UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 28, 2005
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Date of Report (Date of earliest event reported)
CNF Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-5046 94-1444798
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation or Number)
organization)
3240 Hillview Avenue, Palo Alto, California 94304
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(Address of principal executive offices)
(zip code)
Registrant's telephone number, including area code:
(650) 494-2900
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant
under any of the following provisions (see General Instruction A.2
below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
Executive Compensation. On April 25, 2005, the Company's Compensation
Committee, together with the other independent members of the Board of
Directors, approved the following compensation for Douglas W. Stotlar,
effective upon his promotion to President and Chief Executive Officer of the
Company on April 25, 2005.
1. Increase in annual base salary from $425,100 to $650,000.
2. Target incentive compensation award equal to 100% of annual base
salary(subject to a maximum equal to 200% of annual base salary), with
actual payout (i) to be prorated based on the portion of the calendar
year in which he serves as President and Chief Executive Officer and
(ii) to be determined based upon the Company's actual 2005 pre-tax,
pre-incentive income versus target.
3. Grant of (i) 79,673 stock options having an exercise price of $43.93 per
share, which shall be subject to the standard terms applicable to option
awards made to executives of the Company, and (ii) 23,690 shares of
restricted stock, which shall be subject to the standard terms
applicable to restricted stock awards made to executives of the Company.
(Grants are based on a total target value of 4 times annual base salary
of $650,000, with 60% allocated to stock options and 40% allocated to
shares of restricted stock).
4. A relocation package, to include (i) a mortgage subsidy as partial
compensation for differences in housing costs between Palo Alto,
California and Ann Arbor, Michigan, in an amount and for a term to be
determined by the Compensation Committee, (ii) payment of reasonable
relocation expenses, and (iii) gross-up for taxes payable in connection
with non-deductible relocation expenses.
On April 25, 2005, the Company's Compensation Committee, together with the
other independent members of the Board of Directors, also approved a
discretionary cash bonus of $1,000,000 for Dr. Kennedy in consideration of
his contributions as Interim Chief Executive Officer of the Company during
the first part of 2005. Dr. Kennedy, who will continue to serve as Chairman
of the Board of Directors, will receive compensation solely in his capacity
as Chairman during the remainder of 2005 as described below under "Director
Compensation." Such compensation was approved by the independent members of
the Board of Directors.
Director Compensation.
Compensation of Chairman of the Board. During the remainder of 2005,
Dr. Kennedy will receive an annualized Chair retainer of $750,000, in
recognition of his increased responsibilities and time commitment as Chair to
ensure that the Board's strategic direction is communicated to and embraced
by the new Chief Executive Officer, Mr. Stotlar, during the first few
months following his assumption of such executive responsibilities. Dr.
Kennedy will not receive any additional compensation during the remainder of
2005 as an officer or employee and the Chair retainer noted above shall
constitute his total compensation as a member of the Board of Directors. In
2006, Dr. Kennedy will receive a Chair retainer in an amount to be determined
by the independent members of the Board of Directors, as well as a grant of
restricted stock having a value at the time of grant of $65,000.
Restricted Stock Awards. On January 24, 2005, the Company's Board of
Directors, based on the recommendation of the Director Affairs Committee and
advice from an outside compensation consultant, approved certain compensation
payable to members of the Board, including grants of restricted stock awards.
Following a transition period, each director will receive a restricted stock
grant in April of the year in which he or she is elected or re-elected to the
Board of Directors at the Company's Annual Meeting of Shareholders. The
grants will have a value at the time of grant of $65,000 for each year of the
director's term (or $195,000 for a 3-year term), and will vest one-third per
year commencing on the anniversary date of the grant. Transitional grants
will be made to incumbent directors who are not standing for election in
2005, and directors who are appointed to the Board in the future to fill
vacancies. The material terms of these awards were disclosed in a Report on
Form 8-K filed on January 28, 2005.
The 2005 restricted stock grants were made on April 25, 2005, and are set
forth below. Prior to such grants the Board, based on the recommendation of
the Director Affairs Committee, approved a form of Restricted Stock Award
Agreement to govern the restricted stock awards. The Restricted Stock Award
Agreement provides that (i) all unvested shares of restricted stock will vest
upon a director's death or disability; (ii) all unvested shares of restricted
stock that are scheduled to vest on the grant anniversary date next following
a Change in Control will vest upon a Change in Control; (iii) all unvested
shares of restricted stock that are scheduled to vest on the grant
anniversary date next following a director's retirement after attaining age
72 will vest upon such retirement; and (iv) all unvested shares of restricted
stock that are scheduled to vest during the calendar year in which the
director leaves the Board at the end of his or her term will vest upon such
departure. A copy of the form of the Restricted Stock Award Agreement is
filed with this Report as Exhibit 99.1. The foregoing description of the
Restricted Stock Award Agreement is qualified in its entirety by reference to
such exhibit.
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|Name of Director|Amount of Grant (in |Number of Shares of Restricted |
| |Dollars)* |Stock |
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|John J. Anton |$130,000 |2,961 |
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|William R. |$65,000 |1,480 |
|Corbin | | |
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|Margaret G. Gill|$65,000 |1,480 |
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|Robert Jaunich |$65,000 |1,480 |
|II | | |
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|Henry H. Mauz, |$65,000 |1,480 |
|Jr. | | |
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|Michael J. |$195,000 |4,441 |
|Murray | | |
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|John C. Pope |$130,000 |2,961 |
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|Robert D. Rogers|$195,000 |4,441 |
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|William J. |$195,000 |4,441 |
|Schroeder | | |
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|Peter W. Stott |$130,000 |2,961 |
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|Robert P. Wayman|$65,000 |1,480 |
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|Chelsea C. White|$195,000 |4,441 |
|III | | |
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* Messrs. Murray, Rogers, Schroeder and White, who were elected or re-
elected (as applicable) to the Board in 2005, received a grant of
restricted stock having a value of $195,000 at the time of grant. Ms.
Gill and Messrs. Corbin, Jaunich, Mauz and Wayman, who are scheduled for
election or re-election (as applicable) in 2006, received a grant of
restricted stock having a value of $65,000 at the time of grant, and will
receive a grant of restricted stock having a value of $195,000 in 2006 if
they are elected or re-elected to the Board. Messrs. Anton, Pope and
Stott, who are scheduled for election or re-election (as applicable) in
2007, received a grant of restricted stock having a value of $130,000 at
the time of grant, and will receive a grant of restricted stock having a
value of $195,000 in 2007 if they are elected or re-elected to the Board.
All of the grants described above will vest one-third per year commencing
on the anniversary date of the grant.
Item 5.02 Departure of Directors or Principal Officers; Elections of
Directors; Appointment of Principal Officers.
On April 25, 2005, CNF Inc. issued a press release announcing that Douglas W.
Stotlar has been appointed President and Chief Executive Officer, replacing
W. Keith Kennedy, Jr., who served as interim Chief Executive Officer since
July 2004. Dr. Kennedy will continue to serve as Chairman of the Board.
Mr. Stotlar, age 44, was appointed President and Chief Executive Officer of
Con-Way Transportation Services, Inc. ("CTS"), the Company's wholly-owned
subsidiary, in December 2004. He had been an executive vice president of CTS
since 1999 and served as chief operating officer of CTS since 2002. Prior to
that time, Mr. Stotlar headed Con-Way NOW, the Company's time-definite
freight services carrier. He joined CTS in 1985 as a freight supervisor.
Mr. Stotlar is a graduate of Ohio State University.
In addition, it was announced that John H. Williford, most recently president
and chief executive officer of Menlo Worldwide, LLC, a wholly-owned affiliate
of the Company, will become an advisor to the Company.
A copy of the press release is filed with this report as Exhibit 99.2 and is
incorporated herein by reference. The foregoing description of the press
release is qualified in its entirety by reference to such exhibit.
Mr. Stotlar was also appointed to the Company's Board of Directors, effective
April 25, 2005.
As previously reported, Chutta Ratnathicam retired on March 31, 2005 after
approximately 27 years of service with the Company, the last 8 of which he
served as Senior Vice President and Chief Financial Officer. In recognition
of his many contributions, upon his retirement the Company presented him with
title to his company automobile, having an estimated value of approximately
$27,000.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On April 25, 2005 the Company's Board of Directors, based on the
recommendation of the Director Affairs Committee, approved amendments to
Article IV, Section 3(a) of the Company's By-laws, making the establishment
of an Executive Committee of the Board of Directors permissive rather than
mandatory. A copy of the amended By-laws is filed with this Report as
Exhibit 3.1
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description
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3.1 CNF Inc. Bylaws as amended April 25, 2005.
99.1 CNF Inc. Restricted Stock Award Agreement.
99.2 Press release dated April 26, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
CNF Inc.
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(Registrant)
April 28, 2005 /s/ Jennifer W. Pileggi
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Jennifer W. Pileggi
Senior Vice President,
General Counsel & Secretary