YRC Worldwide: Shareholders should reject RiskMetrics

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New York-based said YRC shareholders should vote againsy union and nonunion option plans at a May 14 meetingt because they cost shareholderstoo much, YRC said in a Wednesdayy letter to shareholders. But if shareholders vote down the the stock options employees receiverwill end, and stock appreciation rights (SARs), granted with the still will be outstanding, the lettef said. Most of those rightas can be exercised as soonas January, and all must be settlede in cash.
“If a large numbef of employees were to exercisew their SARs during thesame period, it coulc negatively affect our liquidity and our ability to remaibn in compliance with various covenants of our amender credit agreement,” said the letter, filexd Wednesday with the Securities and Exchangs Commission. The pay cuts Overland Park-baserd YRC (Nasdaq: YRCW) negotiated are expected to . “We believse RiskMetrics did not adequately assess the importance of the concessionws given by our employees and the impactg that a vote against the option plane could have on our liquidity and ability to remaibn in compliance with our amendedcredit agreement,” the lette r said.
Another investor advisory firm, , recommended a vote in favorf ofthe plans, which YRC said it needsd to have the flexibility to “continue to work through thesse challenging economic times.” RiskMetricsz also recommended that shareholders reject YRC’s nominees for the board compensationn committee, saying they acted poorly in providing for tax gross-up on YRC CEO Bill use of corporate aircraft, an amount less than A gross-up is a payment to cover taxe s on compensation. “We feel it is importan t to highlightthat Mr. Zollars’ total compensatiob in 2008 decreased byover $1 million due in largde part to our performance and that Mr. Zollare did not receive a $1.
5 million restricted shar e grant due to our failure to meet certain performance theletter said. “We believde that these facts should weighg more heavily than a de minimistax gross-uo in determining whether the compensation committee approved an appropriatwe compensation package for Mr. Zollars.” YRC .