UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.  )

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

CON-WAY INC.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

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No fee required.

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Con-way Inc.

 
 
 
 
 

Notice of Annual Meeting
 
 
and
 
 
Proxy Statement

 
 
 
 
 
 
 
Annual Meeting of Shareholders
 
 
MAY 12, 2015

  
  

 

 

 

Con-way Inc.

2211 Old Earhart Road
Suite 100
Ann Arbor, Michigan 48105

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
ON MAY 12, 2015

March 30, 2015

Dear Con-way Inc. Shareholder:

The Con-way Inc. Annual Meeting of Shareholders will be held on Tuesday, May 12, 2015, at 9:00 a.m., Eastern Time, at The Westin Detroit Metropolitan Airport, 2501 Worldgateway Place, Detroit, Michigan 48242.

We are pleased to furnish our proxy materials over the Internet. We believe that this e-proxy process expedites shareholders’ receipt of proxy materials, while also lowering the costs and reducing the environmental impact of our Annual Meeting. On or about March 30, 2015, we mailed to our shareholders a Notice of Internet Access and Availability of Proxy Materials, which contains instructions on how to vote, how to access our 2015 Proxy Statement and 2014 Annual Report on Form 10-K online, and how to request paper copies of the proxy materials.

At the Annual Meeting, you will be asked to vote on the following matters:

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To elect to the Board of Directors the eleven director nominees who are named in the attached Proxy Statement for a one-year term until the 2016 Annual Meeting;

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To approve, through a non-binding advisory vote, the compensation of the named executive officers of the Company as disclosed in the attached Proxy Statement;

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To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2015;

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If properly raised, to consider the two shareholder proposals described on pages 62 – 68 of the attached Proxy Statement; and

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To transact any other business properly brought before the Annual Meeting.

Shareholders of record at the close of business on March 17, 2015, are entitled to notice of and to vote at the Annual Meeting.

Your vote is important. Whether or not you attend the Annual Meeting, the Company urges you to promptly vote and submit your proxy via a toll-free number or over the Internet. If you received a paper copy of the proxy card by mail, you may submit your proxy by signing, dating and mailing the proxy card in the envelope provided. If you attend the Annual Meeting and prefer to vote in person, you will be able to do so and your vote at the Annual Meeting will revoke any proxy you have previously submitted.

Sincerely,

 

STEPHEN K. KRULL
Secretary

Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting to be held on May 12, 2015

Con-way’s 2015 Proxy Statement and 2014 Annual Report on Form 10-K are available at
http://www.envisionreports.com/CNW

 

 

TABLE OF CONTENTS

 

 

 

 

  

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Con-way Inc.

2211 Old Earhart Road, Suite 100
Ann Arbor, Michigan 48105
Telephone: (734) 757-1444

PROXY STATEMENT

March 30, 2015

We are furnishing this Proxy Statement in connection with the solicitation of proxies by the Board of Directors (“Board”) of Con-way Inc. (“Con-way,” “Company,” “we,” “us,” or “our,” as the context requires) for use in voting at the Annual Meeting of Shareholders (the “Annual Meeting”) and any adjournment or postponement of the Annual Meeting. The Annual Meeting will be held on Tuesday, May 12, 2015, at 9:00 a.m., Eastern Time, at The Westin Detroit Metropolitan Airport, 2501 Worldgateway Place, Detroit, Michigan, 48242. This Proxy Statement is first being sent to shareholders on or about March 30, 2015.

Who May Vote

If you are a shareholder of record at the close of business on March 17, 2015, you will be entitled to vote at the Annual Meeting. As of that date, there were 57,695,248 shares of common stock of the Company outstanding and entitled to vote. Each share of common stock has the right to one non-cumulative vote.

How Proxies Work

Only votes cast in person at the Annual Meeting or received by proxy before the Annual Meeting will be counted at the Annual Meeting. Giving us your proxy means you authorize us to vote your shares at the Annual Meeting in the manner you direct. If your shares are held in your name, you can vote by proxy in three convenient ways:

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By Telephone: Call toll-free 1-800-652-VOTE (8683) and follow the instructions.

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By Internet: Go to www.envisionreports.com/CNW and follow the instructions.

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By Mail: Complete, sign, date and return your proxy card in the provided envelope.

Telephone and Internet voting facilities for shareholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on May 11, 2015.

As permitted by Securities and Exchange Commission (“SEC”) rules, the Company is making this Proxy Statement and its Annual Report on Form 10-K (“Annual Report”) available to its shareholders electronically via the Internet. On or about March 30, 2015, we will mail our shareholders a Notice of Internet Access and Availability of Materials (“Notice”), which contains instructions on how to vote, how to access this Proxy Statement and our Annual Report online, and how to request paper copies of the materials. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you receive a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained in the Notice.

If your proxy is properly submitted or returned, 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, as discussed below.

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Revoking a Proxy

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

Board of Directors’ Recommendations

The Board recommends you vote:

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FOR the election of the eleven director nominees described below,

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FOR the approval, on an advisory basis, of the Company’s executive compensation,

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FOR ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2015, and

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AGAINST each of the shareholder proposals, Proposal 4 and Proposal 5.

Quorum and Required Vote

The presence, in person or by proxy, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business at the Annual Meeting. A nominee for director in an uncontested election will be elected to the Board 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 under “Majority Voting; Director Resignation Policy.”

Approval of each other matter on the agenda for the Annual Meeting requires the favorable vote of the holders of a majority of the voting power represented at the meeting and entitled to vote on such matter.

Abstentions from voting will have no effect on the election of directors. For all other matters, abstentions from voting will have the same effect as voting against the matter.

Shares Held Through a Broker, Bank or Other Nominee

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.

If you do not provide voting instructions to your broker, your broker has discretion to vote those shares on matters that are routine. However, a broker cannot vote shares on non-routine matters without your instructions. This is referred to as a “broker non-vote”. For this Annual Meeting, only ratification of the appointment of the independent registered public accounting firm is considered a routine matter; so, there will not be any broker non-votes with respect to that proposal. For all other matters, broker non-votes will be disregarded and will have no effect on the outcome of the vote.

Information for Participants in the Company’s 401(k) Plans

If you are a participant in one or more of the Con-way Retirement Savings Plan, the Con-way 401(k) Plan or the Con-way Personal Savings Plan (the “Plans”), your proxy card will serve as voting instructions to the Trustee of the Plans, T. Rowe Price Trust Company, for shares of Company common stock credited to your account(s). If you fail to give timely voting instructions to the Trustee, your shares will be voted by the Trustee in the same manner and

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proportion as shares in the Plan for which valid voting instructions have been received on a timely basis. To allow sufficient time for voting by the Trustee of the Plans, your voting instructions for shares held in the Plans must be received by 11:59 p.m., Eastern Time, on May 8, 2015.

Attendance at the Annual Meeting

All shareholders are invited to attend the Annual Meeting. Persons who are not shareholders may attend only if invited by the Board. 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.

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PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

The Board, pursuant to the Certificate of Incorporation and the Bylaws, has determined that the number of directors of the Company shall be eleven. There are eleven nominees for director at our 2015 Annual Meeting of Shareholders. Each director is elected annually for a term of one year.

The following persons are the nominees of the Board for election to the Board of Directors to serve for a one-year term until the 2016 Annual Meeting of Shareholders and until their successors are duly elected and qualified:

All of our director nominees, other than Mr. Shurts, have previously been elected by our shareholders. Pursuant to the retirement age provision of the Company’s Corporate Governance Guidelines, one of our current eleven directors, Mr. John J. Anton, has not been nominated for re-election at the 2015 Annual Meeting and will retire from the Board as of the 2015 Annual Meeting. The Board has nominated Mr. Shurts for election at our 2015 Annual Meeting to fill the vacancy that would otherwise be left by Mr. Anton’s retirement. Mr. Shurts was identified as a potential director candidate by a third-party search firm. He was reviewed as a director candidate by our Governance and Nominating Committee, which recommended his nomination by the Board of Directors.

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

Biographical Information

The Board seeks to have members with a variety of backgrounds and experiences. Set forth below for each director nominee is a summary of biographical information and a brief description of the experience, qualifications, attributes or skills that led the Board to conclude that the director or director nominee should serve on the Board.

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PROPOSAL NUMBER 2: ADVISORY VOTE TO APPROVE
EXECUTIVE COMPENSATION

Pursuant to Section 14A of the Exchange Act, the Company is providing shareholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules. This is the fifth consecutive year that the Company is asking shareholders to vote on this type of proposal, known as a “say-on-pay” proposal. At the Annual Meeting of Shareholders held in 2014, approximately 90% of the total votes cast were voted in favor of the Company’s say-on-pay proposal. At the 2011 Annual Meeting, shareholders were asked to vote on a proposal seeking their views as to whether the say-on-pay vote should be held every year, every two years or every three years. The Board recommended that a say-on-pay vote be held annually, and an overwhelming majority of shareholders voting on the matter indicated a preference for holding such vote on an annual basis. Accordingly, the advisory vote on NEO compensation will be held on an annual basis at least until the next non-binding shareholder vote on the frequency of future say-on-pay votes.

Accordingly, we are providing our shareholders with the opportunity to cast a non-binding advisory vote to approve the compensation of our NEOs disclosed in this Proxy Statement through the following resolution:

“RESOLVED, that the holders of Con-way Inc.’s common stock approve, on an advisory basis, the compensation of its named executive officers, as disclosed in the proxy statement for the Con-way Inc. 2015 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).”

The fundamental goal of our executive compensation program is to incentivize our executives to create sustainable value for our shareholders over the long-term while effectively managing through the economic cycles of our business. To help achieve this goal, the key objectives of our executive compensation program are to:

 

In order to effectively meet our goal, we have designed our executive compensation program around two key compensation principles: pay for performance and pay at risk. Please see the Compensation Discussion and Analysis for additional detail regarding our executive officer compensation program.

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The say-on-pay vote is an advisory vote only, and therefore it will not bind the Company or our Board. However, the Board and the Compensation Committee will consider the voting results as appropriate when making future decisions regarding executive compensation.

THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE ADVISORY RESOLUTION RELATING TO THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

PROPOSAL NUMBER 3: RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

At last year’s annual meeting, shareholders ratified the appointment of KPMG LLP as independent public accountants to audit the consolidated financial statements of the Company for the year ended December 31, 2014. The Board recommends that shareholders vote in favor of ratifying the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2015. A representative of the firm will be present at the Annual Meeting 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. KPMG LLP has served as the Company’s independent registered public accounting firm since 2003.

Fees

The following table sets forth the aggregate fees for services KPMG LLP provided to the Company during the fiscal years ended December 31, 2014 and December 31, 2013:

•

Audit Fees.  Represents fees 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.

•

Tax Fees.  Represents fees billed for professional services rendered for tax compliance, tax advice and tax planning.

•

All Other Fees.  No fees were billed by KPMG LLP to the Company for products and services rendered in 2014 and 2013, other than the Audit Fees and Tax Fees described in the preceding paragraphs.

All of the services performed by KPMG LLP during 2014 and 2013 were pre-approved by the Audit Committee of the Board, 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 LLP’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

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subcategories that describe the nature of the services to be rendered and the fees for such services. For 2014 and 2013, the Audit Committee also pre-approved nominal additional fees (beyond those included in the KPMG LLP fee proposal) for services in a limited number of subcategories, based on unanticipated need. The Company’s pre-approval policy provides that the Audit Committee must specifically pre-approve any engagement of KPMG LLP for services outside the scope of the fee proposal and engagement letter.

THE AUDIT COMMITTEE AND THE BOARD RECOMMEND A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2015.

AUDIT COMMITTEE REPORT

In connection with its review of the audited financial statements of the Company for the fiscal year ended December 31, 2014, the Audit Committee has reviewed and discussed the audited financial statements with management, and discussed with KPMG LLP, the Company’s independent auditors, the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has received the written disclosures and the letter from KPMG LLP in accordance with applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the Audit Committee concerning independence, and has discussed with KPMG LLP its independence.

Based on the review and discussions referred to in the preceding paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2014, for filing with the SEC.

The Audit Committee

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STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding beneficial ownership of the Company’s common stock, as of March 17, 2015, by each of the directors, director nominees and the NEOs identified in the Summary Compensation Table below, and by our current directors and executive officers as a group. The percentages shown are based on the outstanding shares of common stock as of March 17, 2015.

*

Less than one percent of the Company’s outstanding shares of common stock.

(1)

Represents shares as to which the individual has sole voting and investment power (or for which the individual shares such power with his or her spouse). None of these shares has been pledged as security. The shares shown include 2,248 restricted shares for each of the non-employee directors, with the exception of Mr. Anton.

(2)

The amount shown includes 8,700 shares which Mr. Bianco has the right to acquire within 60 days of March 17, 2015 pursuant to vested stock options. In addition to the holdings shown in the above table, Mr. Bianco holds 32,719 restricted stock units (“RSUs”) that are not scheduled to vest within 60 days of March 17, 2015.

(3)

The amount shown includes 27,813 shares which Mr. Bruffett has the right to acquire within 60 days of March 17, 2015 pursuant to vested stock options. In addition to the holdings shown in the above table, Mr. Bruffett holds 37,056 RSUs that are not scheduled to vest within 60 days of March 17, 2015.

(4)

In addition to the holdings shown in the above table, Mr. Krull holds 28,814 RSUs that are not scheduled to vest within 60 days of March 17, 2015.

(5)

The amount shown includes 11,776 shares which Mr. Lehmkuhl has the right to acquire within 60 days of March 17, 2015 pursuant to vested stock options. In addition to the holdings shown in the above table, Mr. Lehmkuhl holds 37,769 RSUs that are not scheduled to vest within 60 days of March 17, 2015.

(6)

The amount shown includes 156,933 shares which Mr. Stotlar has the right to acquire within 60 days of March 17, 2015 pursuant to vested stock options. In addition to the holdings shown in the above table, Mr. Stotlar holds 94,248 RSUs that are not scheduled to vest within 60 days of March 17, 2015 and 14,735 phantom stock units under the Company’s Deferred Compensation Plan for Executives and Key Employees that will be paid out in cash.

(7)

The amount shown includes 269,986 shares which all directors and executive officers as a group have the right to acquire within 60 days of March 17, 2015 pursuant to vested stock options.

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STOCK OWNERSHIP BY PRINCIPAL SHAREHOLDERS

The following table sets forth information as to any person known to the Company to be the beneficial owner of more than 5% of the Company’s common stock, which information has been obtained from filings pursuant to Sections 13(d) and 13(g) of the Securities Exchange Act of 1934.

(1)

Based on information contained in a Schedule 13G/A filed on January 15, 2015. The Schedule 13G/A indicates that BlackRock, Inc. has a principal business office at 55 East 52nd Street, New York, NY 10022. This amount reflects the total shares beneficially owned by BlackRock, Inc. and certain subsidiaries as of December 31, 2014. Blackrock has sole voting power over 5,128,875 shares and no voting power over 197,680 shares, and sole dispositive power over all shares.

(2)

Based on information contained in a Schedule 13G/A filed on February 13, 2015. The Schedule 13G/A indicates that Hotchkis and Wiley Capital Management, LLC is an investment adviser with a principal business office at 725 S. Figueroa Street, Los Angeles, CA 90017. This amount reflects the total shares held by Hotchkis clients as of December 31, 2014. Hotchkis has sole voting power over 4,638,622 shares and no voting power over 382,800 shares, and sole dispositive power over all shares.

(3)

Based on information contained in a Schedule 13G/A filed on February 11, 2015. The Schedule 13G/A indicates that The Vanguard Group has a principal business office at 100 Vanguard Blvd., Malvern, PA 19355. This amount reflects the total shares beneficially owned by The Vanguard Group and certain subsidiaries as of December 31, 2014. The Vanguard Group has sole voting power over 38,511 shares and no voting power over 3,358,197 shares, and sole dispositive power over 3,362,997 shares and shared dispositive power over 33,711 shares.

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INFORMATION ABOUT THE BOARD OF DIRECTORS AND
BOARD COMMITTEES; CORPORATE GOVERNANCE

Director Independence Standards

Pursuant to NYSE listing standards, our Board has adopted a formal set of categorical Director Independence Standards with respect to the determination of director independence, which either meet or exceed the independence requirements of the NYSE corporate governance listing standards. In accordance with these standards, to be considered independent, a director must be determined to have no material relationship with the Company other than as a director. The standards specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate families with respect to past employment or affiliation with the Company or its independent registered public accounting firm. Our Director Independence Standards are available on the Company’s corporate website at www.con-way.com under the heading “Corporate Governance” within the “Investors” tab.

Director Independence

The Board has determined that each incumbent director and director nominee other than our Chief Executive Officer (or “CEO”), Douglas W. Stotlar, is an independent director under the NYSE listing standards and our Director Independence Standards.

Majority Voting; Director Resignation Policy

The Company’s Bylaws 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 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.

Such policy requires an incumbent director who fails to obtain a majority vote in an uncontested election in accordance with the Company’s Bylaws to tender his or her resignation to the Chairman of the Board 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 meeting of shareholders at which the election of directors occurred. The Company will announce the Board’s decision regarding such resignation 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 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.

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Board Meetings; Board Leadership Structure; Sessions of Non-Management Directors

During 2014, the Board held five 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 non-executive Chairman of the Board, Mr. Templin, and a Chief Executive Officer, Mr. Stotlar, and has had a separate Chairman and Chief Executive Officer at all times since 1998, except for a ten-month period from 2004 to 2005 when the then-Chairman of the Board also served as interim Chief Executive Officer.

Separating these positions allows our CEO to focus on both setting the strategic direction and providing the day-to-day leadership of the Company, while the Chairman of the Board can then focus on providing advice to, and overseeing the performance of, the CEO. Although our Bylaws and Corporate Governance Guidelines do not require the separation of these positions, the Board believes that having an independent director serve as Chairman of the Board is the appropriate leadership structure for the Board at this time.

Pursuant to the Company’s Corporate Governance Guidelines, Mr. Templin also serves as the Board’s “Lead Non-Management Director.” Non-management members of the Board meet in executive session on a regularly scheduled basis, with Mr. Templin presiding at such executive sessions. Neither the CEO nor any other member of management attends the meetings of non-management directors, unless their attendance is specifically requested by the non-management directors. For information regarding how to communicate with the Lead Non-Management Director and other members of the Company’s Board, see “Communications with Directors” below.

Standing Committees

The Board currently has the following four standing committees: the Audit Committee, the Compensation Committee, the Finance Committee, and the Governance and Nominating Committee. Each of these standing committees is governed by a written charter approved by the Board. A copy of each charter can be found on the Company’s website as follows:

Audit Committee:

http://www.con-way.com/en/investor_relations/corporate_governance/committee_charters/ audit_committee/

Compensation Committee:

http://www.con-way.com/en/investor_relations/corporate_governance/committee_charters/ compensation_committee/

Finance Committee:

http://www.con-way.com/en/investor_relations/corporate_governance/committee_charters/ finance_committee/

Governance and Nominating Committee:

http://www.con-way.com/en/investor_relations/corporate_governance/committee_charters/ governance_and_nominating_committee/

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.

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The current members of each of the standing committees of the Board are shown below:

ü =

Current member

C =

Committee Chair

* =

Chairman of the Board

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

Audit Committee: The Audit Committee assists the Board in its oversight of matters involving the accounting, auditing, financial reporting, and internal control functions of the Company. Under its charter, the Audit Committee is responsible for the appointment, evaluation and compensation of the Company’s outside independent auditors. The Committee receives and reviews reports on the Company’s accounting and internal control policies and procedures and oversees the work of the Company’s outside independent auditors and internal auditors. Under its charter, the Audit Committee also provides oversight of the Company’s Compliance program. The Company has established a Compliance Committee, chaired by the Chief Compliance Officer and comprised of a cross-functional team of Company employees, which provides a process for addressing ethics and compliance complaints, including complaints regarding accounting, internal accounting controls, or auditing matters, and for reporting such complaints to the Audit Committee, as appropriate.

Each Audit Committee member has been determined to be an independent director under the NYSE 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 SEC. The Committee met ten times during 2014.

Compensation Committee: The Compensation Committee approves the annual base salaries paid to the CEO, the Company’s other policy-making officers and certain other corporate officers. The Company’s CEO 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 CEO, it is the practice of the Compensation Committee to obtain the input of the other independent members of the Board of Directors. Management has no role in recommending or setting compensation for the CEO. The Compensation Committee also reviews the retirement and benefit plans of the Company and its domestic subsidiaries.

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Each Compensation Committee member has been determined to be an independent director under the NYSE listing standards. The Committee met five times during 2014.

The Compensation Committee typically engages an independent compensation consultant to assist the Committee in its annual review of executive compensation. For 2014, the Compensation Committee retained Semler Brossy Consulting Group, LLC as its independent compensation consultant. (See “Compensation Discussion and Analysis — Compensation Consultant” below.)

The independent compensation consultant is 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 charter identifies the Compensation Committee as the Committee with the responsibility to administer the 2012 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 NEOs 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.

Finance Committee: The Finance Committee reviews the Company’s capital structure, dividend policy, major insurance programs, pension plan investment policy, and material financial transactions, including but not limited to transactions involving derivatives, loan and credit agreements, capital leases, mortgages, bond indentures and securities issuances in general, and advises Company management and the Board of Directors with respect to such matters.

The Finance Committee consists of three or more directors, as determined from time to time by the Board of Directors, based upon recommendations of the Governance and Nominating Committee. Each member of the Committee shall be qualified to serve on the Committee pursuant to any applicable requirements of the NYSE, and any additional requirements that the Board deems appropriate. The Finance Committee met two times during 2014.

Governance and Nominating Committee: The duties and responsibilities of the Governance and Nominating Committee include the following:

•

identifying and recommending to the Board individuals qualified to serve as directors of the Company;

•

recommending to the Board directors to serve on the standing committees of the Board;

•

advising the Board with respect to matters of Board composition and governance processes;

•

developing and recommending to the Board a set of corporate governance guidelines applicable to the Company and overseeing corporate governance matters generally;

•

overseeing the Company’s policies and procedures with respect to related person transactions;

•

overseeing the annual evaluation of the Board and the Company’s management; and

•

reviewing and recommending to the Board the appropriate forms and levels of compensation for Board and Committee service by non-employee directors (including the Chairman of the Board, if he or she is not an employee of the Company).

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Each Committee member has been determined to be an independent director under the NYSE listing standards. The Governance and Nominating Committee met three times during 2014.

Periodically, 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 retained Semler Brossy Consulting Group, LLC to evaluate the Company’s director compensation against relevant market information. 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 on the same basis as it considers director candidates identified by the Committee. In considering director candidates, 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 name of the shareholder and evidence of the person’s ownership of Company stock; and

•

the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director of the Company and the person’s consent to be named as a director if selected by the Governance and Nominating Committee and nominated by the Board.

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 nor more than 150 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. A nominee should 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 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

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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.

Board’s Role in the Oversight of Company Risk

The Board has responsibility for oversight of the Company’s risk management, while the Company’s executive leadership is responsible for the day-to-day enterprise risk management. The Company has developed an enterprise risk management process in which key business and functional leaders identify the major risks that the Company faces, including operational, financial, legal and regulatory, strategic and reputational risks. In addition to evaluating major risks, management identifies ways to mitigate and monitor such risks. At least annually, the Company’s executive leadership reviews with the Board the major risks identified in the enterprise risk management process, as well as the steps identified to mitigate such risks.

In addition, the Board has allocated to its standing committees the review of risks within their respective areas of responsibility. For example, the Audit Committee reviews risks relating to financial reporting and internal control functions, the Finance Committee reviews risks relating to financial matters and transactions, and the Compensation Committee reviews risks relating to the Company’s compensation programs and policies.

The Compensation Committee, with assistance from its independent compensation consultant, conducted a review of the risks arising from the Company’s compensation policies and practices for employees, including executives. Based on such review, the Compensation Committee concluded that these risks are not reasonably likely to have a material adverse effect on the Company.

Annual Board Self-Evaluation Process

As required by our Corporate Governance Guidelines, the Board conducts a self-evaluation of its performance and effectiveness on an annual basis. In addition, each of the standing committees also conducts an annual self-evaluation of its performance and effectiveness annually and discusses the results of such assessment with the Board. The purpose of the self-evaluation process is to identify ways in which to enhance the effectiveness of the Board’s and Committees’ oversight of the Company’s business and financial performance and corporate governance. As part of the self-evaluation process, each Director completes written questionnaires developed by the Governance and Nominating Committee to provide feedback on the effectiveness of the Board and the Committees on which they serve. The collective ratings and comments are compiled by outside legal counsel and presented to the Committee and to the full Board for discussion and action.

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Policies and Procedures Regarding Related Person Transactions; Transactions with Related Persons

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 an amount 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 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 shareholders, 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, 2014, 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.

Shareholder Outreach and Engagement and Exclusive Forum Bylaw Amendment

The Company recognizes the value of the views and input of its shareholders. From time to time, the Company reaches out to and engages with some of its shareholders as a matter of good corporate governance. The Board believes that engaging with shareholders helps the Company to (i) understand how shareholders view management, (ii) set goals and expectations for performance, and (iii) identify emerging issues that may affect the Company’s corporate governance or other aspects of its operations.

In January 2015, the Board unanimously approved an amendment to the Bylaws (as adopted, the “Exclusive Forum Bylaw Amendment”). The Exclusive Forum Bylaw Amendment requires that certain types of shareholder internal-affairs litigation cannot be brought in any court other than the state courts of Delaware (or, if no state court located in Delaware has jurisdiction, then in the federal courts located in Delaware) unless the Company otherwise consents.

In 2014, prior to its adoption, the Board requested that management engage with those shareholders holding more than 1% of the Company’s outstanding common stock (roughly the top 20 holders, representing approximately 65% of the outstanding shares of common stock) to solicit feedback on the proposed Exclusive Forum Bylaw Amendment. In these discussions, the Company highlighted:

•

that the Board has been monitoring this corporate governance trend for some time through updates to the Board from the Company’s outside counsel;

•

the assurance that the proposed Exclusive Forum Bylaw Amendment, if adopted, would follow a well-thought-out process, including shareholder engagement;

•

the Board’s view that, in light of the fact that the Company is a Delaware corporation, Delaware is appropriate as the exclusive forum for certain types of litigation;

•

the fact that the proposed Exclusive Forum Bylaw Amendment would have no fee-shifting provisions or mandatory arbitration provisions, provisions which are often viewed unfavorably by shareholders;

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•

the Board’s view that the proposed Exclusive Forum Bylaw Amendment would not abridge the rights of shareholders but rather serve as a way for any of the specified types of litigation to be resolved in a more efficient manner before a judiciary that is familiar with Delaware law;

•

that the timing of the proposed Exclusive Forum Bylaw Amendment was not in anticipation of any specific litigation; and

•

the Company’s long-standing commitment to strong corporate governance.

Before amending the Bylaws, the Board was informed of, and considered, the views of shareholders’ on this topic based on the management discussions noted above. The Company believes that these efforts reflect the importance that the Board has placed on the concerns expressed by our shareholders.

Communications with Directors

Any shareholder or other interested party desiring to communicate with any director (including the Chairman of the Board 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.

Policy Regarding Director Attendance at Annual Meetings of Shareholders

The Company’s policy regarding director attendance at the Annual Meeting of Shareholders is for the Chairman of the Board and the CEO (if different from the Chairman) to attend in person, and for other directors to attend in person or electronically. In 2014, the Chairman of the Board and the CEO each attended the meeting in person and the nine other outside directors attended telephonically.

Authority to Retain Advisors

The Board 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.

Code of Business Ethics; Corporate Governance Guidelines

The Company has adopted a Code of Business Ethics that applies to our CEO, Chief Financial Officer and Controller, as well as other officers, directors and employees of Con-way. The Board has also adopted 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 heading “Corporate Governance” within the “Investors” tab. 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 Business Ethics by posting such information on its website at www.con-way.com.

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2014 DIRECTOR COMPENSATION

The following table sets forth the compensation for 2014 of the non-employee members of the Board. The narrative that follows the table describes the compensation programs applicable to the non-employee directors during 2014. Mr. Stotlar is not included in the table because he does not receive compensation in his capacity as a member of the Board. His compensation as President and CEO is included in the 2014 Summary Compensation Table.

(1)

Mr. Templin completed his transition to and was named Chairman of the Board in January 2014. At that time, Dr. Kennedy concluded his service as Chairman and assumed a position on both the Audit and Governance and Nominating Committees. In conjunction with this transition, Mr. Templin concluded his service as Chair of the Finance Committee as of the Annual Meeting in May 2014 and Mr. Stott was appointed in his place.

Amounts shown in this column include a cash payment of $31.44 issued in lieu of granting partial shares in connection with the 2014 restricted stock grants for non-employee directors.

Following is a breakdown of Board retainers and committee fees paid in 2014:

(2)

The amounts shown in this column reflect the aggregate grant date fair value of restricted stock awards granted in 2014 and are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“FASB ASC Topic 718”). For additional information on the valuation assumptions for the 2014 grants, see Note 10, “Share-Based Compensation” of Item 8, “Financial Statements and Supplementary Data,” of our Form 10-K for the year ended December 31, 2014, as filed with the SEC.

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The following table provides the total number of shares of restricted stock granted to each non-employee director during fiscal year 2014 and the total number of shares of unvested restricted stock held by each non-employee director as of December 31, 2014:

(3)

No option awards were granted to non-employee directors in 2014. As of December 31, 2014, none of the non-employee directors held any stock options.

(4)

Mr. Anton reached age 72 on June 27, 2014. At that time his restricted stock awards vested in contemplation of his pending retirement as required under the corporate governance guidelines.

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 2014, 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 valued 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.

Each of our directors stands for election or re-election annually. In 2014, upon his or her election or re-election, each non-employee director received a grant of restricted stock with a notional value of $100,000. The number of shares of restricted stock in each grant was 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 will vest on the date of the annual shareholder meeting following the grant date or earlier upon the occurrence of certain events such as death, disability, retirement or a change in control of the Company.

The Board has established stock ownership guidelines for non-employee directors. Under the guidelines, each non-employee director is expected to hold Con-way securities having an aggregate value of not less than five times the annual cash retainer. New directors have five (5) years from the date of their appointment to the Board to satisfy these stock ownership guidelines. To determine compliance with these guidelines, ownership interests are valued as follows:

Directors are provided with business travel insurance coverage and, in addition, are reimbursed for travel expenses incurred for attending Board and Committee meetings as well as director educational seminars or events.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the Company’s executive compensation program for 2014. The Compensation Committee of the Company’s Board of Directors oversees our executive compensation program and practices. In this section of the Proxy Statement, we explain how and why the Compensation Committee made its 2014 compensation decisions for the following named executive officers, or NEOs:

Executive Summary

The Company provides transportation, logistics and supply-chain management services for a wide range of customers across a variety of markets. The success of our Company is ultimately built on the trust placed in us by our customers, who rely on us to handle and deliver their products on time, undamaged and at a competitive price. However, even when our operational execution is strong, our financial results remain sensitive to seasonal and economic cycles.

Our Compensation Philosophy

 

The mix of performance-based, at-risk compensation versus fixed compensation in the target pay of our CEO and other NEOs is shown in the charts below. Consistent with the pay-for-performance and pay-at-risk principles that are fundamental to our executive compensation program, for 2014, approximately 80% of our CEO’s target pay and, on average,

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approximately 72% of the target pay of our other NEOs was in the form of at-risk incentive compensation, both annual cash bonuses and long-term equity-based awards. Our CEO’s and other NEOs’ pay is heavily dependent on the achievement of performance goals and impacted by our stock price.

2014 Target Total Direct Compensation Mix

 

How Executive Compensation Was Tied to Company Performance in 2014

Our stock performed well and we grew our total shareholder return by approximately 25% in 2014. During 2015, our fundamental goal remains the creation of additional long-term value for our shareholders.

Consistent with our pay-for-performance philosophy, our Company’s financial performance drove executive compensation for 2014.

The year-over-year increase in profitability across our business units was reflected in above-target annual incentive compensation payouts to our corporate NEOs. Con-way Freight’s

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year-over-year profit improvement resulted in an above-target annual incentive compensation payout for Mr. Lehmkuhl. Despite Menlo Logistics’ profit improvement from last year, its performance against pre-established annual goals resulted in a below-target payout for Mr. Bianco.

With respect to performance-based equity awards, the PSPU awards granted to our NEOs in 2012 paid out at 134% of target based on performance against the pre-established goals for 2012 – 2014 average annual EBITDA growth and 2014 return on invested capital (“ROIC”). For outstanding PSPU awards, including those granted to our NEOs in 2014, their estimated realizable value as of December 31, 2014, was higher than their grant date value reflecting both the Company’s strong financial performance in 2014 relative to pre-established goals and the increase in the Company’s stock price during 2014.

The value ultimately realized with respect to the 2014 long-term incentive awards will depend on the Company’s achievement of the three-year performance goals established for the 2014 performance-based equity awards and the Company’s stock price at the time the awards vest.

Focusing on the three-year period from 2012 through 2014, our CEO’s realizable pay as of each fiscal-year end was higher than his target pay for that year, which reflects the positive trend in the Company’s total shareholder return during that same period.

CEO Compensation vs. Indexed Total Shareholder Return

 

Target compensation is the sum of annual base salary, the target annual incentive award, and the total grant date value of PSPUs and RSUs awarded each year.

Total Shareholder Return represents the cumulative change to $100 invested in Con-way common stock at 2011 year-end, with dividends reinvested.

Realizable compensation is the sum of annual base salary, the actual annual incentive compensation paid based on performance for the year, and the value of PSPUs and RSUs awarded each year based on the Company’s closing stock price at year-end ($27.82 in 2012, $39.71 in 2013 and $49.18 in 2014). For PSPUs, realizable value assumes actual financial performance for completed annual portions of the three-year performance period and target financial performance for the remaining annual portions of the three-year performance period.

Other 2014 Executive Compensation Highlights

•

Total direct compensation levels are generally compared to the median of market data, with upside opportunity to reward superior performance and reduced compensation levels when performance objectives are not achieved.

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•

Our annual incentive program requires achievement of financial thresholds (pre-established goals for adjusted operating income for each business unit in 2014) before any annual incentive compensation is paid, as described more fully beginning on page 40.

•

Given the pay-for-performance nature of our executive compensation program, the Compensation Committee included performance-based equity awards in the long-term incentive compensation mix for 2014 (50% PSPUs and 50% RSUs), as described more fully beginning on page 43.

•

Our Company provides minimal perquisites, which on average represent approximately 1.1% of the total compensation package for our NEOs.

Corporate Governance Framework

To meet the key objectives of our executive compensation program and to mitigate risk from our compensation practices and principles, the Company has adopted a corporate governance framework that includes the components described below, each of which the Committee believes reinforces the Company’s executive compensation philosophy and objectives.

•

No hedging or pledging of Company stock: Company policy prohibits all of our employees, including the NEOs, and members of our Board from engaging in short sales and other similar transactions (i.e., trades in puts, calls or other options) that could be used to hedge the risk of Company stock ownership. Company policy also prohibits members of our Board, executive officers (including the NEOs), and other key employees from pledging Company stock, including holding shares of Company stock in a margin account.

•

Stock ownership guidelines and stock retention requirements: We have established stock ownership guidelines for our NEOs and other top executive officers to further align the interests of our executives with those of our shareholders. In 2013, the stock ownership guideline applicable to our CEO was increased to 6 times base salary. The following guidelines for equity ownership are expressed as a multiple of each executive’s base salary:

To determine compliance with these guidelines, only vested shares of Company stock held by the NEO (including shares held indirectly in the Company’s 401(k) plans and phantom stock units held in the Company’s deferred compensation plans) count towards the stock ownership guidelines. Until the guidelines are met, 70% of the net shares (after tax withholding) received upon vesting of restricted stock, RSUs and PSPUs are required to be retained by the NEO.

•

“Clawback” policy: Our NEOs and other policy-making executive officers are required to repay overpayments of annual and long-term cash incentive compensation awards in the event of a financial restatement due to certain reasons other than fraud occurring within one year following the award payment and in the event of a financial restatement due to fraud at any time.

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•

Double-trigger vesting: The vesting of an NEO’s unvested equity awards will accelerate upon a change in control of the Company only if he also experiences a qualifying termination of employment, subject to certain exceptions for equity awards held by our business unit presidents following the disposition of their business unit.

•

No stock option repricing: The Company’s equity incentive plan does not permit either stock option repricing without shareholder approval or stock option grants with an exercise price below fair market value.

•

No tax gross-ups: The Company does not provide tax gross-ups on any benefits or perquisites, including severance payments received following a change in control of the Company.

•

Independent compensation consultant: Our Compensation Committee retains an independent compensation consultant who performs services only for the Compensation Committee (and periodically for the Governance and Nominating Committee with respect to director compensation).

We Value the Perspectives of Our Shareholders

We conducted our annual advisory vote on executive compensation at our 2014 Annual Meeting. While this vote was not binding on the Company, our Board or our Compensation Committee, we believe that it is important for our shareholders to have an opportunity to vote on this proposal on an annual basis as a means to express their views on our executive compensation philosophy, our executive compensation program and policies, and our decisions regarding executive compensation, all as disclosed in our Proxy Statement.

At our 2014 Annual Meeting, approximately 90% of the votes cast on the advisory vote on executive compensation were in favor of our NEO compensation program as disclosed in our 2014 Proxy Statement. The Compensation Committee reviewed the final vote results, interpreted this significant level of support as an endorsement by our shareholders of our executive compensation program and policies and did not make any changes to our executive compensation program in response to such vote.

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Key Compensation Elements

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Overview of Compensation Practices

The Compensation Committee is responsible for the executive compensation program design and decision-making process for NEOs. The table below describes the roles of the Compensation Committee and other participants in the decision-making process.

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Compensation Consultant

The Compensation Committee relies upon a compensation consultant to assist in the assessment of executive compensation. The compensation consultant is engaged by and reports to the Compensation Committee, which evaluates the performance and independence of the compensation consultant, determines the scope of the consultant’s services and decides whether or not to continue to use the consultant’s services.

The Compensation Committee retained Semler Brossy Consulting Group, LLC (“Semler Brossy”) to advise the Compensation Committee on executive compensation matters for 2014. At the Compensation Committee’s request, the independent compensation consultant advised the Compensation Committee with regard to:

•

composition of the focused peer group;

•

comparative market data for peer group companies and companies across the general industry;

•

evaluation of the NEOs’ total direct compensation in relation to comparative market data;

•

establishment of target long-term incentive award opportunities based on multiples of base salary for each NEO;

•

design of the 2014 and 2015 annual incentive and long-term equity incentive compensation awards, including the selection of performance metrics and the setting of performance goals, and the methodologies and assumptions used to value those awards;

•

regulatory and governance requirements for executive compensation, including disclosure requirements;

•

enhancements to the Compensation Committee’s governance of the Company’s executive compensation;

•

assessment of the risks associated with the Company’s overall compensation policies and practices; and

•

trends and evolving market practices in executive compensation.

Except as described above and except for services provided to the Governance and Nominating Committee of the Board of Directors with respect to director compensation, the independent compensation consultant provided no other services to the Company in 2014.

As part of its annual performance evaluation of its compensation consultant, the Compensation Committee considered Semler Brossy’s independence in light of applicable SEC rules and NYSE listing standards. At the Compensation Committee’s request, Semler Brossy provided information addressing the independence of the individual compensation advisors and consulting firm. Based on its assessment, the Compensation Committee concluded that Semler Brossy’s work did not raise any conflict of interest that would prevent them from serving as an independent consultant to the Compensation Committee.

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How We Determine Total Direct Compensation for Our NEOs

Given our Company’s size and unique mix of service offerings, we do not have strictly comparable industry peers against which we can evaluate executive compensation. To assist it in evaluating the total direct compensation of our NEOs, the Compensation Committee considered comparative market data provided by its independent compensation consultant for companies within the peer group and for companies within general industry, as described further below under “Overview of Compensation Practices — Peer Group for 2014 Executive Compensation Decisions.”

For 2014, the Compensation Committee considered relevant market pay practices when setting executive compensation, but did not benchmark specific compensation elements or total compensation of each executive against the market data. Instead, the Compensation Committee utilized the market data in evaluating the overall competitiveness and fairness of the Company’s executive compensation program. The Compensation Committee also sought to maintain the overall target compensation of the executive team as a whole at approximately the median of market practices. In assessing the Company’s overall executive compensation, the Compensation Committee considered annual base salaries together with the annual cash incentive targets and the fair market value of the target long-term equity incentive compensation awards.

While the Compensation Committee considers relevant market pay practices when setting executive compensation, the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market data. The Compensation Committee believes that compensation decisions are complex and require consideration of overall Company performance, challenges facing the Company, general economic conditions, advice from the independent compensation consultant, compensation recommendations made by the CEO and peer compensation levels. The factors that influence the amount and mix of each executive’s total direct compensation include the executive’s contributions to shareholder value accretion, scope of responsibilities, credentials, length of service, skills, experience and individual performance. In addition, the Compensation Committee also considers each executive’s compensation history, the market competition for such position and the relative comparability of pay internally across executives with similar organizational impact and responsibilities.

Peer Group for 2014 Executive Compensation Decisions

Each year, the Compensation Committee, with input from its independent compensation consultant, reviews and approves the peer group used in evaluating executive compensation to ensure that the peer group continues to reflect certain market characteristics comparable to those of the Company. These peer group characteristics include being:

ü

traded on a major United States stock exchange

ü

the transportation sector (based on the Global Industry Classification Standard, or GICS)

ü

the same relative size as the Company (annual revenue of $2.0 to $11.0 B)

ü

headquartered in North America

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The peer group of companies used to evaluate 2014 executive compensation decisions consisted of the following companies:

Based on the advice of Semler Brossy, the Compensation Committee made no changes to the peer group for 2014 compared to the prior year. For 2014, peers were generally selected among companies with revenue in a range of approximately 0.4 to 2.0 times the Company’s revenue, with a slight bias to smaller companies so that more of our direct trucking competitors would be included in the peer group. The companies selected for the peer group had annual revenues of approximately $2.0 to $11.0 billion, with a median of $5.0 billion, at the time the peer group was approved at the end of 2013, as compared to the Company’s 2014 annual revenue of $5.8 billion.

For 2015, the Compensation Committee has decided to (i) remove the airline companies (Alaska Air Group Inc., JetBlue Airways Corp., Republic Airways Holdings Inc., and SkyWest Inc.) in order to narrow the business focus of the peer group, (ii) add four companies that have grown to reflect the peer group characteristics discussed above (ArcBest Corporation, Hub Group, Inc., Kansas City Southern and Old Dominion Freight Line, Inc.), and (iii) remove Werner Enterprises Inc. to avoid overweighting smaller companies.

General Industry Survey Data

The Compensation Committee also uses general industry compensation survey data in its evaluation of executive compensation. In compiling compensation market data, the independent compensation consultant, Semler Brossy, may supplement the peer group data with data from other companies included in certain general industry compensation surveys if they determine that a particular executive position is not generally reported in proxy statements or is not sufficiently represented in the peer group. For the 2014 executive compensation review, Semler Brossy compiled compensation data from the following general industry compensation surveys: 2013 U.S. Mercer Benchmark Database — Executive (which included data from approximately 65 companies with annual revenues between $3.75 billion and $7.5 billion) and Equilar Survey Data (which included data from approximately 248 companies with annual revenues between $2.0 billion and $11.0 billion).

In the evaluation of 2014 executive compensation for the positions of CEO (Mr. Stotlar) and CFO (Mr. Bruffett), Semler Brossy weighted the peer group proxy data at 50% with the remaining 50% of the comparator data from the Mercer survey, based on Semler Brossy’s assessment of the relevancy of the data sources. For executive positions that oversaw business units (Messrs. Bianco and Lehmkuhl), Semler Brossy considered the proxy data from the peer group as the most relevant market data. For Mr. Krull, whose position is not reported as consistently in proxy data, the Compensation Committee considered only the survey data, with equal weighting between the Mercer and Equilar surveys.

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CEO Compensation

The Compensation Committee did not increase Mr. Stotlar’s 2014 target total direct compensation from last year. Generally, the Compensation Committee evaluates Mr. Stotlar’s target total direct compensation to assess whether it is competitive compared to the median of market data for chief executive officers at comparable companies, including in our peer group. In determining Mr. Stotlar’s 2014 target total direct compensation, the Compensation Committee also considered general economic conditions, overall Company performance, the mix of elements in the total direct compensation package, the potential perspectives of our shareholders, and input from the independent compensation consultant.

Based on its assessment of competitive market practices and the recommendation of the independent compensation consultant, the Compensation Committee made no changes to Mr. Stotlar’s base salary and annual incentive compensation opportunity for 2014 compared to 2013. With respect to Mr. Stotlar’s long-term equity incentive opportunity, the Compensation Committee granted Mr. Stotlar an award of 300% of base salary in 2014, which was unchanged from 2013. This was in recognition of the Company’s share price performance in 2013, which was a significant consideration when establishing 2014 equity awards. In order to tie CEO compensation to Company performance, the equity mix of his long-term incentive award continued to be comprised of 50% PSPUs and 50% RSUs. For 2015, the Compensation Committee has decided to change the equity mix of Mr. Stotlar’s long-term incentive award to 60% PSPUs and 40% RSUs to further enhance the performance-based nature of his executive compensation.

As in prior years, in 2014, the CEO’s total direct compensation was higher than that of the other NEOs. This difference reflects both the assessment of a chief executive officer’s skills, experience and value relative to that of other senior company executives and the Compensation Committee’s belief that Mr. Stotlar’s substantially higher level of responsibility and accountability, as well as greater potential impact on the Company’s financial results, warrants a higher level of performance compensation than the other NEOs. This higher level of compensation is also consistent with market practices.

Our Executive Compensation Program

Our executive compensation program consists of three primary elements: annual base salary, annual cash incentive awards and long-term equity incentive compensation awards. Each element is discussed in more detail below.

Annual Base Salary

The Compensation Committee did not increase the annual base salary of any of the NEOs in 2014. In evaluating base salaries, the Compensation Committee considered market data, the Company’s financial performance and long-term strategic objectives, the scope of each NEO’s responsibilities and his level of experience, individual performance, salary history, the recommendations of the independent compensation consultant, and the CEO’s recommendations with respect to the other NEOs.

Annual Cash Incentive Awards

The annual incentive compensation paid to our NEOs based on 2014 financial results reflects a year-over-year increase in profitability across our business units. Con-way Freight’s 44% increase in business unit operating income over last year was reflected in an above-target annual incentive bonus payout for Mr. Lehmkuhl and contributed to the above-target payouts for our corporate NEOs. Despite its profit improvement from last year, Menlo Logistics did not achieve the target goal previously established by the Compensation Committee, resulting in a below-target payout for Mr. Bianco.

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The annual cash incentive program is designed to focus executives on the achievement of financial performance goals that are tied to the short-term business objectives of the business unit for which the executive is responsible or, in the case of the corporate NEOs, the combined performance of the business units. Payouts under the annual cash incentive program are based on the level of achievement of performance goals set annually by the Compensation Committee. Specifically, the amount actually paid under the annual cash incentive program to each NEO equals the product of (i) a target award for each NEO, which is base salary multiplied by the annual incentive target, and (ii) each business unit’s performance measured against predetermined financial performance goals, which is the financial performance multiplier:

 

NEO 2014 Annual Cash Incentive Award Payments

How does the Compensation Committee determine the annual cash incentive award target for each NEO?

Each NEO’s annual cash incentive award is set at a level designed to deliver, at target performance levels, a specified percentage of annual base salary, as shown in the table above. The Compensation Committee assesses the reasonableness of these percentages based on market data as part of its review of total target direct compensation. For each of the NEOs, there was no change from the percentages that were applicable in 2013.

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What are the performance metrics for the 2014 annual cash incentive program?

For Mr. Bianco and Mr. Lehmkuhl, the presidents of two of the Company’s primary business units, their annual cash incentive awards are based entirely on the operating results of the business unit for which they are responsible, as shown in the table below. In the case of Mr. Bianco, based on its consideration of Menlo’s performance against certain non-financial business goals, the Compensation Committee determined not to exercise negative discretion with respect to his award payout.

For our corporate NEOs, Messrs. Stotlar, Bruffett and Krull, annual cash incentive awards are based on the respective performances of Con-way Freight, Con-way Truckload and Menlo Logistics relative to the adjusted operating income goals of each business unit, weighted by percentage of revenue, as shown in the table below.

How does the Compensation Committee set the performance goals for the annual cash incentive awards?

When setting the performance goals set forth in the following table, the Compensation Committee considered projected Company performance as reflected in the one-year financial plans that are developed by the Company and approved by the Board of Directors. In evaluating these financial plans, among the factors the Compensation Committee considers are market conditions, the business cycle, prior-year financial results, operating plan priorities, and the prospective ROIC of the Company and its respective primary business units. It also gauges the relative degree of difficulty the Company and its business units will likely face in meeting the financial plans. The Compensation Committee discusses the financial plans with the CEO. Based on its independent assessment of all of these factors, the Compensation Committee sets the numerical performance goals for the annual cash incentive awards.

Numerical performance goals are set for threshold, target and maximum performance levels. For performance between threshold and target or between target and maximum, the actual payout is determined by interpolation. For the 2014 plan design, the Compensation Committee decided to reduce the payout at threshold (i.e., performance at 70% of the target goal) from 56% of the target award in 2013 to 30% of the target award in 2014 and thereby, changed the payout percentages for below-target performance. The maximum annual cash incentive payout that an executive can receive continued to be 200% of the target payout.

1

The Compensation Committee includes certain pre-defined adjustments to the operating income performance metric to provide NEOs with an incentive to take actions that are in the long-term interests of the business unit, but that might otherwise adversely affect payouts on the annual cash incentive awards. Operating income (as determined in accordance with United States generally accepted accounting principles) is adjusted for (i) asset impairments pursuant to FASB Codification topics 350 and 360, (ii) costs related to exit or disposal activities pursuant to FASB Codification topic 420 and termination benefits pursuant to FASB Codification topics 712 and 715 (limited to those adjustments in excess of $1.0 million per event during the relevant calendar year), (iii) defined-benefit pension settlements and curtailments (limited to those adjustments in excess of $1.0 million per event during the relevant calendar year) pursuant to FASB Codification topic 715, and (iv) changes in accounting principles pursuant to FASB Codification topic 250.

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In 2014, what were the specific performance goals and how did actual performance compare to the goals?

The following table shows the numerical performance goals that applied to the annual NEO awards, as well as the level of achievement in 2014.

Performance Goals Applicable to 2014 Annual Cash Incentive Awards

Long-Term Equity Incentive Compensation Awards

The Compensation Committee designed our 2014 long-term equity incentive compensation program to focus executives on financial metrics that are deemed to be complementary to the performance metric of adjusted operating income applicable to our short-term cash incentive program. Our long-term equity incentive program also aligns the interests of our executives with those of our shareholders through the use of stock-based awards that reward executives for increases in our stock price over time.

During 2014, the NEOs had three long-term equity incentive awards outstanding. In February 2014, the Compensation Committee granted the 2014 PSPU and RSU awards. The key features of these awards are as follows:

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How does the Compensation Committee determine the long-term equity incentive compensation opportunity for each NEO?

To determine the dollar value of each NEO’s target long-term equity incentive award, the Compensation Committee has established a range of multiples, as a percentage of base salary, applicable to each executive grade level. The ranges are considered competitive with market data and allow the Compensation Committee to adjust awards for particular NEOs based on individual performance, experience level, contribution to the Company, and overall Company financial results, while remaining within a reasonable range of the market overall.

In determining awards, the CEO and the Compensation Committee also consider the overall use of shares and costs for the Company. As a result, some executives may receive grants below the midpoint of the applicable range in order to allow awards above the midpoint to others. A below-midpoint award does not necessarily indicate any perceived shortcoming in an executive’s performance.

The multiples applicable to the NEOs’ 2014 target long-term incentive awards are shown in the following table.

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

Based on its assessment of competitive market practices and in recognition of the Company’s 2013 share price performance, the Compensation Committee did not change the 2014 target long-term incentive award from 2013 for Mr. Stotlar and lowered the target awards compared to 2013 for the other NEOs.

How does the Compensation Committee determine which equity vehicles to grant to NEOs?

Given the pay-for-performance nature of our executive compensation program, the Compensation Committee included PSPUs in the mix of long-term equity incentive compensation awards granted to NEOs in February 2014. In determining the types of long-term incentive awards to be granted, the Compensation Committee considered factors such as the alignment of executive and shareholder interests, the competitive practices of our peers, the motivational and retention values of the awards and share utilization. The Compensation Committee believes that when taken together, the 2014 equity mix of PSPUs and RSUs provides a balanced mix of long-term incentive awards that align the interests of executives with those of shareholders.

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The Compensation Committee believes that PSPUs, which have a three-year performance period, effectively focus executives on performance metrics that are linked to the long-term financial objectives of the Company and appropriately expose executives to the risk of no award if certain threshold performance goals are not met. The Compensation Committee also believes that RSUs, which are subject to three-year cliff vesting, further align executive interests with those of shareholders by incentivizing them to take a longer-term perspective when managing the Company’s businesses.

The Compensation Committee also views PSPUs and RSUs, which have a three-year performance period and three-year vesting period, respectively, as providing important motivational and retentive benefits. The 2014 PSPU and RSU awards are subject to the Company’s retention policy described under “Executive Summary — Corporate Governance Framework” and are expected to assist the NEOs in meeting the Company’s stock ownership guidelines also described under “Executive Summary — Corporate Governance Framework.” Compliance with the guidelines will result in the NEOs building meaningful equity positions in the Company, thereby further aligning their interests with the interests of other shareholders.

The Compensation Committee chose to allocate 50% of the total equity grant value for each NEO in the form of PSPUs and 50% of the total equity grant value in the form of RSUs. Given the Company’s pay-for-performance philosophy, the Compensation Committee felt that it was important to award at least half of the total equity grant value in the form of performance-based equity awards that are tied to specific performance metrics. In order to encourage executives to build their stock ownership in the Company and to align their interests with the interests of the Company’s shareholders, the Compensation Committee felt that it was appropriate to grant the remaining 50% of the total equity grant value in the form of RSUs.

What are the performance metrics for the PSPU awards made to NEOs in 2014?

The PSPUs granted in February 2014 have a three-year performance period of 2014 – 2016 and will vest three years from the grant date subject to achievement of pre-established performance goals. The objective of the PSPUs is to reward executives for maintaining an acceptable level of profit growth over a multi-year period and throughout the cycles of our business.

The Compensation Committee selected Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) as the performance metric for evaluating long-term profit growth. EBITDA was selected as the performance metric because the Compensation Committee felt that it is a widely-used measure of the economic value of businesses similar to the Company and is less sensitive to exogenous factors over the business cycle than other metrics, such as net income or earnings per share, making it a more meaningful metric.

The Compensation Committee chose the Company’s 3-year average EBITDA growth as the specific performance measure. For the 2014 – 2016 performance period, the 3-year average EBITDA growth will be calculated at the end of the performance period as the arithmetic average of the annual EBITDA growth rates during the three-year performance period.²

2

In more specific detail, EBITDA is defined as Con-way consolidated Operating Income (Loss) plus Depreciation and Amortization determined on a “US GAAP basis,” adjusted for the following: 1) asset impairments pursuant to FASB Codification topics 350 and 360; 2) costs related to exit or disposal activities pursuant to FASB Codification topic 420 and termination benefits pursuant to FASB Codification topics 712 and 715 (limited to those adjustments in excess of $1.0 million per event during the relevant calendar year); 3) defined-benefit pension settlements and curtailments (limited to those adjustments in excess of $1.0 million per event during the relevant calendar year) pursuant to FASB Codification topic 715; 4) changes in accounting principles pursuant to FASB Codification topic 250; 5) the impact of future acquisitions and dispositions effective after the grant date pursuant to FASB Codification topics 805 and 205; and 6) the impact of adjustments or expenses related to any judgments or settlements in connection with the Allianz Global Risks US Ins. Co. et al. v. ACE Prop. & Cas. Ins. Co., et al. litigation.

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How did the Compensation Committee determine the performance goals for the 2014 PSPUs?

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

Among the factors the Compensation Committee considered when setting the performance goals were the cyclical nature of the Company’s business, the Company’s financial performance relative to its competitors’ expected future economic growth (as measured by GDP forecasts) and market conditions, long-term operating and strategic plan priorities, the prospective ROIC of the Company, and the competitive practices of our peers. It also considered the relative degree of difficulty the Company and its business units will likely face in meeting these performance goals over time; however, the Compensation Committee explicitly did not rely on budgets or management forecasts as the primary determinant of long-term performance goals. The Compensation Committee also discussed the performance goals with the CEO. Based on its independent assessment of all of these factors, the Compensation Committee set the numerical performance goals.

How difficult will it be to achieve the performance goals for the 2014 PSPU awards?

The Compensation Committee established the performance goals to encourage strong, focused performance. The target payout level is designed to be achievable with strong management performance over our business cycle and favorable economic conditions, while payout at the maximum level is designed to be very difficult to achieve. Both the target and maximum payout levels are designed to reflect EBITDA and ROIC financial performance that is rewarding to shareholders.

For the 2012 PSPU awards, which vested in February 2015, what were the performance goals and how did actual performance compare to these goals?

As with the 2014 PSPU awards, the Compensation Committee established performance goals for the Company’s 3-year average EBITDA growth, which was calculated as the average of the annual EBITDA growth rates during the 2012 – 2014 performance period.³ For the 2012 PSPU awards, the Compensation Committee also established a modifier to the final payout of the award based on the Company’s ROIC in the third year of the performance period. The Compensation Committee established the following performance goals for the 2012 – 2014 performance period:

Subject to the overall maximum payout of 200%, the ROIC modifier provided for a payout enhancement of 5% for an ROIC in the third year of at least 8.3% and an additional

3

In more specific detail, EBITDA is defined as Con-way consolidated Operating Income (Loss) determined on a “US GAAP basis” plus Depreciation and Amortization adjusted for the following: 1) asset impairments pursuant to FASB Codification topics 350 and 360; 2) restructuring charges pursuant to FASB Codification topic 420; 3) defined-benefit pension settlements pursuant to FASB Codification topic 715; 4) changes in accounting principles pursuant to FASB Codification topic 250; and 5) the impact of future acquisitions and/or dispositions effective after the grant date pursuant to FASB Codification topics 805 and 205.

  

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enhancement of 5% for each incremental 0.2% of ROIC, with a maximum 30% payout enhancement for a third-year ROIC of 9.3% or higher. The actual ROIC in 2014 of 8.5% resulted in a payout enhancement of 10%, with a final award payout of 134%.

Retirement Benefits

401(k) Savings Plans

The Company maintains 401(k) plans to provide employees with an opportunity to accumulate benefits for retirement. These broad-based plans are not limited to executives as many other Company employees are eligible to participate.

For additional information regarding Company contributions to the 401(k) accounts of the NEOs, see the “2014 Summary Compensation Table” and accompanying footnotes.

Defined Benefit Pension Plans

In addition to the Company’s 401(k) savings plans, certain executives were previously eligible to participate in the Company’s broad-based defined benefit pension plans. These plans were closed with respect to new participants, effective December 31, 2006, and the Company ceased credited service accruals under these plans after December 31, 2006. 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.

For additional information regarding the pension benefits available to the NEOs, see the “2014 Pension Benefits” table below and the narrative that follows the table.

Non-Qualified Supplemental Plans

Employees of the Company (including the NEOs) who are subject to federal tax law limits on the compensation that can be taken into account for the 401(k) plans and defined benefit pension 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. The Company maintains the supplemental plans in order to provide competitive post-retirement benefits. For additional information, see the “2014 Nonqualified Deferred Compensation” table and the “2014 Pension Benefits” table below.

Deferred Compensation Plans

The Company provides eligible highly compensated key employees the opportunity to defer receiving a portion of their compensation until after termination of employment. The deferred compensation plans 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.

For additional information regarding the deferred compensation accounts of the NEOs, see the “2014 Nonqualified Deferred Compensation” table below.

Post-Employment Compensation

The Compensation Committee believes that severance benefits and change-in-control benefits are necessary to attract and retain the high-performing executives that the Company seeks for its most senior positions. In addition, the Compensation Committee believes that change-in-control benefits reduce the risk to individual executives if the Company or a business unit is merged with or sold to another group or entity, thereby allowing such executive to

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favorably present the Company and negotiate such transactions in the interests of shareholders without the distraction of their personal concerns or interests. For non-change-in-control terminations, the Committee believes that by eliminating the need for negotiations upon a separation of service, a pre-determined severance arrangement reduces the potential costs to shareholders and increases the likelihood of an amicable separation when management changes are needed. The Company does not have employment agreements with the NEOs. Under the Company’s non-change-in-control and change-in-control executive severance programs, each of the NEOs has severance agreements with the Con-way company that employs the NEO.

The non-change-in-control severance agreements provide for severance benefits to be paid upon a termination of employment, other than in connection with a change in control or for cause, and for partial vesting of equity awards. The change-in-control severance agreements provide for severance benefits to be paid in the event of a qualifying termination in connection with a change in control. The levels of benefits payable to the NEOs under these agreements were determined based on comparative market data supplied by the independent compensation consultant to the Compensation Committee at the time of the agreement.

Additional information regarding the Company’s non-change-in-control and change-in-control executive severance programs, as well as a table showing the payments and benefits that the NEOs would have been eligible to receive under the severance programs if a qualifying termination of employment had occurred on December 31, 2014, can be found under “Other Potential Post-Employment Payments” below.

Perquisites

The Company provides limited perquisites, which currently include eligibility to participate in the Company’s car program and the Flexible Perquisites Program (FPP). Participation in the Company’s car program is not limited to executives and participation in the FPP is not limited to NEOs. Under the FPP, executives are entitled to receive $8,000 per year (before tax withholding) to use for expenses that the Company does not reimburse, which includes obtaining a required executive annual physical and certain services such as tax preparation, estate and financial planning, long-term care insurance or other benefits, at the discretion of the executive.

Tax Considerations

Federal tax law limits the deductibility by the Company of “non-performance based compensation” paid to the CEO and the three other most highly compensated executives, other than the CFO (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. Because the Compensation Committee also recognizes the need to retain flexibility to make compensation decisions that may not meet the standards of “performance-based compensation” when necessary to enable the Company to continue to attract, retain and motivate highly-qualified executives, it reserves the authority to approve potentially non-deductible compensation in appropriate circumstances.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis which appears in this Proxy Statement.

Based on the review and discussion referred to above, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement to be filed in connection with the Company’s 2015 Annual Meeting of Shareholders and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

THE COMPENSATION COMMITTEE

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Members of the Compensation Committee are all independent directors of the Company and have no other relationships with the Company and its subsidiaries.

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EXECUTIVE COMPENSATION TABLES

2014 SUMMARY COMPENSATION TABLE

The following table provides information regarding the compensation of the Company’s Chief Executive Officer, Chief Financial Officer, and the three other most highly-compensated executive officers serving as executive officers of the Company as of December 31, 2014, or the NEOs.

(1)

Mr. Bianco is also President of Menlo Worldwide, LLC, the Company’s supply chain management company.

(2)

Mr. Lehmkuhl is also President of Con-way Freight Inc., the Company’s full-service less-than-truckload company.

(3)

Amounts reported in this column for 2014 reflect the aggregate grant date fair value of RSU and PSPU awards calculated in accordance with FASB ASC Topic 718 and pursuant to our long-term incentive program as described in the Compensation Discussion and Analysis above. The amounts included in the Stock Awards column for the PSPU awards granted during 2014 are calculated based on the probable satisfaction of the performance conditions for such awards on the grant date. Assuming the highest level of performance is achieved for these PSPU awards, the maximum value of these awards at the grant date would be as follows: Mr. Stotlar — $2,310,302; Mr. Bruffett — $871,779; Mr. Bianco — $728,962; Mr. Krull — $678,123; and Mr. Lehmkuhl — $871,779. For information on the valuation assumptions for the 2014 equity grants, see Note 10, “Share-Based Compensation” of Item 8, “Financial Statements and Supplementary Data,” of our Form 10-K for the year ended December 31, 2014, as filed with the SEC.

(4)

Amounts reported in this column for 2014 reflect the annual cash incentive awards earned under the Company’s short-term incentive compensation plan. Information regarding applicable performance goals and achievement levels is contained under “Annual Cash Incentive Awards” in the Compensation Discussion and Analysis above.

(5)

Amounts reported in this column for 2014 reflect the aggregate increase in the actuarial present value of the NEOs’ accumulated benefits under the Company’s pension and supplemental excess retirement plans during 2014. The age 65 pension benefits are no longer increasing for all participants. However, the actuarial present value of a participant’s benefit can change each year based on the assumed interest rate, the mortality table, and the executive’s age. Messrs. Bruffett and Krull do not participate in the Company’s pension plan and supplemental excess retirement plans because they joined the Company after these plans were closed to new participants.

On deferred compensation account balances that were credited with returns based on the Bank of America prime rate, no amounts were earned above 120% of the applicable federal rate. Other deferred compensation balances, as well as Supplemental Retirement Savings Plan (“SRSP”) account balances, are credited with returns based on the performance of one or more investment funds chosen by the NEO from a group of available funds, which are substantially the same funds as are made available in the Company’s tax-qualified 401(k) plans.

(6)

Amounts reported in this column for 2014 include Company-paid disability insurance premiums, payments under the Flexible Perquisites Program, the annual cost of providing use of a Company automobile, Company contributions to defined contribution plans, and in the case of Mr. Stotlar, Company-paid premiums for director business travel insurance. In 2014, Company contributions to defined contribution plans include the SRSP Registrant Contributions as shown in the 2014 Nonqualified Deferred Compensation table and 401(k) plan Company contributions as follows: Mr. Stotlar — $18,200; Mr. Bruffett — $7,800; Mr. Bianco — $15,600; Mr. Krull — $5,200; and Mr. Lehmkuhl — $10,400.

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2014 GRANTS OF PLAN-BASED AWARDS

The following table presents, for each of our NEOs, information regarding annual cash incentive awards and long-term equity incentive compensation awards granted in 2014 pursuant to our 2012 Equity and Incentive Plan. The actual amount of the annual cash incentive award received by each NEO for performance during 2014 is shown in the 2014 Summary Compensation Table above.

(1)

The terms of these awards (including the actual amounts received by the NEOs) are discussed in the Compensation Discussion and Analysis under “Our Executive Compensation Program — Annual Cash Incentive Awards.” For all executives, Estimated Possible Payouts are based on actual salary earned during the calendar year 2014, as defined in the plan, consistent with the methodology used for calculating final plan payments.

(2)

The terms of the Company’s PSPU grants are discussed below and in the Compensation Discussion and Analysis under “Our Executive Compensation Program — Long-Term Equity Incentive Compensation Awards.”

(3)

The terms of the Company’s RSU grants are discussed below and in the Compensation Discussion and Analysis under “Our Executive Compensation Program — Long-Term Equity Incentive Compensation Awards.”

(4)

Amounts shown in this column reflect the grant date fair value of PSPU awards and RSU awards calculated in accordance with FASB ASC Topic 718 and, in the case of the PSPU awards, are based upon the probable outcome of the applicable performance conditions on the grant date. For information on the valuation assumptions for the 2014 grants, see Note 10, “Share-Based Compensation” of Item 8, “Financial Statements and Supplementary Data,” of our Form 10-K for the year ended December 31, 2014, as filed with the SEC.

The amounts shown above in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” column reflect the amounts payable at threshold, target, and maximum achievement levels for the 2014 annual cash incentive awards. The performance metrics applicable to the awards are discussed in the Compensation Discussion and Analysis above.

The PSPU awards listed in the 2014 Grants of Plan-Based Awards Table are scheduled to vest on the third anniversary of the grant date, or February 10, 2017, subject to the Company’s achievement of performance goals relating to EBITDA, as described in the Compensation Discussion and Analysis under

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“Our Executive Compensation Program — Long-Term Equity Incentive Compensation Awards.” Except in the limited circumstances of death, disability, and retirement or in connection with a change in control of the Company, the PSPUs will be forfeited if an executive leaves the Company prior to the end of the three-year period. Upon vesting, the PSPUs are settled in shares of Company common stock. The PSPUs do not pay dividend equivalents in the event that a dividend is declared on the Company’s common stock.

The RSU awards listed in the 2014 Grants of Plan-Based Awards Table are scheduled to vest on the third anniversary of the grant date, or February 10, 2017, and except in the limited circumstances of death, disability, and retirement or in connection with a non-change-in-control or change-in-control severance, provide for forfeiture of the RSUs if an executive leaves the Company prior to the end of the three-year period. Upon vesting, the RSUs are settled in shares of Company common stock. The RSUs 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.

Pursuant to Compensation Committee policy, awards of PSPUs and RSUs are made after the close of the market on the third business day after the Company’s fourth quarter and full year earnings have been announced.

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OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END

The following table identifies the exercisable and unexercisable option awards and unvested stock awards for each of the NEOs as of December 31, 2014.

(1)

RSUs or earned PSPUs vest three years from the date of grant.

(2)

Calculated based on the closing price on December 31, 2014 ($49.18 per share).

(3)

Shares shown in this column reflect the maximum number of performance shares that may be earned under the PSPU program.

(4)

Represent performance achievement of PSPUs based on actual performance through December 31, 2014. These PSPUs vested on February 7, 2015 and attainment was certified on February 23, 2015.