CNF INC.
VALUE MANAGEMENT PLAN
(2004 AMENDMENT AND RESTATEMENT)
1. Purpose; Effective Date; Administration
1.1 Purpose
The purpose of the CNF Inc. Value Management Plan (the
"Plan"), as hereby amended and restated, is to provide
eligible employees of CNF Inc. (the "Company") and its
subsidiaries or affiliates with long term compensation that
is linked to the Company's mission of creating long-term
shareholder value.
This Plan is adopted pursuant to the Company's 1997 Equity
and Incentive Plan, as amended (the "1997 Plan") in order to
provide for the grant of "Other Cash-Based Awards" (as
defined in the 1997 Plan), and is subject to all of the
applicable terms and provisions of the 1997 Plan.
1.2 Effective Date
The Plan shall be effective December 1, 1999 (the "Effective
Date"). The effective date of this 2004 Amendment and
Restatement of the Plan is December 1, 2003[January 1,
2004]. The terms and conditions applicable to awards made
with respect to Award Cycles commencing prior to January 1,
2004 shall be subject to the terms of this Plan as in effect
immediately prior to this 2004 Amendment and Restatement
1.3 Administration
The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company
(the "Board"). The Committee shall interpret the Plan and
determine the amount, time and form of award payments for
eligible employees. Decisions by the Committee are final
and binding on all parties.
2. Award Cycles; Eligibility; Vesting
2.1 Award Cycles
"Award Cycle" means a period of three consecutive calendar
years. Each Award Cycle shall be identified by its first
calendar year. For example, the 2004 Award Cycle runs from
January 1, 2004 to December 31, 2006.
2.2 Award Payout
"Award Payout" means, for any Award Cycle, the cash award
that a Participant is eligible to receive under the Plan for
that Award Cycle.
2.3 Eligibility
The Committee shall designate the employees eligible to
participate in an Award Cycle. A "Participant" must be an
employee of the Company or one of its subsidiaries or
affiliates as designated by the Committee, and must be
designated as eligible as of the beginning of each Award
Cycle. The Company shall maintain in its records a list of
Participants for each Award Cycle.
The Committee shall also designate, for each Participant
during each Award Cycle, whether such Participant's Absolute
Performance Payout (as such term is defined in Section 3.1)
Award Payout is to be based upon the performance of (i) the
Company, (ii) a subsidiary of the Company, (iii) a business
unit or division of the Company or a subsidiary, or (iv) a
combination of the foregoing. Any entity upon whose
performance an Absolute Performance Payout Award Payout is
based, in whole or in part, whether such entity is the
Company, a subsidiary of the Company, or a business unit or
division of the Company or a subsidiary, is referred to
herein as a "Business Unit." The terms and conditions
applicable to awards made to Participants for an Award Cycle
need not be identical.
2.4 Vesting
A Participant shall become vested in his or her right to
receive an Award Payout if the Participant is continuously
employed by the Company or one of its Business Units
throughout the entire applicable Award Cycle or until the
occurrence of one of the events described below. A
Participant who terminates from the Company before the last
day of an Award Cycle shall forfeit his or her right to
receive an Award Payout unless the departure coincides with
one of the following (in which case the Participant's right
to receive an Award Payout shall vest):
(a) The Participant's death.
(b) The Participant's disability as defined in the
Company's Long Term Disability Plan or a successor to that
plan.
(c) The Participant's (i) early retirement under the
Company's tax qualified Retirement Plan if the Participant
elects within 60 days from the last day of regular
employment to receive monthly pension benefits under such
Retirement Plan starting on the first day of the month
following the last day of employment, or (ii) normal or
deferred retirement under such Retirement Plan.
In addition, a Participant's right to receive an Award
Payout shall vest upon the occurrence of a Change in
Control.1
Award Payouts that vest pursuant to this Section 2.4 shall
be payable as provided in Section 3.3.
2.5 Change in Control
"Change in Control" means the occurrence of an event
described in any one of the following clauses (a) through
(f):
(a) any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than (A) the Company or its
affiliates, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
its affiliates, and (C) any corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of the
common stock, par value $0.625 per share, of the Company),
is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities acquired
directly from the Company or its affiliates) representing
25% or more of the combined voting power of the Company's
then outstanding voting securities;
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on the Effective Date, constitute
the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to
a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's
stockholders was approved or recommended by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors on the Effective Date or whose
appointment, election or nomination for election was
previously so approved or recommended;
(c) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company
with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent
entity) more than 50% of the combined voting power of the
voting securities of the Company or such surviving or parent
entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (as defined above),
directly or indirectly, acquired 25% or more of the combined
voting power of the Company's then outstanding securities
(not including in the securities beneficially owned by such
person any securities acquired directly from the Company or
its affiliates);
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated
an agreement for the sale or disposition by the Company of
assets having an aggregate book value at the time of such
sale or disposition of more than 75% of the total book value
of the Company's assets on a consolidated basis (or any
transaction having a similar effect), other than any such
sale or disposition by the Company (including by way of
spin-off or other distribution) to an entity, at least 50%
of the combined voting power of the voting securities of
which are owned immediately following such sale or
disposition by stockholders of the Company in substantially
the same proportions as their ownership of the Company
immediately prior to such sale or disposition;
(e) there is consummated the sale or other disposition by
the Company, however effected, of at least two of the three
primary business units of the Company, whether in a single
transaction or in a series of transactions occurring within
an 18-month period, and whether or not one or both of such
business units constitute part of a larger enterprise at the
time of the sale or other disposition; provided, however,
that this clause (e) shall apply only to
GranteesParticipants who are employed by the Company and
shall not apply to GranteesParticipants who are employed by
the Company's business units; and provided further, that the
Board may, upon notice to the affected GranteesParticipants
given at any time, terminate this clause (e) without the
consent of such GranteesParticipants, except that any such
notice shall not be effective to terminate this clause (e)
if a Change in Control occurs pursuant to this clause (e)
within 90 days after such notice is given; or
(f) there is consummated the sale or other disposition,
however effected, of one of the primary business units of
the Company, or the sale or other disposition by the
Company, however effected, of the Emery Worldwide Airlines,
Inc. business unit, whether or not such business unit
constitutes part of a larger enterprise at the time of the
sale or other disposition; provided, however, that this
, clause (f) shall apply only to GranteesParticipants (i) who
immediately prior to such sale or other disposition, were
employed by the business unit that is sold or otherwise
disposed of and (ii) who are not employed by the Company or
any of its Subsidiaries immediately following such sale or
other disposition.
As used in clauses (e) and (f) above:
(i) "primary business units" means Con-Way Transportation
Services, Inc., Menlo Worldwide Forwarding, Inc. and Menlo
Logistics, Inc., and
(ii) a "sale or other disposition" of a business unit
includes:
(A) a sale by the Company of the then outstanding shares of
capital stock of the business unit having more than 50% of
the then existing voting power of all outstanding securities
of the business unit, whether by merger, consolidation or
otherwise;
(B) the sale of all or substantially all of the assets of
the business unit; and
(C) any other transaction or course of action (including,
without limitation, a spin-off or other distribution)
engaged in, directly or indirectly, by the Company or the
business unit that has a substantially similar effect as the
transactions of the type referred to in clause (A) or (B)
above;
it being the intent that a sale or other
disposition of a business unit occurs even if
(x) such business unit constitutes part of a
larger enterprise at the time of the relevant
sale or disposition transaction and (y) such
sale or disposition transaction involves such
larger enterprise (such as, by way of example
and without limitation, when one or more
business units are subsidiaries of a common
parent and either (A) the common parent is
spun-off or (B) there is consummated a sale
of the stock or other equity interests in the
common parent having more than 50% of the
then existing voting power of all outstanding
securities of the common parent).
The foregoing notwithstanding, (1) a sale or other
disposition of a business unit shall not be deemed
to have occurred for purposes of clauses (e) and
(f) above (x) except in the case of a transaction
described in clause (B) above, so long as the
Company or any of its Affiliates (as such term is
defined in Rule 12b-2 under the Exchange Act),
individually or collectively, own the then
outstanding shares of capital stock of the
business unit having 50% or more of the then
existing voting power of all outstanding
securities of the business unit, or (y) in the
event of the sale of shares of capital stock of
the business unit (or the sale of shares or other
equity interests in any parent company of such
business unit) to any trustee or other fiduciary
holding securities under an employee benefit plan
of the Company, the business unit or any other
Affiliate of the Company, and (2) a sale or other
disposition of a business unit shall not be deemed
to have occurred for purposes of clause (f) above
in the event of the sale or distribution of shares
of capital stock (including, without limitation, a
spin-off) of the business unit to shareholders of
the Company, or the sale of assets of the business
unit to any corporation or other entity owned,
directly or indirectly, by the shareholders of the
Company, in either case in substantially the same
proportions as their ownership of stock in the
Company.
3. Awards
3.1 Award Payouts
Subject to Section 3.4 and the other terms and provisions of
this Plan, a Participant shall be eligible to receive an
Award Payout, payable as provided in Section 3.2, in an
amount equal to the sum of such Participant's (i) Absolute
Performance Payout and (ii) Relative Performance Payout.
Establishment of Total Target Award. Not later than 90 days
following the commencement of an Award Cycle, the Committee
shall establish a Total Target Award or an Award Opportunity
with respect to each Participant who is participating in
such Award Cycle.
Absolute Performance Component. Not later than 90 days
following the commencement of an Award Cycle, the Committee
shall establish the Absolute Performance Matrix for each
Business Unit for that Award Cycle. As soon as practicable
following the end of an Award Cycle, the Committee shall
certify the Absolute Performance Payout Percentage for each
Business Unit for such Award Cycle.
the calculations with respect to the Company's Cumulative
EBITDA and Average Pre-tax ROCE for such Award Cycle shall
be performed by [the Company's outside auditors or such
other party or parties as the Committee shall designate].
Within [45 days] following the end of an Award Cycle, the
Company's achievement with respect to Cumulative EBITDA and
Average Pre-tax ROCE, and the determination of each
Participant's Absolute Performance Payout Percentage, shall
be certified by the Committee. The Committee shall then
determine the Participants' Absolute Performance Payouts.
Relative Performance Component. Not later than 90 days
following the commencement of an Award Cycle, the Committee
shall establish the Relative Performance Table. As soon as
practicable following the end of an Award Cycle, the
Committee shall certify the Relative Performance Payout
Percentage for such Award Cycle.
the calculations with respect to the Company's TSR and the
TSR of the component companies of the DJTA shall be
performed by [the Company's outside auditors or such other
party or parties as the Committee shall designate]. Within
[45 days] following the end of an Award Cycle, the Company's
TSR ranking against the TSR of the component companies of
the DJTA, and the determination of each Participant's
Relative Performance Payout Percentage, shall be certified
by the Committee. The Committee shall then determine the
Participants' Relative Performance Payout.
For purposes of this Section 3.1, the following terms shall
have the meanings hereinafter set forth:
"Absolute Performance Matrix" means a table comprised of two
axes, one axis showing Cumulative EBITDA targets for the
applicable Business Unit(s) for an Award Cycle, and the
second axis showing Average ROCE targets for the applicable
Business Unit(s). No Absolute Performance Payout will be
made for performance below the minimum Cumulative EDITDA and
Average ROCE shown on the Absolute Performance Matrix. Each
Absolute Performance Matrix shall have a point at and below
which no Absolute Performance Payout will be made and a
point beyond which no additional Absolute Performance Payout
will be made (with the maximum payout pursuant to each
Absolute Performance Matrix being 200% of a Participant's
Absolute Performance Target Award). The intersection points
on the Absolute Performance Matrix shall be expressed as
percentages. An illustrative example of an Absolute
Performance Matrix is shown in Appendix A annexed hereto.
"Absolute Performance Payout" means the product of (a) a
Participant's Absolute Performance Target Award and (b) the
Absolute Performance Payout Percentage.
"Absolute Performance Payout Percentage" means a percentage
indicated on the Absolute Performance Matrix for an Award
Cycle which reflects the actual Cumulative EBITDA and
Average ROCE of the applicable Business Unit(s) for such
Award Cycle. For purposes of determining a Participant's
Absolute Performance Payout Percentage, straight-line
interpolation shall be utilized to the extent necessary to
reflect results that fall between the percentages indicated
on the Absolute Performance Matrix.
"Absolute Performance Target Award" means the product,
rounded to the nearest whole Dollar, of (a) a Participant's
Total Target Award and (b) the fraction 2/3number 0.6667.
"Average ROCE" means, with respect to a Business Unit for an
Award Cycle, the arithmetic average of Return on Capital
Employed of such Business Unit as determined for each year
of the Award Cycle.
"Award Opportunity" means a percentage of a Participant's
Beginning Base Salary, which percentage shall be established
by the Committee in its discretion.
"Beginning Base Salary" means a Participant's annual base
salary as as in effect during the first year at the time of
the commencement of an Award Cycle, after giving effect to
any adjustment made to such Participant's annual base salary
in such year in connection with the annual review and
adjustment of executive salaries generally.
"Capital Employed" means, with respect to a Business Unit
for each year during an Award Cycle, a twelve-month average,
determined as of the end of such year, of total assets minus
current liabilities, plus short-term debt and current
maturities of long-term debt.
"Cumulative EBITDA" means the sum of the EBITDA of the
applicable Business Unit(s) for each year in the Award
Cycle.
"DJTA Companies" means, for any Award Cycle, the Dow Jones
Transportation Average, as reported in the Wall Street
Journal as of [____].companies (other than the Company)
that were included in the Dow Jones Transportation Average
for the entirety of such Award Cycle.
"EBITDA" means, with respect to any year in an Award Cycle,
the applicable Business Unit's earnings before interest,
taxes, depreciation and amortization, calculated in
accordance with GAAP.
"GAAP" means [United States] generally accepted accounting
principles.
"Relative Performance Target Award" means the product,
rounded to the nearest whole Dollar, of (a) a Participant's
Total Target Award and (b) the fraction 1/3number 0.3333.
"Relative Performance Payout" means the product of (a) a
Participant's Relative Performance Target Award and (b) the
Relative Performance Payout Percentage.
"Relative Performance Payout Percentage" means a percentage
indicated on the Relative Performance Table for an Award
Cycle, which reflects the Company's applicable Business
Unit'spercentile ranking in TSR for such Award Cycle against
the component companies of the DJTA Companies. For purposes
of determining a Participant's Relative Performance Payout
Percentage, straight-line interpolation shall be utilized to
the extent necessary to reflect results that fall between
the percentile rankings indicated on the Relative
Performance Table.
"Relative Performance Table" means a table determined by the
Committee for an Award Cycle, pursuant to which the TSR of
the Company applicable Business Unit(s) for such Award Cycle
shall be percentile ranked against the TSR of the component
companies of the DJTA Companies for such Award Cycle. Each
Relative Performance Table shall have a point at and below
which no Relative Performance Payout shall be made and a
point beyond which no additional Relative Performance Payout
shall be made (the maximum payout pursuant to each Relative
Performance Table shall be 200% of a Participant's Relative
Performance Target Award). An illustrative example of a
Relative Performance Table is shown in Appendix A attached
hereto.
"Return on Capital Employed" means, with respect to a
Business Unit for each year of an Award Cycle, income before
income taxes and interest expense of such Business Unit for
such year, divided by Capital Employed of such Business Unit
for such year.
"Total Shareholder Return" or "TSR" for any company means
the percentage (expressed as a decimal) obtained by dividing
(i) the sum of (a) the appreciation in the value of a share
of common stock of such company during an Award Cycle, as
measured by the difference between the market price of such
share of stock at the beginning and end dates of such Award
Cycle, plus (b) the dividends payable on such share of
common stock during such Award Cycle, divided by (ii) the
market price of such share of stock at the beginning date of
such Award Cycle. For purposes of determining "Total
Shareholder Return," (x) the term "market price" shall mean
the average closing price of such share of stock for the 60
trading days immediately preceding the applicable date, and
(y) appropriate adjustments shall be made to reflect stock
splits, reverse stock splits, spinoffs, recapitalizations
and other similar transactions to the extent that they
materially alter the equity value of a share of common
stock.
"Total Target Award" means, with respect to a Participant
for an Award Cycle, such Participant's Beginning Base Salary
multiplied by such Participant's Award Opportunity.
3.2 Payment of Award
Except as otherwise provided in Section 3.3, the Company
shall pay a Participant's award for an Award Cycle to the
Participant in a lump sum of cash within 60 days after the
end of such Award Cycle, unless the Participant has made a
valid election to defer payment under the CNF Inc. Deferred
Compensation Plan for Executives.
3.3 Payments Upon Early Vesting
In the event that, pursuant to Section 2.4, a Participant
shall become vested in his or her right to receive an Award
Payout prior to the end of an Award Cycle, then (i) the
Award Cycle applicable to such Participant shall be deemed
to have ended (A) in the case of a Change in Control, as of
the end of the month immediately preceding such Change in
Control and (B) in all other cases, as of the end of the
calendar year in which such vesting occurs, (ii) the Award
Payout shall be determined pursuant to Section 3.1 based
upon the actual performance of the applicable Business
Unit(s) and the Company for such Award Cycle, and (iii) such
Award Payout shall be paid to such Participant within 60
days after the end of such Award Cycle or, in the event of a
Participant's death, as provided in the next paragraph.
In the event of a Participant's death, the Award Payout
payable to the Participant for an Award Cycle shall be paid
to the Participant's Beneficiary. "Beneficiary" means the
person or persons designated by the Participant pursuant to
a beneficiary designation form properly completed and
delivered to the Corporate Secretary. If no such
beneficiary designation is made, then the award shall be
paid to the Participant's estate. Payment to the
Beneficiary shall be made within 60 days after the end of
the applicable Award Cycle; provided, however, that if the
Participant had elected deferral of the Award Payout under
the Company's Deferred Compensation Plan for Executives with
payment in installments, the Committee may choose, in its
sole discretion upon application by the Beneficiary, to make
payment to the Beneficiary in accordance with the elected
installment schedule as though the date of death was the
date of retirement.
3.4 Adjustments
Subject to the terms of the 1997 Plan, in the event that the
Committee determines (i) that the Award Payout payable to
one or more Participants for an Award Cycle has been
materially affected as a result of events or circumstances
that were unanticipated at the beginning of the Award Cycle
and/or extraordinary in nature and (ii) that the goals of
the Plan would be frustrated if adjustments were not made to
such Award Payouts, then the Committee, in its sole
discretion, may make such adjustments to such Award Payouts
as it deems appropriate, which adjustments may have the
effect of increasing or decreasing the amount of the Award
Payouts [(to the extent permitted under Section 162(m) of
the Internal Revenue Code of 1986, as amended)] otherwise
payable pursuant to this Plan.
3.5 Special Award Cycles
Notwithstanding any provision thereof to the contrary, the
Committee may elect at any time and from time to time to
designate employees to participate in special Award Cycles,
which may be periods of one, two or three years. All
designations and determinations required under the Plan with
respect to such special Award Cycles (including, without
limitation, those under Section 2.3 and 3.1) shall be made
prior to or within 90 days after the commencement of the
special Award Cycle.
4. Amendment; Termination
4.1 Amendment
The Committee may amend the Plan at any time by notice to
the Participants, except that no amendment shall reduce the
award determined for an Award Cycle that has ended before
the date of the Amendment.
4.2 Termination
The Committee may terminate the Plan at any time.
Notwithstanding the termination of the Plan, the Award
Payouts for each Award Cycle then in progress shall be
calculated, and be payable, following the completion of each
such Award Cycle, in accordance with the provisions of
Sections 3.1 through 3.4.
5. Claims Procedure
5.1 Submission of Claims
Any person claiming an award or requesting an
interpretation, ruling or information under the Plan shall
present the request in writing to the Committee, which shall
respond in writing.
5.2 Initial Denial
Notice of an initial denial shall normally be given within
90 days of receipt of the claim or request or no later than
180 days if special circumstances require an extension of
time. The written notice of denial shall state the
following:
(a) The reasons for the denial, with specific reference to
the Plan provisions on which the denial is based.
(b) A description of any additional materials or
information required and an explanation of why it is
necessary.
5.3 Review of Denied Claim
Any person whose claim or request is denied or who has not
received a response within the time period described above
may request review by notice to the Committee. The original
decision shall be reviewed by the Committee, which may, but
shall not be required to, grant the claimant a hearing. On
review, whether or not there is a hearing, the claimant may
have representation, examine pertinent documents and submit
issues and comments in writing.
5.4 Decision on Review
The decision on review shall ordinarily be made within 60
days. If an extension of time is required for a hearing or
other special circumstances, the claimant shall be so
notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reasons and the
relevant plan provisions. All decisions on review shall be
final and bind all parties concerned.
6. General Provisions
6.1 Attorneys Fees
If suit or action is instituted to enforce any rights under
this Plan, the prevailing party may recover from the other
party reasonable attorneys' fees at trial and on any appeal.
6.2 Applicable Law
This Plan shall be governed by and construed in accordance
with the laws of the State of California, except as
preempted by federal law.
6.3 Notice
Any notice under this Plan shall be in writing and shall be
effective when actually delivered or, if mailed, when
deposited as first class mail postage prepaid. Mail to the
Company shall be directed to 3240 Hillview Avenue, Palo
Alto, CA 94304, or to such other address as the Company may
specify by notice to all Participants. Mailed notices to a
Participant shall be directed to the Participant's last
known home address shown in the Company's records. Notices
to the Committee shall be sent to the Company's address.
6.4 No Assignment or Alienation
The rights of a Participant or Beneficiary under this Plan
are personal. No interest of a Participant or Beneficiary
may be directly or indirectly assigned, transferred, or
encumbered. A Participant's or Beneficiary's rights to
awards payable under this Plan are not subject in any manner
to anticipation, alienation, sale, transfer, assignment,
pledge, or encumbrance. Such rights shall not be subject to
the debts, contracts, liabilities, engagement or torts of
the Participant or Beneficiary.
6.5 Tax Withholding
The Company shall make any required withholding of income
taxes and of the employee's share of FICA and any other
applicable payroll taxes from payments made under this Plan.
If such withholding is required before the date of payment
of amounts deferred under this Plan, the Company shall pay
the required amount and withhold it from other compensation
payable to the Participant.
6.6 Payment to Impaired Person
The Committee may decide that because of the mental or
physical condition of a person entitled to payments, or
because of other relevant factors, it is in the best
interest to make payments to others for the benefit of the
person entitled to payment. In that event, the Committee
may, in its discretion, direct that payments be made to any
of the following:
(a) To a parent or spouse or a child of legal age.
(b) To a legal guardian.
(c) To one furnishing maintenance, support, or
hospitalization.