How Did Con-Way Lure CFO Away From Trucking Rival YRC Worldwide? Here's How

Implications: The hiring of ex-YRC Worldwide Chief Financial Officer Stephen Bruffett by Con-way Inc. has more intrigue than would first meet the eye. It's more than just filling a corner office in the executive suite. The inside story is quite telling of the conditions in the trucking industry in 2008.

Analysis:   At first glance, Con-way Inc.'s hiring of former YRC Worldwide Chief Financial Officer Stephen Bruffett would seem one of those small-print items in the back of the business section. But it's more than just hiring away a young, talented executive from a rival competitor.
  How Con-way lured away the 44-year-old Bruffett is a telling story about conditions in the industry right now. A growing, non-union, diversified competitor has taken away a CFO from a largely unionized, purely trucking rival with a total compensation package that rivals may CEO's.
  Bruffett is replacing former Con-way CFO Kevin C. Schick, who is being named vice president of operating accounting for Con-way. In comes Bruffett, whom Con-way CEO Doug Stotlar describes as a "seasoned transportation executive" who has helped first American Freightways (now part of a FedEx Freight) and then YRC Worldwide, where he had been CFO for the past year.
  According to Con-way's 8-K filing with the SEC on Aug. 14, the day Bruffett's hiring was announced, Bruffett was lured with a total compensation package fit for a king. Among the details:
 * $425,000 salary, plus a $150,000 signing bonus.
 * Stock options of 7,000 restricted shares and 10,000 unrestricted.
 * Eligibility in Con-way's short term incentive compensation with a target annual incentive equal to 75 percent of his base salary up to a maximum of 150 percent of base salary.
  * Eligibility in Con-way's long-term incentive compensation with a long-term opportunity equal to 225 percent of base salary.
  * Other unnamed perks worth up to $4,000.
  * A company car.
  * And if Con-way doesn't want Bruffett any longer, he gets a severance package worth twice his annual base salary and bonuses.
  Mind you, this is for a CFO. A CFO of a former company, YRC, whose stock lost 33 percent of its value last year and was ranked as the second-worst performing stock in the S&P trucking index.
  The move was noted by trucking analysts as a positive for Con-way and another negative for YRC.
  The move "extends numerous senior level management changes over the past couple years and complicates turnaround efforts" at YRC, wrote Baird Co. trucking analyst Jon Langerfeld in a note to investors.
  Similarly, Ed Wolfe of Wolfe Research, noted that the hiring of Bruffett strengthens Con-way's youngish senior management team while causing further confusion at YRC.
  In 1998, YRC lured Bruffett away from American Freightways as director as financial planning and analysis for the unit then known as Yellow Freight System. Over the next decade, he rose through the ranks before being named YRC CFO last year.
  "He is highly respected in the financial community and holds a well-earned reputation as a skilled manager with broad knowledge and expertise in our industry," Con-way CEO Stotlar said in a news release.
  The move might not mean much to customers. But to Wall Street investors, it's a significant plus for Con-way and another negative for YRC.