election is subject to the Company’s Director Resignation Policy, which is described below. With respect to the advisory vote on the frequency of future advisory votes on executive compensation, the frequency (one, two or three years) receiving the most votes will be the recommendation of shareholders. All other matters on the agenda for the meeting require the favorable vote of the holders of a majority of the voting power represented at the meeting.

For all matters, broker non-votes will be disregarded and have no effect on the outcome of the vote. Abstentions from voting will have no effect on the election of directors or on the advisory vote on the frequency of future advisory votes on executive compensation. For all other matters, abstentions from voting will have the same effect as voting against the matter.

 

At the close of business on March 21, 2011, the record date for the Annual Meeting, there were outstanding and entitled to vote 55,136,624 shares of Common Stock. Each share of Common Stock has the right to one non-cumulative vote. Therefore, an aggregate of 55,136,624 votes are eligible to be cast at the meeting.

 

You are encouraged to exercise your right to vote.

 

If you are a shareholder of record or a participant in a Company 401(k) plan, you can give your proxy by calling a toll-free number, by using the Internet, or by mailing your signed proxy card or plan instruction card. Specific instructions for voting by means of the telephone or Internet are set forth on the proxy card or plan instruction card. The telephone and Internet voting procedures are designed to authenticate each shareholder’s identity and to allow each shareholder to vote his or her shares and confirm that his or her voting instructions have been properly recorded. If you vote by telephone or on the Internet, you do not have to return your proxy card or plan instruction card. If you do not wish to vote by telephone or via the Internet, please complete, sign and return the proxy card or plan instruction card in the self-addressed, postage-paid envelope provided. You may also vote your shares in person at the meeting.

 

If you hold your shares beneficially (that is, “in street name” through a broker, bank or other nominee), you must follow directions received from the broker, bank or other nominee in order to vote your shares.

 

You may revoke or change your proxy at any time prior to its use at the meeting. There are three ways you may do so: (1) give the Company a written direction to revoke your proxy; (2) submit a later dated proxy card or plan instruction card, or a later dated vote by telephone or Internet, or (3) attend the meeting and vote in person.

 

All shareholders are invited to attend the meeting. Persons who are not shareholders may attend only if invited by the Board of Directors. If you are a shareholder but do not own shares in your name, you must bring proof of ownership (e.g., a current broker’s statement) in order to be admitted to the meeting. If you wish to attend the meeting in person, you can obtain driving directions to the Con-way offices in Ann Arbor, Michigan at www.con-way.com, in the Investor Events Calendar under the Investor tab.

The Board of Directors of the Company, pursuant to the By-laws, has determined that the number of directors of the Company shall be eleven. There are eleven nominees for director at our 2011 Annual Meeting of Shareholders. Under our Certificate of Incorporation, as amended (which was approved at our 2009 Annual Meeting of Shareholders), the classification of our Board was eliminated so that all directors are now elected annually for terms of one year. All of our directors, other than Ms. Perez, have previously been elected by shareholders. Ms. Perez was recommended to the Company’s Governance and Nominating Committee by a non-management director of the Company.

 

The following persons are the nominees of the Board of Directors for election to serve for a one-year term until the 2012 Annual Meeting of Shareholders and until their successors are duly elected and qualified:

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED ABOVE.

 

BIOGRAPHICAL INFORMATION

 

 

 

 

 

 

 

The Board of Directors of the Company has placed on the agenda of the meeting a proposal for the shareholders of the Company to approve the Con-way Inc. Amended and Restated 2006 Equity and Incentive Plan (the “Plan”). Capitalized terms used herein will, unless otherwise defined, have the meanings assigned to them in the text of the Plan.

 

As described further below, the Plan is being submitted for approval by shareholders so that certain awards granted under the Plan that are intended to qualify as “performance-based compensation” under Section 162(m) (“Section 162(m)”) of the Internal Revenue Service Code of 1986, as amended, (the “Code”) may so qualify. This proposal does not seek shareholder approval of an increase in the number of shares available for issuance under the Plan. Nor does this proposal seek shareholder approval of an extension to the term of the Plan.

 

The 2006 Equity and Incentive Plan (the “Original Plan”) was adopted by the Board of Directors on January 23, 2006, subject to approval by the shareholders of the Company, and was approved by shareholders at the Company’s Annual Meeting of Shareholders held on April 18, 2006. Since April 18, 2006, the Board of Directors has approved certain non-material amendments to the Original Plan. These amendments were made (i) to incorporate changes necessary to keep the Original Plan compliant with Section 409A of the Internal Revenue Code, (ii) to make certain minor revisions to the definition of the term “Change of Control” and to provide that unless otherwise specified in an applicable award agreement, upon a Change in Control an award will vest only if there also occurs a qualifying termination of employment in connection with the Change in Control (that is, so-called “double-trigger vesting”), and (iii) to make certain administrative and clarifying changes. A copy of the Plan, which incorporates all changes made by the Board to the Original Plan, is attached hereto as Exhibit A.

 

The term of the Plan is 10 years from the date of the Board of Directors’ adoption of the Original Plan, and unless terminated earlier by the Board the Plan will terminate on January 23, 2016. As originally approved by shareholders and as currently in effect, the Plan authorizes a total of 6,200,000 shares of the Company’s common stock to be issued in connection with awards made under the Plan, subject to adjustment as described below. Up to 3,604,650 shares may be issued in connection with Restricted Stock, Phantom Stock Units and Other Stock-Based Awards, subject to adjustment as described below, No more than 1,550,000 shares of common stock may be awarded in the form of Options and SARs to a single individual over the term of the Plan, and no more than 500,000 shares of common stock may be awarded in the form of Restricted Stock and Phantom Stock Units to a single individual over the term of the Plan, in each case subject to adjustment as described below.

 

As of March 21, 2011, a total of 1,058,126 shares had been issued in connection with awards made under the Plan and an additional 3,277,747 shares were reserved for issuance in connection with awards outstanding under the Plan, leaving a balance of 1,809,472 shares available for future awards made under the Plan. A total of 626,804 shares had been issued or reserved for issuance in connection with awards of Options and SARs made to the Company’s Chief Executive Officer (the individual receiving the largest awards under the Plan), and a total of 209,468 shares had been issued or reserved for issuance in connection with Restricted Stock, Phantom Stock Units and Other Stock-Based Awards made to the Chief Executive Officer under the Plan.

 

The Plan was put in place to assist the Company in attracting, retaining and motivating highly talented executives and to help align the interests of those executives with the interests of the Company’s shareholders by providing for the grant of equity awards and other performance-based awards. The Plan is being submitted for approval by shareholders so that certain awards granted under the Plan that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code may so qualify. Section 162(m) denies a deduction by an employer for certain compensation in excess of

$1 million per year paid by a publicly traded corporation to the following individuals who are employed at the end of the employer’s taxable year (“Covered Employees”): the chief executive officer, and the three most highly compensated executive officers (other than the chief executive officer and the chief financial officer) for whom compensation disclosure is required under the proxy rules. Certain compensation, including compensation based on the attainment of performance goals, is excluded from this deduction limit if certain requirements are met.

 

One of these requirements is that the material terms (including the performance goals) pursuant to which the compensation is to be paid be disclosed to and approved by shareholders prior to payment. This requirement was originally met when the Company’s shareholders approved the 2006 Equity and Incentive Plan in 2006. However, Section 162(m) requires under certain circumstances that shareholders periodically re-approve the material terms of the Plan. Accordingly, if the Plan is re-approved by shareholders and the other conditions of Section 162(m) relating to the exclusion for performance-based compensation are satisfied, certain compensation paid to Covered Employees pursuant to the Plan will not be subject to the deduction limit of Section 162(m). If the Plan is not re-approved by shareholders, certain types of awards made under the Plan will be subject to the deduction limit of Section 162(m), and the Compensation Committee may or may not consider alternative means by which to compensate executives.

 

The following description of the Plan is qualified in its entirety by reference to the complete text of the Plan, attached hereto as Exhibit A.

 

General

 

The purposes of the Plan are to afford an incentive to selected employees of the Company and its Subsidiaries and Affiliates to continue as employees, to increase their efforts on behalf of the Company and to promote the success of the Company’s business.

 

The Plan generally provides for the grant of various types of stock- and cash-based compensation. The Plan includes both long-term incentive awards and an Annual Incentive Compensation Program. The long-term incentive awards include stock options (“Options”), including incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”); stock appreciation rights (“SARs”), which may be granted in tandem with or independently of Options; restricted stock and phantom stock units (“Restricted Awards”); dividend equivalents; and other stock- and cash-based awards (“Other Awards”). As more fully described below, the Annual Incentive Compensation Program provides for the granting of short-term cash-based awards. All awards will be evidenced by an agreement (an “Award Agreement”) or by a plan setting forth the terms and conditions applicable thereto.

 

Plan Administration

 

The Plan is administered by the Compensation Committee of the Board (the “Committee”), the composition of which will at all times satisfy the provisions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and Section 162(m) of the Code. The Plan provides that no member of the Board or the Committee will be liable for any action or determination taken or made in good faith with respect to the Plan.

 

Subject to the terms of the Plan, the Committee has the right, among other things, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including the authority to grant awards; to determine the persons to whom and the time or times at which awards shall be granted; to determine the type and number of awards to be granted, the number of shares of stock to which an award may relate and the terms, conditions, restrictions and Performance Goals (as defined below) relating to any award; to determine Performance Goals no later than such time as required to ensure that an underlying award which is intended to comply with the requirements of Section 162(m) so complies; to determine whether,

to what extent, and under what circumstances an award may be settled, canceled, forfeited, exchanged or surrendered; to make adjustments in the terms and conditions (including Performance Goals, if any) applicable to awards; to designate affiliates; to construe and interpret the Plan and any award; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the award agreements; and to make all other determinations deemed necessary or advisable for the administration of the Plan. However, the Committee shall not have the authority to lower the exercise price of any outstanding Option or SAR (other than in connection with stock splits, stock dividends and similar capital adjustments described below), nor shall the Committee have the authority to settle, cancel or exchange any outstanding Option or SAR in consideration for the grant of a new award with a lower exercise price. Unless otherwise provided by the Committee in an Award Agreement, each award will vest in the event of a Grantee’s termination of employment upon or within two (2) years following a Change in Control, subject to certain exceptions.

 

Shares Subject to the Plan

 

The maximum number of shares of the Company’s common stock (“Common Stock”) reserved for the grant of awards under the Plan is 6,200,000, subject to adjustment as provided in the Plan. The per-share market value of the Common Stock was $38.50 on March 21, 2011. Each share of Restricted Stock, each Phantom Stock Unit payable in shares of Stock and each share of Stock subject to an Other Stock-Based Award that is granted will reduce the pool of shares available for issuance under the Plan by 1.72 shares, and as a result, no more than 3,604,650 shares of Common Stock may be awarded in the aggregate in respect of Restricted Stock, Phantom Stock Units and Other Stock-Based Awards over the term of the Plan, subject to adjustment as described below. No more than 1,550,000 shares of Common Stock may be awarded in the form of Options and SARs to a single individual over the term of the Plan, and no more than 500,000 shares of Common Stock may be awarded in the form of Restricted Stock and Phantom Stock Units to a single individual over the term of the Plan, in each case subject to adjustment as described below. Shares subject to an award that is forfeited, canceled, exchanged, surrendered or terminated will again be available for issuance under the Plan, to the extent of such forfeiture, cancellation, exchange, surrender or termination, with shares becoming available for issuance under the Plan on the basis of 1.72 shares for every share of Restricted Stock, every Phantom Stock Unit and every share subject to an Other Stock-Based Award that is forfeited, canceled, exchanged, surrendered or terminated. The following shares of Stock shall not be available for future grant under the Plan: (1) unissued shares that are retained by the Company, or issued shares that are surrendered by the Grantee to the Company, in each case upon exercise of an Option in order to satisfy the exercise price for such Option or any withholding taxes due with respect to such exercise; (2) shares of Restricted Stock withheld upon vesting to cover taxes; and (3) shares of Stock that otherwise would be issued with respect to an SAR, Phantom Stock Unit or Other Stock-Based Award but are instead retained in order to satisfy withholding taxes. Unless terminated earlier by the Board, the Plan will terminate on January 23, 2016 (ten years after the date the Plan was first adopted by the Board).

 

The Plan provides that, in the event of any dividend or other distribution, recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, which affects the stock such that one or more adjustments or changes are necessary in order to prevent dilution or enlargement of rights under the Plan, then the Committee shall make such equitable changes or adjustments to any or all of (i) the number and kind of shares of stock or cash that may thereafter be issued in connection with awards, (ii) the number and kind of shares of stock or cash issued or issuable in respect of outstanding awards, (iii) the exercise price, grant price, or purchase price relating to any award, (iv) the Performance Goals and (v) the individual limitations applicable to awards. Any such adjustments or changes shall be made in a manner such that the effect on Grantees under the Plan is consistent with the effect of the corporate transaction on shareholders generally.

Eligibility

 

Discretionary grants of awards may be made to any employee of the Company or its Subsidiaries or Affiliates who is determined by the Committee to be eligible for participation in the Plan, consistent with the purposes of the Plan.

 

Long-Term Incentive Awards

 

Options

 

Options will vest and become exercisable over the exercise period, at such times and upon such conditions as the Committee determines and as set forth in the Award Agreement. The Committee may accelerate the exercisability of any outstanding Option at such time and under such circumstances, as it deems appropriate. Options are generally exercisable during the optionee’s lifetime only by the optionee. The Award Agreements will contain provisions regarding the exercise of Options following termination of employment with or service to the Company, including terminations due to the death, disability or retirement of an award recipient, or upon a Change in Control of the Company (as defined in the Plan). In addition to the terms and conditions governing NQSOs, ISOs awarded under the Plan must comply with the requirements set forth in Section 422 of the Code.

 

The purchase price per share of Common Stock subject to the exercise of an Option will be as determined by the Committee but may not be less than the Fair Market Value per share on the date of grant, subject to adjustment in accordance with the antidilution provisions described in “Shares Subject to the Plan”, above. Upon the exercise of any Option, the purchase price may be fully paid in cash, by delivery of Common Stock previously owned by the optionee equal in value to the purchase price, or by a combination of both.

 

Stock Appreciation Rights

 

Unless the Committee determines otherwise, an SAR (1) granted in tandem with an NQSO may be granted at the time of grant of the related NQSO or at any time thereafter or (2) granted in tandem with an ISO may only be granted at the time of grant of the related ISO. An SAR will be exercisable only to the extent the underlying Option is exercisable.

 

Upon exercise of an SAR, the grantee will receive, with respect to each share subject thereto, an amount equal in value to the excess of (1) the Fair Market Value of one share of Common Stock on the date of exercise over (2) the grant price of the SAR (which in the case of an SAR granted in tandem with an Option will be the purchase price of the underlying Option, and which in the case of any other SAR will be the price determined by the Committee).

 

With respect to SARs that are granted in tandem with Options, each such SAR will terminate upon the termination or exercise of the pertinent portion of the related Option, and the pertinent portion of the related Option will terminate upon the exercise of any such SAR.

 

Restricted Stock

 

A Restricted Stock award is an award of Common Stock subject to such restrictions on transferability and other restrictions as the Committee may impose at the date of grant or thereafter. Each Restricted Stock award shall be subject to restrictions, imposed at the date of grant, relating to either or both of (1) the attainment of Performance Goals by the Company or (2) the continued employment of the grantee with the Company, a Subsidiary or an Affiliate. All performance-based Restricted Stock Awards will have a minimum vesting period of one year, with no vesting prior to the end of the performance period except in the case of specified events, including, without limitation, death, disability or a Change in Control. With respect to any shares of Restricted Stock subject to restrictions which lapse solely based on the grantee’s continuation of employment with the Company, a Subsidiary or an Affiliate, such restrictions shall lapse

over a vesting schedule (so long as the grantee remains employed with the Company, a Subsidiary or an Affiliate) no shorter in duration than three years from the date of grant; provided that such vesting schedule may provide for partial or installment vesting from time to time during such period and may be subject to acceleration in the case of specified events, including, without limitation, death, disability or a Change in Control. Unless an Award Agreement provides otherwise, a Restricted Stock recipient will have all of the rights of a shareholder during the restriction period, including the right to vote Restricted Stock and the right to receive dividends thereon.

 

If the recipient of an award of Restricted Stock terminates employment with the Company during the applicable restricted period, Restricted Stock and any accrued but unpaid dividends or dividend equivalents that are at that time still subject to restrictions will be forfeited (unless the applicable Award Agreement or the Committee provide otherwise).

 

Phantom Stock Units

 

Recipients of Phantom Stock Units will be entitled to receive cash or shares of Common Stock, as determined by the Committee, upon expiration of the restricted period specified for such Phantom Stock Units in the related Award Agreement. The Committee may place restrictions on Phantom Stock Units, which lapse, in whole or in part, on the attainment of certain Performance Goals. Phantom Stock Units credited under the Company’s Deferred Compensation Plan for Executives shall constitute awards of Phantom Stock Units under the Plan. Such awards may be settled under the Plan by the delivery of cash or shares of Stock and shall otherwise be subject to the terms and conditions of the Deferred Compensation Plan for Executives.

 

Upon termination of employment with the Company during any applicable deferral period to which forfeiture conditions apply, or upon failure to satisfy any other conditions precedent to the delivery of cash or Common Stock pursuant to a Phantom Stock Unit award, all such units that are subject to deferral or restriction will be forfeited (unless the applicable Award Agreement or the Committee provides otherwise).

 

Dividend Equivalents

 

Dividend equivalents may be granted, which relate to Options, Rights or other awards under the Plan, or may be granted as freestanding awards. The Committee may provide, at the grant date or thereafter, that dividend equivalents will be paid or distributed to a grantee when accrued with respect to Options, Rights or other awards under the Plan, or will be deemed to have been reinvested in additional shares of Common Stock (or such other investment vehicles as the Committee may specify). Dividend equivalents which are not freestanding will be subject to all conditions and restrictions applicable to the underlying awards to which they relate.

 

Other Awards

 

The Committee may grant such other long-term incentive stock-based or cash-based awards as it deems consistent with the purposes of the Plan. Such awards may be granted with value and payment contingent upon the attainment of specified individual or Company (or Subsidiary) Performance Goals, so long as such goals relate to periods of performance in excess of one calendar year. The maximum payment in respect of such Other Awards that a grantee may receive under the Plan with respect to any performance period is $3 million. Payments in respect of such Other Awards may be decreased (or, with respect to any grantee who is not a Covered Employee, increased) in the sole discretion of the Committee. The Committee must certify the achievement of Performance Goals prior to the payment of Other Awards.

Annual Incentive Compensation Program

 

The Committee is authorized to grant awards to grantees under the Annual Incentive Bonus Program (the “Program”). Awards granted under the Program may be contingent on the attainment by the Company of one or more Performance Goals over a period of one year or less. The maximum payment that any grantee may receive under the Annual Incentive Bonus Program with respect to any performance period is $3 million. Payments may be decreased (or, with respect to any participant who is not a Covered Employee, increased) in the sole discretion of the Committee based on such factors as it deems appropriate. No payment shall be made prior to the certification by the Committee that any applicable Performance Goals have been attained.

 

Performance Goals

 

The Committee may provide that the payment of an award (or vesting thereof) will be contingent on the attainment of Performance Goals. Performance Goals are generally defined in the Plan as goals which are based on one or more of the following criteria: (i) pre-tax income, after-tax income, or operating income or profit, in each case computed with appropriate adjustments; (ii) return on equity, assets, capital or investment; (iii) earnings or book value per share; (iv) working capital; (v) sales or revenues, in each case computed with appropriate adjustments; (vi) accounts receivable or days sales outstanding; (vii) operating or administrative expense in the absolute or as a percent of revenue; (viii) stock price appreciation or total stockholder return (stock price appreciation plus dividends); (ix) operational efficiency factors; (x) safety (accidents), and (xi) implementation or completion of critical projects or processes.

 

Where applicable, Performance Goals will be expressed in terms of attaining a specified level of the particular criteria or attaining a specified increase or decrease in the particular criteria, and may be applied to one or more of the Company, Subsidiary or Affiliate, or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. Performance Goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Performance Goals will be determined in accordance with generally accepted accounting principles and are subject to certification by the Committee. To the extent not inconsistent with Section 162(m), the Committee has the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

 

Amendment; Termination

 

The Plan will terminate ten years after its adoption by the Board, unless sooner terminated. The Board may at any time terminate or amend the Plan in whole or in part. However, termination or amendment of the Plan may not adversely affect the rights of any participant without his or her consent, under awards previously granted under the Plan, and no amendment will be effective without shareholder approval if that approval is required by law or New York Stock Exchange rules.

 

Miscellaneous

 

The Company is authorized to withhold from any award granted, any payment relating to an award under the Plan (including from a distribution of Common Stock), or any other payment to a grantee, amounts of withholding and other taxes due in connection with the award, and to take such other action as

the Committee may deem advisable to enable the Company and grantees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to the award. This authority includes the right to withhold or receive Common Stock or other property and to make cash payments in respect thereof in satisfaction of a grantee’s tax obligations. If Stock is distributed to a Grantee with respect to an Award or the exercise thereof, and the withholding taxes exceed any cash being distributed at the same time, the Grantee may elect to have shares of Stock withheld sufficient to satisfy the withholding taxes that are in excess of such cash.

 

Unless otherwise provided by the Committee in an Award Agreement, awards granted under the Plan are not transferable, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order.

 

 

 

Certain Federal Income Tax Consequences

 

Set forth below is a discussion of certain federal income tax consequences relating to awards that may be granted pursuant to the Plan. The discussion constitutes a brief overview of the principal federal income tax consequences relating to the above-described awards based upon current federal income tax laws. This summary is not intended to be exhaustive and does not describe state, local or foreign tax consequences.

 

Stock Options

 

Non-Qualified Stock Options

 

In the case of an NQSO, an optionee generally will not be taxed upon the grant of an option. Rather, at the time of exercise of such NQSO (and in the case of an untimely exercise of an ISO), the optionee will generally recognize ordinary income for federal income tax purposes in an amount equal to the excess of the then fair market value of the shares purchased over the purchase price. The Company will generally be entitled to a tax deduction at the time and in the amount that the optionee recognizes ordinary income.

 

Incentive Stock Options

 

In the case of an ISO, an optionee will generally be in receipt of taxable income upon the disposition of the shares acquired upon exercise of the ISO, rather than upon the grant of the ISO or upon its timely exercise. If certain holding period requirements have been satisfied with respect to outstanding shares so acquired, taxable income will constitute long-term capital gain and the Company will not be entitled to a tax deduction. The tax consequences of any untimely exercise of an ISO will be determined in accordance with the rules applicable to NQSOs. The amount by which the fair market value of the stock on the exercise date of an ISO exceeds the option price will generally be an item of tax preference for purposes of the “alternative minimum tax” imposed by the Code.

 

Exercise with Shares

 

An optionee who pays the purchase price upon exercise of an option, in whole or in part, by delivering already owned shares of Common Stock will generally not recognize gain or loss on the shares surrendered at the time of such delivery, except under certain circumstances relating to ISOs. Rather, such gain or loss recognition will generally occur upon disposition or the shares acquired in substitution for the shares surrendered.

 

SARs

 

A grant of stock appreciation rights has no federal income tax consequences at the time of grant. Upon the exercise of stock appreciation rights, the value of the shares and cash received is generally

taxable to the grantee as ordinary income, and the Company generally will be entitled to a corresponding deduction.

 

Restricted Stock

 

Generally, the grant of restricted stock has no federal income tax consequences at the time of grant. Rather, at the time the shares are no longer subject to a substantial risk of forfeiture (as defined in the Code), the grantee will recognize ordinary income in an amount equal to the fair market value of such shares. A grantee may, however, elect to be taxed at the time of the grant. The Company generally will be entitled to a deduction at the time and in the amount that the grantee recognizes ordinary income.

 

Phantom Stock Units

 

In the case of Phantom Stock Units, a grantee generally will not be taxed upon the grant of such units but, rather, will recognize ordinary income upon the receipt of cash, shares or other property in payment of such Units. The amount recognized as ordinary income will equal the amount of cash received plus the value of shares and other property received. The Company generally will be entitled to a deduction at the time and in the amount that the grantee recognizes ordinary income.

 

Amounts Awarded Under the Plan

 

Because participation in the Plan and the amount and terms of awards under the Plan are at the discretion of the Committee (subject to the terms of the Plan) and because Performance Goals may vary from award to award and from grantee to grantee, benefits under the Plan are not presently determinable. Compensation paid and other benefits granted to Named Executives for the 2010 fiscal year are set forth in the Summary Compensation Table.

 

Shareholder Approval; Board Recommendation

 

Approval of the proposal requires the affirmative vote of a majority of the voting power represented at the meeting. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE CON-WAY INC. AMENDED AND RESTATED 2006 EQUITY AND INCENTIVE PLAN.

 

Equity Compensation Plan Information

 

The following table gives information as of December 31, 2010 regarding Company shares that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans (together, the “Equity Plans”).

 

 

 

 

 

Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) requires public companies, including Con-way, to permit their shareholders to cast a non-binding advisory vote on the company’s executive compensation, as disclosed pursuant to the SEC’s executive compensation disclosure rules. Accordingly, we are providing our shareholders at the annual meeting with the opportunity to cast a non-binding advisory vote on the compensation of our named executive officers contained in this proxy statement through the following resolution:

 

“RESOLVED, that the holders of Con-way’s common stock approve the compensation of its named executive officers, as disclosed in the proxy statement for the Con-way Inc. 2011 annual meeting of shareholders pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the report of the Compensation Committee, and the executive compensation tables and related footnotes and narrative).”

 

Because this vote is advisory, it will not be binding on our Board of Directors, overrule any decision made by the Board of Directors or create or imply any additional fiduciary duty by the Board. However, we recognize that our shareholders have a fundamental interest in our executive compensation practices. Accordingly, the Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements.

 

Our Board of Directors believes that our executive compensation and compensation practices and policies are necessary to attract, retain, and motivate a highly-qualified executive team, are focused on aligning executive and shareholder interests, and are reasonable when measured against our direct competitors in the less-than-truckload, logistics and truckload sectors as well as against companies in our focused peer group and in general industry.

 

Our Board of Directors unanimously recommends a vote FOR approval of the compensation of our named executive officers, as disclosed in the proxy statement for our 2011 annual meeting of shareholders pursuant to the SEC’s executive compensation disclosure rules.

 

 

 

As discussed in “Proposal 3 — Advisory Vote on Executive Compensation,” Section 14A of the Exchange Act requires public companies, including Con-way, to permit their shareholders to cast a non-binding advisory vote on the company’s executive compensation, as disclosed pursuant to the SEC’s

executive compensation disclosure rules. In addition, Section 14A of the Exchange Act requires public companies to permit their shareholders to cast a non-binding advisory vote on whether the company should hold future shareholder advisory votes on executive compensation every year, every two years, or every three years. Accordingly, we are providing our shareholders at the annual meeting with the opportunity to cast a non-binding advisory vote whether to conduct shareholder advisory votes on the compensation of our named executive officers every year, every two years, or every three years.

 

Because this vote is advisory, it will not be binding on our Board of Directors, overrule any decision made by the Board of Directors or create or imply any additional fiduciary duty by the Board. However, we recognize that our shareholders have a fundamental interest in our executive compensation practices. Consequently, the Compensation Committee may take into account the outcome of the vote when considering the frequency of future non-binding shareholder advisory votes on our executive compensation.

 

After careful consideration, our Board of Directors recommends that you vote in favor of having a shareholder advisory vote on the compensation of our named executive officers EVERY YEAR. In making its recommendation the Board considered that an annual vote would enable our shareholders to provide timely input on our executive compensation promptly after it is disclosed in our annual proxy statement. We recognize that our shareholders may have different views regarding the appropriate frequency of the advisory vote on executive compensation and we look forward to hearing from our shareholders on this proposal.

 

While the Board of Directors is in favor of a shareholder advisory vote on executive compensation every year, you may choose to vote in favor of any of three alternatives, i.e., having a shareholder advisory vote on executive compensation every year, every two years, or every three years (or you may abstain from voting on this matter). You are not being asked to vote for or against the Board’s recommendation of having a shareholder advisory vote every year.

 

 

 

At last year’s annual meeting, shareholders approved the appointment of KPMG LLP as independent public accountants to audit the consolidated financial statements of the Company for the year ended December 31, 2010. The Board recommends that shareholders vote in favor of ratifying the reappointment of KPMG LLP as the Company’s independent auditors for the year ending December 31, 2011. A representative of the firm will be present at the Annual Meeting of Shareholders with the opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from shareholders. The Company has been informed by KPMG LLP that neither the firm nor any of its members or their associates has any direct financial interest or material indirect financial interest in the Company or its affiliates.

 

Fees

 

During the Company’s fiscal years ended December 31, 2010 and December 31, 2009, the Company was billed the following aggregate fees by KPMG LLP.

 

Audit Fees.  The aggregate fees billed by KPMG LLP to the Company for professional services for the audit of the Company’s annual financial statements for the fiscal year, for reviews of the financial statements included in the Company’s Forms 10-Q for the fiscal year, and for services provided by KPMG LLP in connection with statutory or regulatory filings for the fiscal year, were $1,966,030 for the fiscal year ended 2010 and $2,172,693 for the fiscal year ended 2009.

 

Audit-related Fees.  The aggregate fees billed by KPMG LLP to the Company for assurance and related services were $5,000 for the fiscal year ended 2010 and $81,800 for the fiscal year ended 2009. These fees were for the audit of employee benefit plans.

Tax Fees.  The aggregate fees billed by KPMG LLP to the Company for professional services rendered for tax compliance, tax advice and tax planning were $75,500 for the fiscal year ended 2010 and $78,450 for the fiscal year ended 2009.

 

All Other Fees.  No fees were billed by KPMG LLP to the Company for products and services rendered for fiscal year 2009 or 2010, other than the Audit Fees, Audit-related Fees, and Tax Fees described in the preceding three paragraphs.

 

All of the services performed by KPMG LLP during 2010 were pre-approved by the Audit Committee of the Company’s Board of Directors, which concluded that the provision of the non-audit services described above is compatible with maintaining KPMG LLP’s independence.

 

Pre-Approval Policies and Procedures

 

Prior to retaining KPMG LLP to provide services in any fiscal year, the Audit Committee first reviews and approves KPMG’s fee proposal and engagement letter. In the fee proposal, each category of services (Audit, Audit Related, Tax and All Other) is broken down into subcategories that describe the nature of the services to be rendered, and the fees for such services. For 2010, the Audit Committee also approved nominal additional fees (beyond those included in the KMPG fee proposal) for services in a limited number of subcategories, based on the Company’s experience regarding the unanticipated need for such services during the year. The Company’s pre-approval policy provides that the Audit Committee must specifically pre-approve any engagement of KPMG for services outside the scope of the fee proposal and engagement letter.

 

The following table sets forth information regarding beneficial ownership of the Company’s Common Stock as of February 1, 2011 by the directors, the executive officers identified in the Summary Compensation Table below and by the directors and executive officers as a group.

 

 

 

 

The Board of Directors has determined that each incumbent director other than Douglas W. Stotlar is an independent director under the New York Stock Exchange listing standards.

 

The Company’s Board of Directors seeks to have members with a variety of backgrounds and experiences. Set forth below, for each current member of the Board of Directors, is a brief description of the experience, qualifications, attributes or skills that led the Board to conclude that the director should serve on the Board.

 

John J. Anton

 

Mr. Anton brings a broad base of experience to the Board, including 20 years of corporate management and executive experience with two consumer product companies as well as leveraged buyout and private equity experience. From this experience, Mr. Anton has developed an array of skills, including in the areas of strategic, business and financial planning and corporate development, which he draws upon in his service as a member of the Company’s Board of Directors. In particular, Mr. Anton’s consumer products marketing experience provides insight to the Board’s oversight of the Company’s businesses and was of benefit to the Board when the Company undertook its rebranding initiative in 2006.

 

William R. Corbin

 

Mr. Corbin’s experience derives from a career of over 35 years in the manufacturing, marketing, sales and distribution of timber and forest products. During the course of his career he served as a senior officer in three large corporations, including as Executive Vice President of Weyerhaeuser Company. Having been engaged in line operations, he has expertise in the areas of organizational effectiveness and industrial safety, which are important aspects of the Company’s operations. He also has international experience in Europe, Asia and South America, as well as mergers and acquisition and private equity experience, which provides insight when the Company considers strategic acquisitions.

 

Robert Jaunich II

 

Founder and a managing partner of a private investment company that makes and oversees majority equity investments in operating companies representing a broad spectrum of industries, Mr. Jaunich has over 20 years of operating experience focusing on strategic planning, finance, marketing and human resources. This experience facilitates his understanding of the Company’s business, particularly from the perspective of the customer. Mr. Jaunich’s experience includes prior service on the boards of directors of a number of publicly-traded companies, including in some cases as chair, which provides insights into how boards at other companies have addressed issues similar to those faced by the Company. Appointed to the Company’s Board of Directors in 1992, Mr. Jaunich is also the longest-serving Company director.

 

W. Keith Kennedy, Jr.

 

Dr. Kennedy brings a breadth of experience to the Company’s Board of Directors derived from his prior service as chief executive officer of a large publicly-traded manufacturing company that, like the Company, was engaged in multiple lines of business. He has experience in the areas of acquisitions and dispositions, doing business with the United States government, conducting business overseas and optimizing supply chains. In addition, Dr. Kennedy has knowledge of the Company’s businesses gained

both through his service as a Company director since 1996 and through his service as interim Chief Executive Officer from July 2004 to April 2005.

 

Michael J. Murray

 

Mr. Murray brings over 30 years of banking and finance experience to the Company’s Board. During his career he held a number of senior positions with major financial institutions, including the position of President of Global Corporate and Investment Banking at Bank of America Corporation. His experience advising major corporations and private equity firms on financing issues has enabled him to provide insights to the Board of Directors when the Company considers equity and debt offerings. In addition, having played a key role in the Bank of America/NationsBank merger, Mr. Murray has experience in the area of mergers and acquisitions, which has proved valuable to the Board when considering possible strategic acquisitions by the Company.

 

Edith R. Perez

 

Ms. Perez joined the Board in September 2010 after more than 25 years with the international law firm of Latham & Watkins LLP. She brings valuable legal knowledge, experience and insights to the Board, having represented clients in a variety of transactions in the areas of financing, real estate, land use, mergers and acquisitions and general corporate transactions. Ms. Perez also has considerable international experience, having represented American and other foreign companies in Mexico, Nicaragua and Brazil on transactions such as licensing of American technology and formation of joint ventures with American partners. The skills and experience Ms. Perez has developed during her career enable her to provide guidance to the Board on legal matters facing the Company, as well as guidance on the Company’s proposed corporate and financial transactions, and her considerable international experience is of value to the Board as the Company’s businesses continue to explore opportunities overseas.

 

John C. Pope

 

As a Company director, Mr. Pope draws on experience gained not only from his prior service as chief financial officer of two large publicly-traded companies in the transportation industry (and president and chief operating officer of one of those companies), but also from his current positions as chairman of a private equity firm and as a member of the boards of directors and audit committees of other publicly-traded companies. Through his service on these other boards and audit committees, Mr. Pope is able to share insights with the Company Board and Audit Committee regarding corporate governance best practices.

 

William J. Schroeder

 

Mr. Schroeder has over 25 years of operating experience as president or chief executive officer of various technology companies, including as president or chief executive officer of three publicly-traded companies. He has experience as an entrepreneur, having grown several small technology companies to a size that they could be taken public. Mr. Schroeder’s entrepreneurial skills and his software and operations experience are of benefit to the Board, particularly when evaluating new business opportunities and matters relating to the Company’s Menlo Logistics business unit.

 

Douglas W. Stotlar

 

As the Company’s Chief Executive Officer for the past six years and a career Company employee who previously held a series of increasingly responsible senior leadership positions at the Company’s Con-way Freight business unit, Mr. Stotlar understands the Company, its customers, workforce, operations, culture and key business drivers. During his tenure as Chief Executive Officer, he has gained an understanding of the regulatory environment and evolving corporate governance practices that

are important to shareholders and regulatory agencies. Mr. Stotlar also holds leadership positions in a number of industry organizations, through which he gains insights into industry and supply chain shifts and evolving practices which are helpful in shaping Company strategy.

 

Peter W. Stott

 

Mr. Stott brings to the Board 40 years of experience in transportation and logistics services, having founded and operated a large asset-based transportation and logistics company located in the Pacific Northwest. This experience enables Mr. Stott to provide insights into operational and service matters affecting the Company. He also has experience with real estate private equity investments, and is knowledgeable regarding commercial real estate located in the Pacific Northwest, including Portland, Oregon where the Company has significant real estate holdings.

 

Chelsea C. White III

 

As Schneider National Chair of Transportation and Logistics at the Georgia Institute of Technology, Professor White has knowledge of the transportation and logistics sectors in which the Company operates. His research focuses on topical issues of key importance to the Company, including analyzing the role of real-time information and enabling information technology for improved logistics and, more generally, supply chain productivity and risk mitigation, with special focus on the U.S. trucking industry. Professor White writes and speaks extensively on supply chain and logistics topics such as trends in the industry, the globalization of innovation in the logistics industry, information technology in the trucking industry, and competitive performance in the U.S. trucking industry.

 

The Company’s By-laws provide for majority voting in the election of directors, except in the case of contested elections, which is when the number of nominees exceeds the number of directors to be elected. In addition, the Board of Directors has adopted a Director Resignation Policy, setting forth the actions to be taken if a director fails to receive the required number of votes for re-election. The principal terms of this Policy are summarized below.

 

An incumbent director who fails to obtain a majority vote in an uncontested election in accordance with the Company’s Bylaws is required to tender his or her resignation to the Chairman of the Board of Directors within five days after the election results are certified. The Governance and Nominating Committee of the Board then considers the resignation and makes a recommendation to the Board concerning the acceptance or rejection of the resignation. The recommendation must be made within 45 days, and the Board must take action on the recommendation within 90 days, following the annual shareholders meeting at which the election of directors occurred. The Company will announce the Board’s decision in a Form 8-K filed with the SEC within four business days after the decision is made.

 

In making its recommendation, the Governance and Nominating Committee will consider all factors it deems relevant, including the reasons why shareholders voted against the director’s election, the qualifications of the director and whether the director’s resignation is in the best interests of the Company and its shareholders. The Committee will also consider possible alternatives concerning the tendered resignation, including acceptance, rejection, or rejection coupled with a commitment to seek to address and cure the reasons underlying the director’s failure to receive the required number of votes for re-election.

 

The Policy also provides for the independent members of the Board of Directors to consider resignations tendered pursuant to this Policy in the event that a majority of the members of the Governance and Nominating Committee fails to receive the required number of votes for re-election.

 

During 2010, the Board of Directors held ten meetings. Each incumbent director attended at least 75% of all meetings of the Board and the committees of the Board on which he or she served.

 

The Company currently has both a Chairman of the Board (Dr. Kennedy) and a Chief Executive Officer (Mr. Stotlar), and except for the period from July 2004 to April 2005 when Dr. Kennedy served both as Chairman of the Board and Interim Chief Executive Officer, has had a separate Chairman and Chief Executive Officer at all times since 1998.

 

Separating these positions allows our Chief Executive Officer to focus on setting the strategic direction of the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board leads the Board in its role of providing advice to, and overseeing the performance of, the Chief Executive Officer. Although our bylaws and corporate governance guidelines do not require the separation of these positions, the Board of Directors believes that having an independent director serve as Chairman of the Board is the appropriate leadership structure for the Board at the current time.

 

Dr. Kennedy also serves as the Board’s “Lead Non-Management Director.” Non-management members of the Board of Directors meet in executive session on a regularly scheduled basis, with Dr. Kennedy presiding at such executive sessions. Neither the Chief Executive Officer nor any other member of management attends the meetings of non-management directors. For information regarding how to communicate with the Lead Non-Management Director and other members of the Company’s Board of Directors, see “Communications with Directors” below.

 

The Board of Directors currently has the following standing committees: Audit Committee, Compensation Committee, Governance and Nominating Committee and Finance Committee, the members of which are shown in the table below. Each of the Audit, Compensation and Governance and Nominating Committees is governed by a charter, current copies of which are available on the Company’s corporate website at www.con-way.com under the headings “Investors/Corporate Governance.” Copies of the charters are also available in print to shareholders upon request, addressed to the Corporate Secretary at 2211 Old Earhart Road, Suite 100, Ann Arbor, Michigan 48105.

 

 

 

Descriptions of the Audit, Compensation and Governance and Nominating Committees follow:

 

Audit Committee: Under its charter, the Audit Committee assists the Board in its oversight of matters involving the accounting, auditing, financial reporting, and internal control functions of the Company. The Committee receives reports on the work of the Company’s outside auditors and internal auditors, and reviews with them the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures. Under the Company’s Corporate Governance Guidelines, the Company’s Chief Executive Officer, Chief Financial Officer, Controller and General Counsel are required to promptly notify the Chair of the Audit Committee upon receiving complaints regarding accounting, internal control and auditing matters involving the Company.

 

Each Committee member has been determined to be an independent director under the New York Stock Exchange listing standards. The Board has determined that Mr. Pope qualifies as an “audit committee financial expert” as such term is defined in rules adopted by the Securities and Exchange Commission. No Board member serves on the audit committees of more than three public companies. The Committee met eleven times during 2010.

 

Compensation Committee: The Compensation Committee’s authority is established in its charter. The Compensation Committee approves the annual base salaries paid to the Chief Executive Officer, the Company’s other policy-making officers and certain other corporate officers. The Company’s Chief Executive Officer approves the annual base salaries for the Company’s other executives. The Compensation Committee also approves, for all executives, the short-term and long-term incentive compensation award opportunities and performance goals applicable to these awards, and annual grants of long-term incentive awards to all executives made under the Company’s equity and incentive plan. In determining the compensation paid to the Chief Executive Officer, it is the practice of the Compensation Committee to consult with and obtain the concurrence of the other independent members of the Board of Directors. Management has no role in recommending or setting compensation for the Chief Executive Officer. The Committee also reviews the retirement and benefit plans of the Company and its domestic subsidiaries.

 

Each Committee member has been determined to be an independent director under the New York Stock Exchange listing standards. The Committee met seven times during 2010.

 

The Compensation Committee typically engages an independent compensation consultant to assist the Committee in its annual review and approval of executive compensation. For 2010, the Compensation Committee retained Hewitt Associates, LLP and Exequity LLP as independent compensation consultants. (See “Compensation Discussion and Analysis — Role of Compensation Consultants” below.)

 

Each year the Chief Executive Officer presents to the Compensation Committee for consideration his recommendations with respect to the compensation of Company executives (other than himself). These recommendations include:

 

 

In developing his recommendations, the Chief Executive Officer typically takes into account:

 

 

The independent compensation consultants are available for consultation with the Committee (without executive officers present) prior to and at the Committee meeting at which executive compensation is approved, as well as at other times during the year. The Compensation Committee also meets with the Chief Executive Officer (without other executive officers present) to discuss his executive compensation recommendations. The Committee then meets in an executive session without management and exercises its independent judgment in deciding whether to accept or revise the Chief Executive Officer’s recommendations.

 

The Compensation Committee charter identifies the Compensation Committee as the Committee with the responsibility to administer the 2006 Equity and Incentive Plan and the short-term and long-term incentive compensation awards made under the Plan. The Committee has delegated to management the authority to administer the plans on a day-to-day basis. However, the Committee retains sole authority to make awards to the Named Executives and other Section 16 officers of the Company, to establish the terms of these awards (including performance goals) and to determine whether or not modifications to performance goals are to be made.

 

Governance and Nominating Committee: The functions of the Governance and Nominating Committee (formerly known as the Director Affairs Committee), which are set forth in the Committee’s charter, include the following:

 

 

Each Committee member has been determined to be an independent director under the New York Stock Exchange listing standards. The Governance and Nominating Committee met four times during 2010.

Not less often than every three years, the Governance and Nominating Committee engages an independent compensation consultant to review the Company’s director compensation. Typically, the Committee engages the same consultant that the Compensation Committee engages to provide advice regarding executive compensation. The Committee instructs the consultant to include in its review prevalent director compensation practices, including compensation in cash, stock and options. The Committee did not retain a compensation consultant for 2010. The Committee does not delegate any of its duties regarding director compensation, and executive officers of the Company have no role in determining or recommending the amount or form of director compensation.

 

The Governance and Nominating Committee will consider director candidates recommended by shareholders. In considering candidates submitted by shareholders, the Governance and Nominating Committee will take into consideration the needs of the Board and the qualifications of the candidate. To have a candidate considered by the Governance and Nominating Committee, a shareholder must submit the recommendation in writing and must include the following information:

 

 

The shareholder recommendation and information described above must be sent to the Corporate Secretary at 2211 Old Earhart Road, Suite 100, Ann Arbor, Michigan 48105. The Governance and Nominating Committee will accept recommendations of director candidates throughout the year; however, in order for a recommended director candidate to be considered for nomination to stand for election at an upcoming annual meeting of shareholders, the recommendation must be received by the Corporate Secretary not less than 120 days prior to the anniversary date of the Company’s most recent annual meeting of shareholders.

 

The Governance and Nominating Committee believes that the minimum qualifications for serving as a director of the Company are that a nominee demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of the Company and have a reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, the Governance and Nominating Committee examines a candidate’s specific experiences and skills, time availability in light of other commitments, potential conflicts of interest and independence from management and the Company. Although the Governance and Nominating Committee does not have a formal policy with respect to diversity, it seeks to have a Board of Directors that represents a diversity of backgrounds, skills and experience. The Governance and Nominating Committee assesses its achievement of diversity through the review of Board composition as part of the Board’s annual self-assessment process.

 

The Governance and Nominating Committee identifies potential nominees by asking current directors and executive officers to notify the Committee if they become aware of persons, meeting the criteria described above, who would be good candidates for service on the Board. The Governance and Nominating Committee also, from time to time, may engage firms that specialize in identifying director candidates. As described above, the Committee will also consider candidates recommended by shareholders.

 

Once a person has been identified by the Governance and Nominating Committee as a potential candidate, the Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Governance and Nominating Committee determines that the candidate warrants further consideration, the Chairman or another member of the Committee contacts the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the Governance and Nominating Committee requests information from the candidate, reviews the person’s accomplishments and qualifications, including in light of any other

candidates that the Committee might be considering, and conducts one or more interviews with the candidate. In certain instances, Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments. The Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder.

 

The Board of Directors, as a whole and at the committee level, oversees the Company’s management of risks, including operational, financial, legal and regulatory, strategic and reputational risks.

 

The Company has established an internal risk committee made up of employees from different disciplines. Periodically senior management reviews with the Board of Directors the major risks identified by the internal risk committee, as well as steps identified by the Company to mitigate the risks.

 

In addition, our Board committees consider risks within their respective areas of responsibility. For example, the Audit Committee considers risks relating to financial reporting and internal control functions and the Compensation Committee considers risks relating to the Company’s executive compensation programs and policies.

 

The Company has reviewed the risks arising from its compensation policies and practices for employees and has concluded that these risks are not reasonably likely to have a material adverse effect on the Company. The Company has discussed its analysis with the Compensation Committee and the Board of Directors, each of which concurs with the Company’s conclusion.

 

The Company has written policies and procedures for the review, approval or ratification of related person transactions. A transaction is subject to the policies and procedures if the transaction involves in excess of $120,000, the Company is a participant in the transaction and any executive officer, director or 5% shareholder, or any of their immediate family members, has a direct or indirect interest in the transaction. The Governance and Nominating Committee of the Board of Directors is responsible for applying these policies and procedures. It is the Company’s policy to enter into or ratify related person transactions only when the Governance and Nominating Committee determines that the transaction in question is in, or is not inconsistent with, the best interests of the Company and its stockholders, including but not limited to situations where the Company may obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when the Company provides products or services to related persons on an arm’s length basis on terms comparable to those provided to unrelated third parties or on terms comparable to those provided to employees generally.

 

Since January 1, 2010, the Company has not been a participant in any transaction involving more than $120,000 in which a related person had a direct or indirect material interest, nor is any such transaction currently proposed, except for the transactions described below.

 

Contract Freighters, Inc. (“CFI”), the truckload carrier acquired by the Company in August 2007 and which now is part of Con-way Truckload, engages Contract Transportation Service (“CTS”) to provide shuttle services within the Joplin, Missouri area. CTS has been providing these services to CFI since 1994, and the amount paid by CFI to CTS has risen from approximately $60,000 in 1994 to approximately $153,000 in 2010. CTS is owned and operated by Scott Schmidt, the brother of Herbert J. Schmidt, President of Con-way Truckload and Executive Vice President of the Company. Herbert J. Schmidt has no ownership or other pecuniary interest in CTS and is not involved in the day-to-day management of the relationship between Con-way Truckload and CTS. Pursuant to the Company’s policies and procedures described below, the Governance and Nominating Committee reviewed and ratified the transactions

between Con-way Truckload and CTS, concluding that the transactions are in the best interests of the Company and its stockholders.

 

Any shareholder or other interested party desiring to communicate with any director (including the Lead Non-Management Director and the other non-management directors) regarding the Company may directly contact any director or group of directors by submitting such communications in writing to the director or directors in care of the Corporate Secretary, 2211 Old Earhart Road, Suite 100, Ann Arbor, Michigan 48105.

 

All communications received as set forth in the preceding paragraph will be opened by the Corporate Secretary for the sole purpose of determining whether the contents represent a message to the Company’s directors. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or any group of directors, the Corporate Secretary will make sufficient copies of the contents to send to each director who is a member of the group to which the envelope is addressed.

 

The Company’s policy regarding director attendance at the Annual Meeting of Shareholders is for the Chairman of the Board of Directors and the Chief Executive Officer (if different from the Chairman) to attend in person, and for other directors to attend in person or electronically. In 2010, the Chairman of the Board and the Chief Executive Officer each attended the meeting in person, and seven of the eight other outside Directors attended telephonically. Mr. Anton was unable to attend due to technical difficulties he encountered when attempting to dial into the meeting.

 

The Board of Directors and each Committee of the Board is authorized, as it determines necessary to carry out its duties, to engage independent counsel and other advisors. The Company compensates any independent counsel or other advisor retained by the Board or any Committee.

 

The Board of Directors has adopted a Code of Ethics for the Chief Executive and Senior Financial Officers, including the Chief Financial Officer and Controller. The Board of Directors has also adopted a Directors’ Code of Business Conduct and Ethics applicable to all directors, a Code of Business Conduct applicable to all officers and employees, and Corporate Governance Guidelines. Current copies of each of these documents are available on the Company’s corporate website at www.con-way.com under the headings “Investors/Corporate Governance.” Copies are also available in print to shareholders upon request, addressed to the Corporate Secretary at 2211 Old Earhart Road, Suite 100, Ann Arbor, Michigan 48105. The Company intends to satisfy any disclosure requirements regarding an amendment to, or waiver from, the Code of Ethics by posting such information on the Company’s website at www.con-way.com.

 

 

 

 

 

 

 

 

 

The Board of Directors has approved an annual cash retainer of $70,000 for each non-employee director. However, as part of cost-savings initiatives implemented in 2009, the Board approved a temporary 10% reduction in the annual cash retainers, so that in 2010, each non-employer director’s annual cash retainer was reduced from $70,000 to $63,000. For 2010 the Board of Directors also approved an additional annual cash retainer of $150,000 for Dr. Kennedy in recognition of his increased responsibilities as Chairman of the Board, which with the 10% reduction was reduced from $150,000 to $135,000.

 

In addition to the annual cash retainers, the chair of the Company’s Audit Committee receives an annual chair cash retainer of $15,000, and the chairs of the Compensation, Governance and Nominating and Finance Committees each receive an annual chair cash retainer of $8,000. Each member of the Audit Committee, other than the chair, also receives a committee retainer of $5,000. Each of the retainers described above are payable quarterly in arrears. Directors do not receive any fees for attending Board or Committee meetings.

 

Directors may elect to defer payment of their fees under the Company’s deferred compensation plans for directors. Payment of any deferred compensation account balances will be paid in a lump sum or in installments beginning no later than the year following the director’s final year on the Board. In 2010 (as in previous years), interest on amounts deferred prior to 2007 was credited quarterly at the Bank of America prime rate. The Company’s deferred compensation plans for directors provide that balances on amounts deferred in 2007 and subsequent years are not credited with a fixed rate of interest but instead fluctuate based on the value of one or more funds selected by the director from a list of available funds. In addition, directors may elect to have some or all of their pre-2007 account balances treated in the same manner as post-2006 deferrals. Directors may also elect to convert some or all of their deferred compensation account balances into phantom stock units that track the performance of the Company’s common stock.

 

Prior to shareholder approval of declassification of the Board of Directors in 2009, each non-employee director also received a three-year restricted stock grant having a notional value at the time of

grant of $255,000 upon election or re-election to the Board, and did not receive a restricted stock grant in the subsequent two years. However, with the declassification of the Board of Directors, beginning in 2011 each director will stand for election or re-election each year, and if elected or re-elected, each non-employee director will receive a grant of restricted stock with a notional value of $85,000 (or such other annual amount as the Board may approve in the future). The number of shares of restricted stock in each grant is determined by dividing the notional value of the grant by the closing price of the Company’s common stock on the grant date, with any fractional shares paid in cash. Each such grant of restricted stock vests one-third per year, commencing on the first anniversary of the grant date, or earlier upon the occurrence of certain events such as death, disability, retirement or a change in control.

 

In 2009 shareholders approved amendments to the Company’s Certificate of Incorporation providing for declassification of the Board of Directors in a manner so as not to affect the term of any director elected prior to the 2010 Annual Meeting of shareholders. As a result, three directors stood for re-election in 2009, and seven directors stood for re-election in 2010. Each non-employee director re-elected in 2010 received a grant of restricted stock with a notional value of $85,000 at the time of grant.

 

The Board established stock ownership guidelines for non-employee directors in 2006. Under the guidelines, by the compliance deadline of April 2012 each non-employee director is expected to hold Con-way securities having an aggregate value not less than three times the annual cash retainer of $70,000, or $210,000. To determine compliance with these guidelines, ownership interests are valued as follows:

 

 

Directors are also provided with certain insurance coverage and, in addition, are reimbursed for travel expenses incurred for attending Board and Committee meetings. The Company also offers an Education Matching Gifts Program, pursuant to which the Company matched donations made to an accredited college or university by executives, certain other employees or members of the Company’s Board of Directors. The matching contributions made by the Company in any year on behalf of any executive, employee or Board member are limited to $5,000. However, as part of the Company’s 2009 cost-savings initiatives, the Educational Matching Gift Program was temporarily suspended and remains suspended as of the date of this Proxy Statement. In 2010, no director received other compensation in excess of $10,000 for the items described in this paragraph; therefore, as permitted under the SEC disclosure rules, we have not included this compensation in the Director Compensation Table.

 

This Compensation Discussion and Analysis describes the Company’s executive compensation program objectives, policies and procedures as they were in effect for the 2010 fiscal year.

 

The Executive Summary included below highlights:

 

 

The Executive Summary contains some capitalized terms whose definitions can be found in the discussion that follows the summary. A full discussion of the Company’s 2010 compensation program objectives, policies and procedures follows the Executive Summary.

 

Executive Summary

 

Recent Changes to the Company’s Executive Compensation Programs

 

The Company periodically makes changes to its executive compensation program to reflect evolving compensation practices, to more closely align executives’ interests with those of shareholders, and in response to changing economic conditions and Company needs. The table below summarizes some of the executive compensation program changes made over the last several years.

 

 

2010 Target Total Direct Compensation

 

The Compensation Committee believes that our executive compensation is necessary to attract, retain, and motivate a highly-qualified executive team and is reasonable when measured against our direct competitors in the less-than-truckload, logistics and truckload sectors as well as against companies in our focused peer group and in general industry.

 

The key components of executive pay are annual base salary, an annual cash incentive award and equity-based long-term incentive compensation awards. Throughout this Compensation Discussion and Analysis, we will refer to these key components as an executive’s “total direct compensation.”

 

The annual cash incentive awards provide an important incentive to the Named Executives to achieve short-term Company goals. 2010 annual cash incentive awards were tied to the performance of one or more the Company’s primary business units. As shown in the tables below, the payouts of these awards closely tracked 2010 performance.

 

In contrast to the annual cash incentive awards, the long-term incentive compensation awards provide an important incentive to achieve long-term strategic goals. The 2010 long-term incentive awards provide an opportunity for additional compensation that is tied to the Company’s stock price. The monetary benefit ultimately realized by the Named Executives from their 2010 long-term incentive awards (which vest over three years) is not yet known and will largely depend on how successful the Named Executives’ efforts are in increasing shareholder value over time and whether the Named Executive is employed by the Company when the awards vest.

 

The Compensation Committee seeks to closely align the interests of executives with those of shareholders. For 2010, the Compensation Committee elected to provide the long-term incentive compensation awards in the form of cash-settled stock appreciation rights (“CSSARs”) and restricted stock units (“RSUs”). In determining the types of long-term incentive awards to be granted, the Compensation Committee considered factors including the alignment of executive and shareholder interests, the motivational and retention values of the awards and share utilization.

 

The Compensation Committee believes that when taken together, the 2010 mix of CSSARs and RSU awards provide a balanced mix of long-term incentive awards closely aligning the interests of

executives with those of shareholders. The CSSARs provide an opportunity for additional compensation, with executives benefitting only if shareholders also benefit through a higher stock price. The RSUs (which are subject to three-year cliff vesting and the Company’s stock retention policy) ensure that executives are aligned with shareholders by incentivizing executives to take a longer-term perspective when managing the Company’s businesses. The Compensation Committee also views both the CSSARs and the RSUs as providing important motivational and retention benefits.

 

The Compensation Committee approved 2010 target total direct compensation for the Chief Executive Officer that is less than his 2009 target total direct compensation. As part of a cost-savings program implemented in April 2009, the CEO’s base salary was temporarily reduced by 10%. This salary reduction continued throughout 2010 and currently remains in effect. In addition, his 2010 target annual cash incentive award, which is set at 100% of his annual base salary, was based on his reduced annual base salary. His target long-term incentive compensation opportunity was set at 400% of his unreduced annual base salary (the same as in 2009), reflecting the Compensation Committee’s decision not to reduce the motivational effect of the Chief Executive’s long-term awards based on the temporary annual base salary reduction. The 2010 compensation of all Named Executives is described further in the discussion that follows this Executive Summary.

 

The chart below shows, for the five Named Executives who remained with the Company through the end of the fiscal year, the 2010 target total direct compensation and the estimated current value of each Named Executives’ total direct compensation. As noted above, the value ultimately realized on the 2010 long-term incentive awards is not yet known and will depend on the Company’s stock price at the time the awards vest, in the case of RSUs, or are exercised, in the case of CSSARs. For purposes of the table below, the value of the long-term incentive awards is based on the Company’s closing stock price on December 31, 2010. The estimated current value also includes 2010 base salary and the actual payouts received on the annual cash incentive awards based on 2010 performance.

 

2010 Total Direct Compensation

 

The following charts show, for the 2010 annual cash incentive awards, actual versus target performance for Con-way Freight, Con-way Truckload and Menlo Worldwide Logistics.

 

 

The annual cash incentive award to Mr. Bianco was based on the adjusted operating income of Menlo Worldwide Logistics and the award to Mr. Schmidt was based on the operating ratio of Con-way Truckload. The awards to Messrs. Stotlar and Bruffett and Ms. Pileggi were based on the weighted performances of Menlo Worldwide Logistics (14%), Con-way Freight (71%) and Con-way Truckload (15%).

 

Introduction

 

The Company’s Compensation Committee engages in a collective evaluation of all components of compensation when establishing the various forms and levels of executive pay. The Compensation Committee seeks to provide a competitive pay package designed to attract, retain and motivate talented executives, and to closely align the interests of our executive officers with those of our shareholders. Consistent with these overarching objectives, the Compensation Committee ensures that equity-based awards make up a significant portion of executive pay.

 

The key components of executive pay are annual base salary, an annual cash incentive award and long-term incentive compensation awards. These key components are referred to as an executive’s “total direct compensation.”

 

The charts below show each of these components, expressed as a percentage of total direct compensation, for the Named Executives in 2010. The “CFO and Other Named Executives” chart shows the average percentages for the Chief Financial Officer and four other Named Executives who are at the same executive grade level.

 

This pay structure furthers the objectives of the Company’s executive compensation program by providing for:

 

 

The Named Executives also are entitled to receive post-employment compensation that includes (among other things) severance benefits that are available only in the event of a “qualifying” termination of employment, whether in connection with a change in control or otherwise. However, under no circumstances are severance benefits available upon a termination of employment for cause.

 

Role of Compensation Consultants

 

The Compensation Committee retains an independent compensation consultant each year to assist in the assessment of executive compensation. The compensation consultant is engaged by and reports to the Compensation Committee, which evaluates the performance of the compensation consultant and decides whether or not to continue to use the consultant’s services.

 

In late 2009 Hewitt Associates, LLP (“Hewitt”) was retained as independent compensation consultant to advise the Compensation Committee in setting executive pay levels for 2010. At the beginning of 2010, the individual consultant advising the Compensation Committee left Hewitt and joined Exequity, LLP (“Exequity”). For continuity, the Compensation Committee elected to retain Exequity to assist in implementing 2010 compensation. In the discussion that follows, the term “independent compensation consultant” refers to both Hewitt and Exequity.

 

At the Compensation Committee’s request, the independent compensation consultant advised the Compensation Committee with regard to:

 

 

Except as described above, the independent compensation consultant had no role in recommending or determining the 2010 compensation of the Company’s executives and provided no other services to the Company in 2010.

 

In a typical year, the Compensation Committee also will ask the independent compensation consultant (i) to recommend the companies to be included in a “Focused Peer Group” (described below), (ii) to provide comparative market data for the companies in the Focused Peer Group as well as for the companies in general industry (excluding financial services companies), and (iii) to provide the Compensation Committee with its analysis of the total direct compensation of the Named Executives in relation to the comparative market data.

However, in setting pay levels for 2010 the Compensation Committee elected not to request and pay for this information from the independent compensation consultant, for the reasons set forth below:

 

 

As a result, 2010 executive compensation was largely determined based on the comparative market analysis provided by Hewitt for 2009. The discussion below describes the comparative market data considered when setting 2009 executive compensation.

 

Comparative Market Data

 

As noted above, when setting 2010 compensation the Compensation Committee relied on comparative market data provided by Hewitt for 2009. This comparative market data is described below.

 

Identification of Peer Groups

 

Given its size and the mix of services that it offers, the Company does not have strictly comparable industry peers against which it can compare executive compensation. As a result, to assist it in setting total direct compensation for the Named Executives, the Compensation Committee instructed its compensation consultant, Hewitt, to provide comparative market data for the Focused Peer Group of companies and for companies within general industry, as described below.

 

Focused Peer Group

 

The Compensation Committee considered a Focused Peer Group of companies recommended by the Committee’s independent compensation consultant that (i) are in the transportation sector (including companies that provide services similar to those provided by the Company), (ii) are of the same relative size as the Company and (iii) represent possible competition to the Company for executive talent. The Focused Peer Group was originally developed in 2007 by Hewitt, and has been modified over time to reflect changing circumstances, such as companies included in the Focused Peer Group being taken private and the Company’s increased involvement in the truckload sector following its 2007 acquisition of truckload carrier Contract Freighters Inc. (now operated under the name “Con-way Truckload, Inc.”).

The Focused Peer Group of companies recommended by Hewitt for 2009 is shown in the following table.

 

(For purposes of comparison, the Company is also included in the table. Revenues shown in the table were obtained from information that was publicly available when 2009 total direct compensation was being considered).

 

 

General Industry Survey Data

 

Survey data was also provided from Hewitt’s Total Compensation Measurement survey for companies from general industry (other than financial services) of the same relative size as the Company. Financial services companies were not considered because the pay structure of those companies differs materially from that of the Company and because the Company does not typically compete with financial services companies for executive talent. Companies with revenues between $1 billion and $10 billion were included. By using this range, the compensation consultant was able to generate a substantially larger pool of comparative market data than was available using the Focused Peer Group described above. Comparative market data from a total of approximately 175 companies was considered. The names of the companies are shown in Appendix A to this Proxy Statement.

 

Use of Comparative Market Data

 

In assessing whether the total direct compensation provided to each of the Company’s Named Executives compares reasonably to the comparative market data, the Compensation Committee considers annual base salary together with the annual cash incentive award payout at target performance levels and the fair value of the long-term incentive compensation awards on the grant date. The Compensation Committee looks at the elements comprising total direct compensation in the aggregate, and does not compare each individual element of compensation to comparative market data.

 

The Compensation Committee’s objective is to provide target total direct compensation that is between the 50th and 75th percentiles of the total direct compensation of comparable executives at peer group companies. The Compensation Committee believes that the targets it sets for incentive compensation are challenging and that the executives should receive above-median compensation if they are able to meet those targets.

However, the Compensation Committee does not engage in strict quantitative benchmarking against the comparative market data using objective guidelines or formulae. Instead the Compensation Committee uses the comparative market data as a starting point and relies on its collective judgment when setting Named Executive compensation. The Compensation Committee takes into consideration general economic conditions and overall Company performance, challenges confronting the Company, advice from the independent compensation consultant, information provided by the Company and the recommendations of the Chief Executive Officer. The Compensation Committee also uses subjective information when considering executive compensation, including the credentials, length of service, experience, consistent performance, and available competitive alternatives of our Named Executives. We believe that the Compensation Committee is in a unique position, with its knowledge of Company circumstances, the characteristics of the executive team, the market data provided by the consultant, and its general background and experience, to use its judgment in setting pay levels.

 

Tax and Accounting Considerations

 

Federal tax law limits the deductibility by the Company of “non-performance based compensation” paid to the Chief Executive Officer and the three other most highly compensated executives, other than the Chief Financial Officer (the “covered employees”). All amounts of non-performance based compensation in excess of the annual statutory maximum of $1 million per covered employee are not deductible. The Company’s general policy is, where feasible, to structure incentive compensation paid to the covered employees so that it qualifies as “performance-based compensation,” which is exempt from the $1 million annual cap and thus is deductible for federal income tax purposes. In 2010 none of the Named Executives received non-performance based compensation in excess of the $1 million limit.

 

However, there may be circumstances where portions of a covered employee’s compensation will not be deductible. For the reasons cited below under “Long-Term Incentive Compensation Awards,” for 2010 the Compensation Committee chose to make significant awards of time-based restricted stock units to the Named Executives. These awards are considered non-performance based compensation, so that upon vesting the value of an award held by any covered employee would be includable when determining whether the $1 million limit is exceeded. Depending on (i) the Company’s stock price at the time the awards vest and (ii) whether one or more of the Named Executives are covered employees for the year during which vesting occurs, some portion of these awards may end up not being deductible. However, the Compensation Committee believes that the motivational and retention benefits of the awards outweigh their potential non-deductibility.

 

The Company did not revise its executive compensation practices relating to equity awards in response to changes in accounting rules pursuant to FAS 123R.

 

Other Considerations

 

The Compensation Committee generally does not consider amounts realized or realizable from prior stock option awards or other long-term incentive awards when approving total direct compensation for the Named Executives. The Compensation Committee believes that incentive awards are effective in motivating executives and that in most cases adjustments based on prior compensation would undermine the effectiveness of these awards.

 

Likewise, the Compensation Committee generally does not consider accrued retirement benefits of Named Executives when approving total direct compensation and did not do so when approving 2010 total direct compensation. Executives who have earned substantial levels of retirement benefits under the Company’s pension plans typically have done so by spending significant parts of their careers at the Company, which benefits the Company through the continuity, experience, institutional knowledge and ‘bench strength’ of its management team. In addition, retirement benefits in the form of 401(k) and

deferred compensation account balances largely reflect compensation earned for services previously performed that the executive has elected to save for retirement.

 

As in prior years, in 2010 the total direct compensation of the Company’s Chief Executive Officer was higher than that of the other Named Executives. This difference reflects both the assessment of a chief executive officer’s value relative to that of other senior company executives (as indicated in the various sources of comparative market data reviewed by the Compensation Committee) and the Compensation Committee’s belief that the Chief Executive Officer’s substantially higher level of responsibility and accountability, and greater potential impact on the Company’s results warrants a higher level of compensation than the other Named Executives.

 

The Company’s annual cash incentive and long-term incentive compensation awards are made under “omnibus” equity and incentive plans approved by the Company’s shareholders. These plans give our Compensation Committee discretion to make equitable and discretionary adjustments to awards granted to executives. For 2010 the Compensation Committee elected to use its discretion to reduce the annual cash incentive awards paid to certain Named Executives, as described below under “Annual Cash Incentive Awards.”

 

Role of Chief Executive Officer in Setting Total Direct Compensation

 

The role of the Chief Executive Officer in setting total direct compensation is discussed above under “Standing Committees — Compensation Committee.”

 

2010 Total Direct Compensation

 

Annual Base Salary

 

The annual base salaries approved by the Compensation Committee typically reflect adjustments designed to bring the Named Executives’ salaries in line with comparative market data. However, adjustments may also take into account other factors, such as the individual performances of the Named Executives and the Named Executives’ relative levels of responsibility and accountability and relative potential to affect business results.

 

In April 2009, as part of a cost reduction program undertaken by the Company, the 2009 annual base salaries of Messrs. Stotlar, Bruffett and Labrie were temporarily reduced by 10%, and the 2009 annual base salaries of Ms. Pileggi and Mr. Thickpenny were reduced by 5%. Mr. Stotlar’s 10% annual base salary reduction remained in effect throughout 2010. Effective January 2010, one-half of the temporary base salary reductions were reinstated for Messrs. Bruffett, Labrie and Thickpenny and for Ms. Pileggi, and no further adjustments were made to the annual base salaries of these Named Executives for 2010. The 2010 annual base salary of Mr. Bianco was unchanged from 2009, and the 2010 annual base salary of Mr. Schmidt was unchanged from 2009 except during an interim three-month period in 2010 when Mr. Schmidt cut back on his duties as Con-way Truckload President for personal reasons and received a temporary 25% reduction in annual base salary.

 

Annual Cash Incentive Awards

 

The Compensation Committee typically grants to each Named Executive an annual cash incentive award with performance metrics and numerical performance goals tied to the short-term business objectives of the business unit(s) for which the executive is responsible. The annual cash incentive awards granted to the Chief Executive Officer, Chief Financial Officer and other Con-way Inc. Named

Executives are tied to the combined operating results of the Company’s three primary business units as described further below.

 

Each Named Executive’s annual cash incentive award is set so as to deliver, at target performance levels, a specified percentage of annual base salary. The percentages applicable to 2010 compensation are shown in the table below.

 

Annual Cash Incentive Award Opportunities
(at Target, as a Percentage of Base Salary)

 

 

The Compensation Committee approves the performance metrics and also approves the specific numerical performance goals that govern the level of payout on each annual cash incentive award. The performance metrics applicable to the 2010 annual cash incentive awards for Messrs. Bianco, Labrie and Schmidt (the heads of the Company’s three primary business units) are shown in the table below.

 

Performance Metrics Applicable to 2010 Annual Cash Incentive Awards
(Business Unit Heads)

 

 

As used in the table above:

 

“Adjusted Operating Income” refers to operating income as determined in accordance with United States generally accepted accounting principles (“US GAAP”), as adjusted for (i) any and all asset impairments pursuant to FASB Codification topics 350 and 360, (ii) any and all restructuring charges pursuant to FASB Codification topic 420 and (iii) any and all accounting changes pursuant to FASB Codification topic 250.

 

“Operating Ratio” refers to Operating Expense as a percentage of Revenue (Revenue less Adjusted Operating Income divided by Revenue) and is, therefore, directly tied to Adjusted Operating Income. This particular performance metric is used for Con-way Truckload due to its traditional and widespread use in the truckload industry.

 

The adjustments to Operating Income described above were included within the performance metric so that each affected Named Executive would have an incentive to take actions that are in the best interests of the business unit in the long-term, but that might otherwise adversely affect payouts on the annual cash incentive awards.

When establishing performance metrics to apply to an award, one of the factors considered by the Compensation Committee is whether the award creates an incentive for executives to take excessive risks in order to increase the amount of the payouts they will receive. The Compensation Committee has concluded that basing the Company’s annual cash incentive awards on the performance metrics of adjusted operating income and operating ratio, and balancing the annual cash incentive awards with significant long-term incentive awards, properly aligns executives’ interest with those of shareholders and does not create or provide an incentive for executives to take excessive risks.

 

The table below shows the numerical performance goals that applied to the awards to those Named Executives, as well as the level of achievement in 2010.

 

Performance Goals Applicable to 2010 Annual Cash Incentive Awards
(Business Unit Heads)

 

 

Numerical performance goals are set for threshold, target and maximum performance levels. For performance levels between threshold and target, or target and maximum, the actual payout is determined by interpolation. The maximum payout that an executive can receive for this award is 200% of the target payout.

 

The Compensation Committee considered projected performance as reflected in the one-year financial plans developed by the Company and its business units when setting the goals set forth in the table above. In evaluating financial plans, among the factors the Compensation Committee considers are market conditions, the business cycle, operating plan priorities, and the prospective return on assets employed by the Company and its respective primary business units. It also tries to gauge the relative degree of difficulty the Company and its business units will face in meeting the financial plans. The Compensation Committee also discusses the financial plans with the Chief Executive Officer and takes into consideration his recommended performance goals and corresponding payout levels. Based on its independent assessment of all of these factors, the Compensation Committee sets the numerical performance goals. The Compensation Committee typically does not consider historical analyses that attempt to correlate performance goals established in prior years with actual payouts in those years and did not do so when establishing performance goals in 2010.

 

The 2010 annual cash incentive awards of Con-way Inc. executives Messrs. Stotlar, Bruffett and Thickpenny and Ms. Pileggi were based on the respective performances of Con-way Freight, Con-way Truckload and Menlo Worldwide Logistics, weighted by revenue, in the case of Con-way Freight and Con-way Truckload, and by net revenue, in the case of Menlo Worldwide Logistics. These weightings are shown in the following table.

2010 Annual Cash Incentive Awards
(Named Executives at Con-way Inc.)

 

 

 

 

As shown in the tables above, the operating results of the Company’s three primary business units varied in 2010. Primarily as a result of the overcapacity and attendant difficult pricing environment in the LTL industry that persisted through 2010, Con-way Freight failed to achieve the threshold level of Adjusted Operating Income. Con-way Truckload managed to achieve a respectable 62.8% of target performance despite the challenging operating environment that the resetting economy created for Con-way Truckload. Menlo Worldwide Logistics turned in a strong performance as it continued to capitalize on the growing need for supply chain outsourcing and its ability to control costs and improve productivity.

 

The Compensation Committee elected to exercise its discretion to reduce the 2010 annual cash incentive award payouts to some Named Executives. When determining the achievement levels shown in the table above, the Compensation Committee did not take into account the effect of Con-way Truckload’s revised capital expenditure program that resulted in the unplanned 2010 acquisition of new tractors and retirement of existing tractors from service. If taken into account, the resulting change in depreciation expense would have increased Con-way Truckload’s 2010 adjusted operating income and increased its achievement level from 62.8% to 79.2% of target. While recognizing that the Con-way Truckload’s revised capital expenditure program is an appropriate element of its long-term strategy, the Compensation Committee did not consider it appropriate for the Named Executives to benefit as a result through increased annual cash incentive award payouts. The Compensation Committee’s decision had the effect of reducing the 2010 annual cash incentive awards payouts that would have otherwise been payable to Messrs. Stotlar, Bruffett and Schmidt and Ms. Pileggi.

 

Annual Incentive Compensation “Clawbacks”

 

Under “clawback” provisions, Named Executives and other policy-making executive officers of the Company are required to repay overpayments of annual incentive compensation awards in the event of fraud, or in the event of financial statement restatement occurring within one year following the award payment. To date, the Company has not had any occasion to consider seeking recovery from its executives of performance award overpayments. The Company generally does not pay such annual incentive compensation awards until the relevant Form 10-K has been filed with the SEC.

 

Long-Term Incentive Compensation Awards

 

Prior to 2010, the dollar value of each Named Executive’s target long-term incentive award was determined using a specified multiple of annual base salary. However, for 2010, the Compensation Committee decided to establish a range of multiples applicable to each executive grade level. The ranges were established to allow the Compensation Committee to adjust awards for particular Named Executives based on perceived performance and contribution to the Company. A pool was also established, based on a hypothetical award at the median of the range for each Named Executive. This pool sets a ceiling on the total target dollar value of the long-term awards made to all Named

Executives. Due to the operation of the pool concept, above-median long-term opportunities provided to particular Named Executives for exemplary performance will by necessity result in below-median opportunities for certain other Named Executives. A below-median award, in and of itself, does not necessarily indicate any perceived shortcoming in a Named Executive’s performance.

 

The multiples applicable to the Named Executives’ 2010 target long-term incentive awards are shown in the table below.

 

Long-Term Incentive Compensation Opportunities as a Multiple of Base Salary

 

 

For 2010, although still within range, above-median long-term opportunities were provided to Mr. Bruffett and Mr. Bianco. Mr. Bruffett’s above-median opportunity was provided in recognition of his performance in centralizing the Company’s finance functions, and Mr. Bianco’s above-median opportunity was provided in recognition of the continued strong performance of Menlo Worldwide Logistics.

 

The number of long-term incentive awards to be granted to each Named Executive is calculated using the total dollar value determined from the table above, the Compensation Committee’s allocation of this total dollar value among types of awards (e.g., for 2010, cash-settled stock appreciation rights and restricted stock units), and the per-unit value of each type of award. (See “Cash-Settled Stock Appreciation Rights” and “Restricted Stock Unit Awards” below.)

 

In determining the types of long-term incentive awards to be granted, the Compensation Committee considered factors including the alignment of executive and shareholder interests, the motivational and retention values of the awards and share utilization. The Compensation Committee considers stock options, stock appreciation rights (“SARs”) and similar option-like awards as an excellent means of aligning executive and shareholder interests by providing “upside” potential to executives for superior performance and no reward if the executives’ actions and decisions do not result in an increase in the Company’s stock price over the longer term.

 

To better align executive and shareholder interests the Compensation Committee put increased emphasis on option-like awards in 2010, changing from the 2009 mix of 50/50 stock options and RSUs to a 70/30 mix of cash-settled SARs (“CSSARs”) and RSUs for our Chief Executive Officer and a 60/40 mix of CSSARs and RSUs for most of the other Named Executives. While changing the award mix, the Compensation Committee did not change the Chief Executive Officer’s total long-term incentive compensation opportunity, which for 2010 was set (as in 2009) at four times his annual base salary. The Compensation Committee delivered this opportunity through grants of specified numbers of CSSARs and RSUs, with the value of each CSSAR and RSU determined using valuation methodologies recommended by the Compensation Committee’s independent compensation consultant. The Compensation Committee recognizes that various methodologies exist for valuing long-term incentive awards and that the use of some methodologies suggests that the change in mix

resulted in a year-over-year increase in the Chief Executive Officer’s total long-term incentive compensation opportunity. However, the valuation methodologies employed by the Compensation Committee did not result in an increase in the Chief Executive Officer’s 2010 long-term incentive compensation opportunity.

 

The Compensation Committee believes that when taken together, the 2010 mix of CSSARs and RSU awards provide a balanced mix of long-term incentive awards closely aligning the interests of executives with those of shareholders. The CSSARs provide an opportunity for additional compensation, with executives benefitting only if shareholders also benefit through a higher stock price. RSUs (which are subject to three-year cliff vesting) ensure that executives are aligned with shareholders by incentivizing executives to take a longer-term perspective when managing the Company’s businesses.

 

The Compensation Committee also views both the CSSARs and the RSUs as providing important motivational and retention benefits. The 2010 restricted stock unit awards are subject to the Company’s retention policy (discussed below) and are expected to assist the Named Executives in meeting the Company’s stock ownership guidelines described below. Compliance with the guidelines will result in the Named Executives building meaningful equity positions in the Company, thereby more closely aligning their interests with the interests of shareholders.

 

Cash-Settled Stock Appreciation Rights:

 

Stock appreciation rights granted to the Named Executives are approved by the Compensation Committee, are granted at the fair market value of the Company’s common stock on the date of grant and have a term of ten years. The cash-settled stock appreciation rights granted in 2010 are scheduled to vest in three equal installments, on January 1 of 2011, 2012 and 2013, or earlier in certain circumstances including upon death or disability.

 

For each Named Executive in 2010, cash-settled stock appreciation rights were determined by dividing an amount equal to the specified percentage of his or her total long-term incentive compensation opportunity by the estimated value of a single cash-settled stock appreciation right. For each vested cash-settled stock appreciation right exercised, a Named Executive will receive from the Company a cash payment in an amount equal to the difference between the fair market value of the Company’s common stock on the exercise date and the grant price of the cash-settled stock appreciation right, less withholding taxes.

 

Pursuant to Compensation Committee policy, grants of stock options and stock appreciation rights are made after the close of the market on the third business day after the Company’s fourth quarter earnings have been announced.

 

Restricted Stock Unit Awards

 

For each Named Executive in 2010, restricted stock unit awards were determined by dividing an amount equal to the specified percentage of his or her long-term incentive compensation opportunity by $28.92, the closing price of the Company’s Common Stock on February 9, 2010. The awards are scheduled to vest on February 9, 2013 (the third anniversary of the grant date) and, except in limited circumstances such as upon death or disability, provide for forfeiture of the restricted stock units if an executive leaves the Company prior to the end of the three-year period. Upon vesting, the restricted stock units are settled in shares of Company common stock. The restricted stock units do not pay dividend equivalents in the event that a cash dividend is declared on the Company’s common stock, but do pay dividend equivalents if stock dividends are declared.

 

Annual awards of restricted stock units are made at the same time as annual grants of stock appreciation rights (see “Cash-Settled Stock Appreciation Rights” above). Company common stock received upon settlement of restricted stock and restricted stock unit awards made to senior executives are subject to a retention policy that, taken together with the Company’s stock ownership guidelines, are

expected to result in those executives building meaningful equity positions in the Company. The stock ownership guidelines and retention policy are described below.

 

Stock Ownership Guidelines; Stock Retention Policy; Hedging; Pledges of Stock

 

The Company believes that its top executives should have a meaningful stake in the risks and rewards of long-term ownership of the Company. To this end, the Company has established stock ownership guidelines for its top three levels of executive officers. The following guidelines identify levels of equity ownership, expressed as a multiple of each executive’s base salary:

 

 

To determine compliance with these guidelines, ownership interests are valued as follows:

 

 

Executives no longer receive credit for vested in-the-money stock options and unvested restricted stock, each of which was previously credited at 50% of value.

 

Previously, the Compensation Committee set deadlines for executives’ compliance with the stock ownership guidelines. However, given the increasing use of stock retention guidelines, in January 2009 the Compensation Committee elected to replace these deadlines with a retention policy for shares received in settlement of restricted stock and restricted stock unit awards granted in 2009 and subsequent years. Under the policy, each executive is required to retain 70% of all shares of Company common stock received in settlement of restricted stock and restricted stock unit awards as and when such awards vest (after withholding of shares required to satisfy applicable taxes) if at the time the award vests the executive is not yet in compliance with the stock ownership guidelines outlined above. An executive may later sell stock retained pursuant to the retention policy if and to the extent the executive’s ownership interest, determined as of the previous compliance measurement date, exceeds the level required under the stock ownership guidelines.

 

Company policy prohibits short sales of Company stock and other similar transactions that could be used to hedge the economic risk of the ownership of Company stock. The Company does not prohibit the pledging of Company stock by executives but strongly discourages the practice, including pledges of Company stock held in margin accounts. As noted in the footnotes to the Stock Ownership Table above, none of the Named Executives has reported pledging any shares of which he or she is the beneficial owner.

 

Post-Employment Compensation

 

Executives are entitled to receive post-employment compensation in the form of (i) retirement benefits, (ii) deferred compensation account balances (for those executives who elect to participate in the Company’s deferred compensation plans), (iii) contingent payments and benefits that are available only upon a qualifying termination of employment in connection with a change-in-control and (iv) contingent payments and benefits that are available only upon a termination of employment under certain other circumstances (but not upon a termination for cause).

 

Post-employment compensation is made available under plans or agreements that either set the levels of compensation or include formulas that set the levels of compensation. The Compensation

Committee periodically reviews the terms of these plans and agreements and reassesses the competitiveness of the compensation provided under the plans and agreements. No substantive changes were made to the Company’s post-employment plans or agreements in 2010.

 

Retirement Benefits

 

The Company maintains defined benefit pension plans and 401(k) plans to provide employees with an opportunity to accumulate benefits for retirement. These plans are not limited to executives as many other Company employees are eligible to participate in these plans.

 

In 2006, the Company decided to make certain changes to its retirement benefit programs, effective January 1, 2007. The changes de-emphasized the defined benefit pension plans by ceasing credited service accrual after December 31, 2006, and provided that employees joining the Company after December 31, 2005 would not be eligible to participate in the defined benefit pension plans. At the same time, the changes put additional emphasis on the Con-way Retirement Savings Plan (the Company’s primary 401(k) plan) by increasing Company matching contributions and introducing Company basic and transition contributions.

 

In response to the economic environment and as part of a cost reduction program, the Company reduced its basic contribution and suspended its other matching and transition contributions to the Retirement Savings Plan, effective April 2009. The basic contribution remains reduced and the other contributions remain suspended as of the date of this Proxy Statement. The Company also amended its defined benefit pension plans to provide that a participant’s average final compensation (which is used when determining benefits available under the plans) will only take into account compensation paid through April 2009.

 

Employees of the Company (including the Named Executives) who are subject to federal tax law limits on the compensation that can be taken into account for the defined benefit pension plans and 401(k) plans also participate in non-qualified supplemental plans maintained by the Company. Plan participants receive benefits under the supplemental plans that they would have received under the defined benefit pension plans and 401(k) plans if not for the federal tax law limits, and do not receive credit for additional service time or other incremental benefits under the supplemental plans. The Company maintains the supplemental plans in order to provide competitive post-retirement benefits to the Company’s executives.

 

The post-employment compensation of the Named Executives described above is earned under plans that were established from time to time by the Compensation Committee, in consultation with independent compensation consultants, to provide a competitive compensation package to executives. The Compensation Committee believes that this post-employment compensation provided to the Named Executives is reasonable and appropriate.

 

For additional information regarding the pension benefits available to the Named Executives, see the “2010 Pension Benefits” table below and the narrative that follows that table, and for additional information regarding Company contributions to the 401(k) accounts of the Named Executives, see the Summary Compensation Table and accompanying footnotes.

 

Deferred Compensation Plans

 

The Company maintains deferred compensation plans for eligible highly compensated key employees (currently, employees at director-level and above with annual base salaries of at least $125,000) to provide an additional tax-deferred vehicle to save for retirement. The Company does not make contributions to the deferred compensation plans on behalf of executives or other participants in the plans. The Company’s obligation to pay such deferred compensation account balances is unsecured.

 

The Compensation Committee views the Company’s deferred compensation plans as providing a reasonable and appropriate means for the Named Executives and other highly compensated key

employees to save for retirement, particularly given that (i) plan participants do not receive Company-provided contributions to these plans and (ii) the Company has taken actions over the past few years to deemphasize its defined benefit pension plan (described above under “Retirement Benefits”), which in the past was an important part of retirement planning for the Named Executives and other Company employees.

 

For additional information regarding the deferred compensation accounts of the Named Executives, see the “2010 Nonqualified Deferred Compensation” table below.

 

Severance Payments

 

Severance Payments (Other Than In Connection with a Change-in-Control):

 

The Company does not have employment agreements with the Named Executives, and in the past has not had any other formal arrangements providing for the payment of severance benefits to the Named Executives, other than in connection with a change in control (discussed below). However, the Compensation Committee believes that it is important to engender loyalty to, and productive employment tenure with, the Company by its executives, and in 2009 decided to implement for the first time a non-change-in-control executive severance program.

 

Under the new program, each Named Executive became party to a severance agreement with the Con-way company that employs the executive: Con-way Inc. for Messrs. Stotlar, Bruffett and Thickpenny and Ms. Pileggi; Menlo Worldwide Logistics for Mr. Bianco; and Con-way Truckload for Mr. Schmidt. Mr. Labrie and Mr. Thickpenny, who left the Company during 2010, received severance benefits under their respective severance agreements. The agreements provide for severance benefits to be provided upon a termination of employment other than in connection with a change in control and other than for cause, and for partial vesting of equity awards. The Compensation Committee believes that the certainty provided by these agreements is of benefit both to the Named Executives and to the Company. The levels of benefits payable to the Named Executives under the agreements were determined based on comparative market data supplied by Hewitt (the compensation consultant to the Compensation Committee) and are less than the levels of benefits payable under the Company’s change-in-control severance program (described below).

 

Additional information regarding the Company’s non-change-in-control executive severance program, as well as a table showing the payments and benefits that the Named Executives would have been eligible to receive under the non-change-in-control severance program if a qualifying termination of employment had occurred on December 31, 2010, can be found under “Other Potential Post-Employment Payments” below.

 

Severance Payments In Connection with a Change-in-Control:

 

The Compensation Committee has authorized and the Company maintains a “change-in-control” executive severance program that provides for certain benefits to be made available to the Named Executives in the event of a qualifying termination in connection with a change in control. The change-in-control program was revised in December 2009 and at that time each Named Executive received a new individual change-in-control severance agreement with the Con-way company that employs the executive. Among other changes, the new agreements do not include a Company-provided gross-up for excise taxes owed under Internal Revenue Code Section 280G and include covenants regarding confidentiality, non-solicitation of employees and non-disparagement with which the Named Executives are required to comply. At the same time, the Compensation Committee determined that all equity awards made to the Named Executives after 2009 would be subject to “double trigger” vesting (that is, the awards would vest only if there is both a change in control and a qualifying termination of employment).

This change-in-control severance program recognizes the significant distraction that can arise from a possible sale or other disposition of the Company or a business unit and thus provides incentives for executives to:

 

 

The levels of payments and benefits provided under these agreements were established based on comparative market data provided by an independent compensation consultant retained by the Compensation Committee and are periodically reviewed by the Compensation Committee to reassess the competitiveness of the benefits offered. In connection with such an assessment that was completed in September 2007 based on an analysis performed by Hewitt, the Compensation Committee decided that executives who are hired at or promoted to executive grade level 4 after that date would receive a lesser level of severance payments and benefits.

 

The Compensation Committee believes that the benefits provided under the change-in-control severance program are reasonably designed to achieve the Company’s goal of encouraging the Named Executives to remain in the employ of the Company and actively support a Board-approved change in control prior to and during the pendency of an actual or potential change-in-control event.

 

In the Compensation Committee’s view, the value of the stock options and other long-term equity awards that would vest in connection with a change in control, taken alone, would not provide a sufficient incentive for the Named Executives to remain with the Company and actively support a change-in-control transaction deemed by the Board of Directors to be in the best interests of shareholders but that might result in the executive’s loss of his or her position with the Company. The cash payments and other benefits offered under the Company’s executive severance program, which are consistent with comparative market data, are considered necessary to promote the Company’s goal of retaining Named Executives, as described above, and incentivizing the active support for a change-in-control transaction.

 

The Compensation Committee does not take into account other forms of wealth accumulation of the Named Executives, such as earnings on vested stock option and restricted stock awards and accumulated retirement benefits under the Company’s pension, 401(k) and deferred compensation plans, when assessing the reasonableness of the severance benefits offered to the Named Executives in connection with a change in control. For example, in the Compensation Committee’s view, accumulated retirement benefits do not serve as an incentive for the Named Executives to remain with the Company, since the executives are generally entitled to receive these benefits whether or not they stay with the Company. In addition, the Compensation Committee recognizes that it is not uncommon for companies seeking to recruit executives to make the executives whole for equity awards that the executive loses when leaving his or her current employer, so the potential forfeiture of these awards may not deter sought-after executives from leaving the Company.

 

Additional information regarding the Company’s change-in-control executive severance program, as well as a table showing the payments and benefits that the Named Executives would have been eligible to receive under the severance program if a qualifying termination of employment in connection with a change in control had occurred on December 31, 2010, can be found under “Other Potential Post-Employment Payments” below.

 

Perquisites

 

Under the Company’s Flexible Perquisites Program implemented in 2008, executives are historically entitled to receive $8,000 per year (payable in two installments, less applicable taxes) to use for benefits

no longer eligible for reimbursement from the Company (including an annual physical examination, which executives are required to undergo each year, tax preparation and estate and financial planning services, and long-term care insurance), or for other benefits at the discretion of the executive. In addition, executives receive the use of a Company car and are eligible to participate in the Company’s Educational Matching Gifts Program and to receive relocation assistance. No relocation assistance or tax gross-up payments were provided to Named Executives in 2010.

 

In April 2009, as part of a cost reduction program undertaken by the Company, both the Flexible Perquisites Program and the Company’s Educational Matching Gifts Program were temporarily suspended. Each program remains suspended as of the date of this Proxy Statement.

 

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis which appears in the Company’s 2011 Notice of Annual Meeting and Proxy Statement.

 

Based on the review and discussions referred to above, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 2011 Notice of Annual Meeting and Proxy Statement for filing with the Securities and Exchange Commission.

 

THE COMPENSATION COMMITTEE

 

 

The following table sets forth the compensation received by the Company’s Chief Executive Officer, Chief Financial Officer and the other executive officers for whom disclosure is required, for the fiscal years ended December 31, 2010, December 31, 2009, and December 31, 2008. As used in this Proxy Statement, “Named Executives” means the officers identified in this Summary Compensation Table.

 

 

 

 

 

 

 

 

The following table includes plan-based awards made to the Named Executives in 2010. The actual payouts received by the Named Executives on the annual cash incentive awards listed below are shown in the Summary Compensation Table above.