Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Definitive Proxy
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Definitive Additional
Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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FedEx Corporation |
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Specified In Its Charter) |
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Table of Contents
2015 Annual Meeting
of Stockholders
Monday, September 28, 2015
8:00 a.m. local time
FedEx Express World Headquarters
Auditorium
3670 Hacks Cross Road,
Building G
Memphis, Tennessee
38125
Table of Contents
INFORMATION ABOUT THE ANNUAL MEETING
Voting Matters and Board Recommendations
FedExs Board of Directors is
furnishing you this proxy statement in connection with the solicitation of
proxies on its behalf for the 2015 Annual Meeting of Stockholders. Our
stockholders will be voting on the following matters at the annual
meeting:
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Boards |
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Matter |
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Recommendation |
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Page |
Proposal 1: Election of
directors |
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For |
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13 |
Proposal 2: Advisory vote to approve named
executive officer compensation |
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For |
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51 |
Proposal 3: Ratification
of the appointment of the independent registered |
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public accounting firm |
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For |
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56 |
Proposals 4 10: Stockholder proposals |
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Against |
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58 |
Stockholders also will consider any
other matters that may properly come before the meeting.
How to Cast Your Vote and Annual Meeting
Admission
If you are a registered stockholder,
you can vote by any of the following methods:
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Online www.investorvote.com/FEDX through 09/27/2015 |
By Phone 1-800-652-VOTE
(8683) through 09/27/2015 |
Proxy Card Completing, signing
and returning your proxy card |
In Person With a ticket
or proof of ownership and a valid
photo identification |
If your shares are held by a bank,
brokerage firm or other nominee, you are considered the beneficial owner of
shares held in street name. If your shares are held in street name, these
proxy materials are being forwarded to you by your bank, brokerage firm or other
nominee (the bank or broker), along with a voting instruction form. To direct
your bank or broker how to vote your shares, complete, sign and return the
voting instruction form in the envelope provided or follow the instructions
provided to you for voting your shares by telephone or on the Internet. To
ensure your shares are voted in the way you would like, you must provide voting
instructions by the deadline provided in the materials you receive from your
bank or broker. As a beneficial owner, in order to be able to vote your shares at the meeting, you must obtain a legal proxy
from your bank or broker and bring it with you to hand in with your signed
ballot.
If you attend the annual meeting in
person, you will need to present your admission ticket, or an account statement
showing your ownership of FedEx common stock as of the record date, and a valid
government-issued photo identification. The indicated portion of your proxy card
or voting instruction form or the ticket accompanying your voting instruction
form will serve as your admission ticket. If you are a registered stockholder
and receive your proxy materials electronically, you should follow the
instructions provided to print a paper admission ticket.
Your vote is very important.
Please vote whether or not you plan to attend the meeting.
We are first sending the proxy
statement, form of proxy and accompanying materials to stockholders on or about
August 17, 2015.
2015 Proxy
Statement i
Table of Contents
Effect of Not Casting Your Vote
If you are a registered stockholder and
you do not sign and return your proxy card or vote electronically on the
Internet or by telephone, no votes will be cast on your behalf on any of the
items of business at the meeting.
If you hold your shares in street name and you
do not instruct your bank or broker how to vote your shares, your broker may
vote your shares in its discretion on the
ratification of the appointment of the independent registered public accounting
firm, but will not be allowed to vote your shares on any of the other
proposals.
General Information
The principal executive offices of
FedEx Corporation are located at 942 South Shady Grove Road, Memphis, Tennessee
38120.
FedExs Annual Report to Stockholders
for the fiscal year ended May 31, 2015, which includes FedExs fiscal 2015
audited consolidated financial statements, accompanies this proxy statement.
Although the Annual Report is being distributed with this proxy statement, it
does not constitute a part of the proxy solicitation materials and is not
incorporated by reference into this proxy statement.
By submitting your proxy (either by
signing and returning the enclosed proxy card or by voting electronically on the
Internet or by telephone), you authorize Christine P.
Richards, FedExs Executive Vice President, General Counsel and Secretary, and Alan B.
Graf, Jr., FedExs Executive Vice President and Chief Financial Officer, to
represent you and vote your shares at the meeting in accordance with your
instructions. They also may vote your shares to adjourn the meeting and will be
authorized to vote your shares at any postponements or adjournments of the
meeting.
Reduce Mailing Costs
If you vote on the Internet, you may
elect to have next years proxy statement and annual report to stockholders
delivered to you electronically. We strongly encourage you to enroll in
electronic delivery. It is a cost-effective way for us to provide you with proxy
materials and annual reports.
ii 2015 Proxy Statement
Table of Contents
PROXY SUMMARY
This summary highlights information
contained elsewhere in this proxy statement. This summary does not contain all
of the information that you should consider, and you should read the entire
proxy statement carefully before voting. Page references are supplied to help
you find further information in this proxy statement.
Corporate Governance Matters (see page 1)
FedExs strong and independent Board of
Directors effectively oversees our management and provides vigorous oversight of
FedExs business and affairs in support of our mission of producing superior
financial returns for our shareowners by providing high value-added logistics,
transportation and related business services through focused operating
companies. The Board is currently comprised of 12 members a combined Chairman
and Chief Executive Officer, the Lead Independent Director and 10 other
independent, active and effective directors of equal importance and
rights.
The Board believes that this current
leadership structure provides the most effective governance of FedExs business
and affairs for the long-term benefit of stockholders and promotes a culture and
reputation of the highest ethics, integrity and reliability.
You can find detailed information about
our corporate governance policies and practices in the Corporate Governance
Matters section of this proxy statement. You can also access our corporate
governance documents in the Governance & Citizenship section of the Investor
Relations page of our website at http://investors.fedex.com.
Corporate Governance Facts |
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Majority Voting for
Directors |
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Yes |
Annual Election of All Directors |
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Yes |
Diverse Board |
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Yes |
Annual Board and Committee
Self-Evaluations |
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Yes |
Separate Chairman &
CEO |
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No |
Lead Independent Director |
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Yes |
Independent Directors Meet
Regularly Without Management Present |
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Yes |
Annual Independent Director Evaluation of
Chairman and CEO |
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Yes |
Code of Business Conduct
and Ethics Applicable to Directors |
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Yes |
Nominating & Governance Committee
Composed of Independent Directors |
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Yes |
Stock Ownership Goal for
Directors and Senior Officers |
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Yes |
Size of Board* |
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12 |
Number of Independent
Directors* |
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11 |
Average Age of Directors* |
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59 |
Average Director Tenure
(in years)* |
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12 |
Median Director Tenure (in years)* |
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7 |
* As of August 17,
2015
2015 Proxy
Statement iii
Table of Contents
Voting Matters and Board Recommendations
Proposal 1 Election
of Directors (see page 13)
You are being asked to elect the 12
nominees named in this proxy statement as directors for a term of one year. Each
of our current directors is standing for reelection.
Your Board of
Directors recommends that you vote FOR the election of each of the twelve
nominees.
Director Nominees (see
page 14)
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Director Nominee |
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Age |
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Director Since |
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Independent |
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Position |
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Other public directorships |
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AC |
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CC |
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ITOC |
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NGC |
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Frederick W.
Smith |
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71 |
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1971 |
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Chairman, President
and |
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Chief Executive Officer
of |
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FedEx
Corporation |
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James L. Barksdale |
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72 |
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1999 |
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✓ |
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Chairman and President |
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Time Warner Inc. |
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C |
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✓ |
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of Barksdale Management |
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Corporation |
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John A.
Edwardson |
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66 |
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2003 |
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✓ |
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Former Chairman
and |
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ACE Limited, |
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C |
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Chief Executive Officer
of |
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Rockwell Collins,
Inc. |
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CDW Corporation |
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Marvin R. Ellison |
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50 |
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2014 |
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✓ |
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President and Chief |
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J. C. Penney Company, Inc. |
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✓ |
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✓ |
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Executive Officer of |
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J. C. Penney Company, Inc. |
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Kimberly A.
Jabal |
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46 |
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2013 |
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✓ |
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Chief Financial
Officer of |
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✓ |
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✓ |
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Kong Technologies,
Inc. |
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(formerly Path,
Inc.) |
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Shirley Ann Jackson |
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69 |
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1999 |
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✓ |
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President of Rensselaer |
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International Business Machines |
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✓ |
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✓ |
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Polytechnic Institute |
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Corporation, Medtronic, Inc., |
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Public Service Enterprise Group |
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Incorporated |
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Gary W. Loveman |
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55 |
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2007 |
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✓ |
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Chairman of
Caesars |
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Caesars
Entertainment |
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✓ |
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✓ |
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Entertainment
Corporation |
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Corporation, Coach,
Inc. |
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R. Brad Martin |
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63 |
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2011 |
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✓ |
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Chairman of RBM Venture |
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Chesapeake Energy |
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✓ |
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✓ |
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Company |
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Corporation, First Horizon |
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National Corporation |
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Joshua Cooper |
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46 |
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2011 |
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✓ |
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Vice Chairman,
Co-Chief |
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Starbucks
Corporation |
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✓ |
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✓ |
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Ramo |
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Executive Officer,
Kissinger |
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Associates, Inc. |
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Susan C. Schwab |
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60 |
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2009 |
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✓ |
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Professor at the University |
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The Boeing Company, Caterpillar |
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✓ |
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✓ |
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of Maryland School of |
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Inc., Marriott International, Inc. |
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Public Policy |
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David P. Steiner |
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55 |
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2009 |
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✓ |
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Chief Executive Officer
of |
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TE Connectivity Ltd.,
Waste |
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C |
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Waste Management,
Inc. |
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Management, Inc. |
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Paul S. Walsh |
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60 |
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1996 |
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✓ |
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Chairman of Compass |
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Avanti Communications Group |
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C |
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Group PLC |
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plc (Chairman), Compass Group |
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PLC (Chairman), |
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RM2
International S.A. |
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iv 2015 Proxy Statement
Table of Contents
Director Experience,
Qualifications, Attributes and Skills (see page 18)
The Board believes that it is desirable
that the following experience, qualifications, attributes and skills be
possessed by one or more of FedExs Board members because of their particular
relevance to the companys business and structure, and these were all considered
by the Board in connection with this years director nomination
process:
Proposal 2 Advisory
Vote to Approve Named Executive Officer Compensation (see page
51)
Our executive compensation program is
designed not only to retain and attract highly qualified and effective
executives, but also to motivate them to substantially contribute to FedExs
future success for the long-term benefit of shareowners and reward them for
doing so. We believe there should be a strong relationship between pay and
corporate performance, and our executive compensation program reflects this
belief.
The Compensation Discussion and
Analysis, Summary Compensation Table and related compensation tables and
narrative provide detailed information on the compensation of our named
executive officers, and can be found on pages 19 through 50. We believe
this information demonstrates that our executive
compensation program promotes the best interests of FedEx and our shareowners by
enabling FedEx to retain and attract talented executive management, while
ensuring they are compensated in such a manner as to sustain and enhance
long-term shareowner value.
In the 2014 advisory vote, 96.6% of the
voted shares supported the compensation of our named executive
officers.
Your Board of
Directors recommends that you vote FOR this proposal.
Proposal 3 Ratify the
Appointment of Ernst & Young LLP as FedExs Independent Registered Public
Accounting Firm (see page 56)
The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of our
independent registered public accounting firm and has specific policies in place
to ensure its independence. The Audit Committee has appointed Ernst & Young
LLP (Ernst & Young) to serve as FedExs independent registered public
accounting firm for fiscal 2016. Ernst &
Young has been our independent registered public accounting firm since
2002.
Fees paid to Ernst & Young for
fiscal 2015 and 2014 are detailed on page 55.
Representatives of Ernst & Young
will be present at the meeting, will be given the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
Your Board of
Directors recommends that you vote FOR this proposal.
Proposals 4 10: Seven
Stockholder Proposals, if properly presented (see pages 58
76)
Seven stockholder proposals are
expected to be presented for a vote at the annual meeting.
Your Board of
Directors recommends that you vote AGAINST each of these
proposals.
2015 Proxy
Statement v
Table of Contents
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Notice of
Annual Meeting of Stockholders To Be
Held September 28, 2015 |
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To Our Stockholders:
We cordially invite you to attend the
2015 annual meeting of FedExs stockholders. The meeting will take place in the
auditorium at the FedEx Express World Headquarters, 3670 Hacks Cross Road,
Building G, Memphis, Tennessee 38125, on Monday, September 28, 2015, at 8:00
a.m. local time. We look forward to your attendance either in person or by
proxy.
The purposes of the meeting are
to:
1.
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Elect the twelve
nominees named in the proxy statement as FedEx directors; |
2. |
Hold an advisory vote
to approve named executive officer compensation; |
3. |
Ratify the appointment
of Ernst & Young LLP as FedExs independent registered public
accounting firm for fiscal year 2016; |
4. |
Act upon seven
stockholder proposals, if properly presented at the meeting;
and |
5. |
Transact any other
business that may properly come before the
meeting. |
Members of FedExs management team will
be present at the meeting to respond to appropriate questions from stockholders.
Only stockholders of record at the close of business on August 3, 2015, may vote
at the meeting or any postponements or adjournments of the meeting.
By order of the Board of
Directors,
Christine P.
Richards
Executive Vice President,
General Counsel and Secretary
August 17, 2015
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON
SEPTEMBER 28, 2015: The following materials are available on the Investor
Relations page of the FedEx website at http://investors.fedex.com:
● |
The Notice of Annual
Meeting of Stockholders To Be Held September 28,
2015; |
● |
The proxy statement;
and |
● |
FedExs Annual Report
to Stockholders for the fiscal year ended
May 31, 2015. |
Your vote is very important.
Please vote whether or not you plan to attend the meeting.
Table of Contents
2015 PROXY
STATEMENT
Table of
Contents
Table of Contents
CORPORATE
GOVERNANCE MATTERS
FedEx Corporate
Governance
Our Board of Directors and management
team are committed to achieving and maintaining high standards of corporate
governance, as well as a culture of and reputation for the highest levels of
ethics, integrity and reliability. We periodically review our governance
policies and practices against evolving standards and make changes as
appropriate. We also value the perspectives of our stockholders and other
stakeholders, including our employees and the communities in which we operate,
and take steps to implement their points of view where warranted.
In considering possible modifications
of our corporate governance policies and practices, our Board and management
focus on those changes that are appropriate for our company and our industry, rather than adopting a one-size-fits-all
approach. Our focus is on the best long-term interests of our company, our
stockholders and our stakeholders.
The following sections summarize our
corporate governance policies and practices, including our Board leadership
structure, our criteria for director selection and the responsibilities and
activities of our Board and its committees. Our corporate governance documents,
including our Corporate Governance Guidelines, our Board committee charters and
our Code of Business Conduct and Ethics, are available in the Governance
& Citizenship section of the Investor
Relations page of our website at http://investors.fedex.com.
Board Leadership
Structure
The leadership structure of our Board
of Directors includes (i) a combined Chairman of the Board and Chief Executive
Officer, (ii) independent, active and effective directors of equal importance
and rights, who all have the same opportunities and responsibilities in
providing vigorous oversight of the effectiveness of management policies and
(iii) a Lead Independent Director. The Chairperson of the Nominating &
Governance Committee, who is elected annually by a majority of the independent
Board members, serves as the Lead Independent Director. The Board believes that
FedEx has been and continues to be well served by having the companys founder,
Frederick W. Smith, serve as both Chairman of the Board and Chief Executive
Officer. The current Board leadership model, when combined with the composition
of the Board, the strong leadership of our independent directors, Board
committees and Lead Independent Director, and the highly effective corporate
governance structures and processes already in place, strikes an appropriate
balance between consistent leadership and independent oversight of FedExs
business and affairs.
The Board believes that FedExs Bylaws
and Corporate Governance Guidelines help ensure that strong and independent
directors will continue to play the central oversight role necessary to maintain
FedExs commitment to the highest quality corporate governance. Under our Bylaws
and Corporate Governance Guidelines, the Board maintains the following
long-standing practices, in addition to those described above:
● |
Directors Stand for Election
Annually By Majority Vote. Under our Bylaws, all members of our Board of Directors are elected
annually. In addition, our Bylaws require that we use a majority-voting
standard in uncontested director elections in which a director nominee
must receive more votes cast for than against in order to be
elected. |
● |
Our Non-Management Directors Hold
Regular Executive Sessions. Our non-management Board members meet at regularly scheduled
executive sessions without management present in conjunction with each
in-person Board meeting. The Lead Independent Director conducts and
presides at these meetings. At least once a year, such meetings include
only the independent members of the Board. In addition, the Lead
Independent Director may call such meetings of the non-management Board
members as he or she deems necessary or appropriate, may be designated to
preside at any Board or stockholder meeting and presides at all Board
meetings at which the Chairman of the Board and Chief Executive Officer is
not present. |
● |
Board Members May
Submit Agenda Items and Information Requests. Each Board member may place items on the agenda for
Board meetings, raise subjects that are not on the agenda for that meeting
or request information that has not otherwise been provided to the Board.
Additionally, the Lead Independent Director reviews and approves all Board
meeting schedules and agendas and consults with the Chairman of the Board
and Chief Executive Officer regarding other information sent to the Board
in connection with Board meetings or other Board
action. |
2015 Proxy
Statement 1
Table of
Contents
CORPORATE GOVERNANCE
MATTERS
● |
Our Board
Members Interact With Management. Consistent with our philosophy of empowering each member of our
Board of Directors, each Board member has complete and open access to any
member of management and to the chairman of each Board committee for the
purpose of discussing any matter related to the work of such committee.
The Lead Independent Director also serves as a liaison, but not a buffer,
between the Chairman of the Board and Chief Executive Officer and
independent Board members. |
|
|
● |
Our Directors Are
Encouraged to Interact With Stockholders. If any of our major stockholders asks to speak with any Board
member on a matter related to FedEx, we encourage that director to make
himself or herself available and will facilitate such interaction.
Additionally, the Lead Independent Director is available to communicate
with stockholders, as appropriate, if requested by such
stockholders. |
|
|
● |
Our
Directors Can Request Special Board Meetings. Special meetings of the Board can be called by the
Chairman of the Board and Chief Executive Officer or at the request of two
or more directors. |
|
|
● |
The Board
or Any Board Committee Can Retain Independent
Advisors. The Board and each
Board committee have the authority to retain independent legal, financial
and other advisors as they deem appropriate. |
|
|
● |
Our
Directors Conduct Annual Evaluations. Our directors evaluate the Boards processes on an
annual basis to ensure, among other things, that its leadership structure
remains effective, that Board and committee meetings are conducted in a
manner that promotes candid and constructive dialog and that sufficient
time has been allocated for such
meetings. |
Board Risk
Oversight
The Board of Directors role in risk
oversight at FedEx is consistent with the companys leadership structure, with
management having day-to-day responsibility for assessing and managing the
companys risk exposure and the Board and its committees providing oversight in
connection with those efforts, with particular focus on ensuring that FedExs
risk management practices are adequate and regularly reviewing the most
significant risks facing the company. The Board performs its risk oversight role
by using several different levels of review. Each Board meeting begins with a
strategic overview by the Chairman of the Board, President and Chief Executive
Officer that describes the most significant issues, including risks, affecting
the company, and also includes business updates from each reporting segment CEO.
In addition, at least annually, the Board reviews in detail the business and
operations of each of the companys reporting segments, including the primary
risks associated with that segment. The Board also reviews the risks associated
with the companys financial forecasts and annual business plan.
Additionally, risks are identified and
managed in connection with the companys robust enterprise risk management
(ERM) process. Our ERM process provides the enterprise with a common framework
and terminology to ensure consistency in identification, reporting and
management of key risks. The ERM process is embedded in our strategic financial
planning process, which ensures explicit consideration of risks that affect the
underlying assumptions of strategic plans and provides a platform to facilitate
integration of risk information in business decision-making.
The Board has delegated to each of its
committees responsibility for the oversight of specific risks that fall within
the committees areas of responsibility. For example:
● |
The Audit Committee
reviews and discusses with management the companys major financial and
other risk exposures and the steps management has taken to monitor and
control such exposures and the implementation and effectiveness of the
companys compliance and ethics programs, including the Code of Business
Conduct and Ethics and the employee hotline program. |
|
|
● |
The Compensation Committee
reviews and discusses with management the relationship between the
companys compensation policies and practices and the companys risk
management, including the extent to which those policies and practices
create or decrease risks for the company. |
|
|
● |
The Information
Technology Oversight Committee reviews and discusses with management the
quality and effectiveness of the companys information technology systems
and processes, including the extent to which those systems and processes
provide cybersecurity and protect the company from technology-related
risks. |
|
|
● |
The Nominating &
Governance Committee reviews and discusses with management, in light of
the companys risk exposure, the composition, structure, processes and
practices of the Board and the Board
committees. |
In addition, the Audit Committee is
responsible for reviewing and discussing with management the guidelines and
policies that govern the processes by which the company assesses and manages its
exposure to all risk, including our ERM process. The ERM process culminates in
an annual presentation to the Audit Committee on the key enterprise risks facing
FedEx.
2 2015
Proxy Statement
Table of
Contents
CORPORATE GOVERNANCE
MATTERS
Executive
Management Succession Planning
The Board of Directors has in place an
effective planning process to select successors to the Chairman of the Board,
President and Chief Executive Officer and other members of executive management.
The Nominating & Governance Committee, in consultation with the Chairman of
the Board, President and Chief Executive Officer, annually reports to the Board
on executive management succession planning. The entire Board works with the
Nominating & Governance Committee and the Chairman of the Board, President
and Chief Executive Officer to evaluate potential successors to the CEO and
other members of executive management. Through this process, the Board receives
information that includes qualitative evaluations of potential successors to the
CEO and other executives. As noted above, each
Board member has complete and open access to any member of management. We
believe that this enhances the Boards oversight of succession planning. The
Chairman of the Board, President and Chief Executive Officer periodically
provides to the Board his recommendations and evaluations of potential
successors, along with a review of any development plans recommended for such
individuals. Additionally, the Board periodically reviews and revises as
necessary the companys emergency management succession plan, which details the
actions to be taken by specific individuals in the event a member of executive
management suddenly dies or becomes incapacitated.
Director
Independence
The Board of Directors has determined
that each member of the Audit, Compensation and Nominating & Governance
Committees and, with the exception of Frederick W. Smith, each of the Boards
current members (James L. Barksdale, John A. Edwardson, Marvin R. Ellison,
Kimberly A. Jabal, Shirley Ann Jackson, Gary W. Loveman, R. Brad Martin, Joshua
Cooper Ramo, Susan C. Schwab, David P. Steiner and Paul S. Walsh) is independent
and meets the applicable independence requirements of the New York Stock
Exchange (including the additional requirements for Audit Committee and
Compensation Committee members) and the Boards more stringent standards for
determining director independence. Mr. Smith is FedExs Chairman of the Board,
President and Chief Executive Officer. Steven R. Loranger retired as a director
immediately before the 2014 annual meeting, and the Board of Directors had
previously determined that he was independent.
Under the Boards standards of director
independence, which are included in FedExs Corporate Governance Guidelines, a
director will be considered independent only if the Board affirmatively
determines that the director has no direct or indirect material relationship
with FedEx, other than as a director. The standards set forth certain categories
or types of transactions, relationships or arrangements with FedEx, as follows,
each of which (i) is deemed not to be a material relationship with FedEx, and
thus (ii) will not, by itself, prevent a director from being considered
independent:
● |
Prior
Employment of Director.
The director was employed by FedEx or was
personally working on FedExs audit as an employee or partner of FedExs
independent auditor, and over five years have passed since such
employment, partner or auditing relationship ended. |
|
|
● |
Prior Employment of
Immediate Family Member.
An immediate family member was an officer
of FedEx or was personally working on FedExs audit as an employee or
partner of FedExs independent auditor, and
over five years have passed since such employment, partner or auditing
relationship ended. |
|
|
● |
Current
Employment of Immediate Family Member. An immediate family
member is employed by FedEx in a non-officer position, or by FedExs
independent auditor not as a partner and not personally working on FedExs
audit. |
|
|
● |
Interlocking Directorships. An executive
officer of FedEx served on the board of directors of a company that
employed the director or employed an immediate family member as an
executive officer, and over five years have passed since either such
relationship ended. |
|
|
● |
Transactions and Business
Relationships. The director or an immediate family member is a partner,
greater than 10% shareholder, director or officer of a company that makes
or has made payments to, or receives or has received payments (other than
contributions, if the company is a tax-exempt organization) from, FedEx
for property or services, and the amount of such payments has not within
any of such other companys three most recently completed fiscal years
exceeded one percent (or $1 million, whichever is greater) of such other
companys consolidated gross revenues for such year. |
|
|
● |
Indebtedness. The director or an
immediate family member is a partner, greater than 10% shareholder,
director or officer of a company that is indebted to FedEx or to which
FedEx is indebted, and the aggregate amount of such debt is less than one
percent (or $1 million, whichever is greater) of the total consolidated
assets of the indebted company. |
|
|
● |
Charitable
Contributions. The director is a trustee, fiduciary, director or
officer of a tax-exempt organization to which FedEx contributes, and the
contributions to such organization by FedEx have not within any of such
organizations three |
2015 Proxy
Statement 3
Table of
Contents
CORPORATE GOVERNANCE
MATTERS
|
most recently completed
fiscal years exceeded one percent (or $250,000, whichever is greater) of
such organizations consolidated gross revenues for such
year. |
The Board broadly considered all
relevant facts and circumstances, including the following immaterial
transactions, relationships and arrangements:
● |
Mr. Barksdale served as
an officer of FedEx, but he left the company well over five years ago (his
employment at FedEx ended in 1992). |
|
|
● |
Mr. Smith has made a passive
investment (holding a less-than-5% equity interest) in a privately held
entity with which Mr. Barksdale is affiliated. |
|
|
● |
Mr. Barksdale has made
an investment (holding a less-than-10% equity interest) in a privately
held entity that is headed by Mr. Smiths daughter. |
|
|
● |
Mr. Martin serves as a
director of First Horizon National Corporation with Robert B. Carter,
FedExs Executive Vice President, FedEx Information Services and Chief
Information Officer. |
|
|
● |
Messrs. Smith and
Martin are members of the board of managers of Pilot Travel Centers
LLC. |
|
|
● |
In the ordinary course
of business, FedEx makes purchases of aircraft and related services and
equipment from The Boeing Company, for which Ambassador Schwab serves as a
director. The payments made by FedEx to Boeing in its three most recently
completed fiscal years represented one percent or less of Boeings
consolidated gross revenues for the year. Ambassador Schwab recuses
herself when the Board discusses or votes on Boeing-related matters. The
Board determined that Ambassador Schwab is still an independent director
under the Boards independence standards as she does not have a direct or
indirect material relationship with either FedEx or Boeing, other than as
a director, and does not derive any financial benefit from these ordinary
course transactions. |
Audit Committee
Financial Expert
The Board of Directors has determined
that at least one member of the Audit Committee, John A. Edwardson, is an audit
committee financial expert as that term is defined in Securities and Exchange
Commission (SEC) rules.
Director
Mandatory Retirement
A director must retire immediately
before the annual meeting of FedExs stockholders during the calendar year in
which he or she attains age 75.
Stock Ownership
Goal for Directors and Senior Officers
In order to encourage significant stock
ownership by our directors and senior officers, and to further align their
interests with the interests of FedExs stockholders, the Board of Directors has
established a goal that (i) within four years after joining the Board, each
non-management director own FedEx shares valued at three times his or her annual
retainer fee, and (ii) within four years after being appointed to his or her
position, each member of senior management own FedEx shares valued at the
following multiple of his or her annual base salary:
● |
5x for the President
and Chief Executive Officer; |
|
|
● |
3x for the other FedEx executive
officers, including the chief executive officers of FedExs core operating
companies; |
|
|
● |
2x for executive vice
presidents of FedExs core operating companies; and |
|
|
● |
1x for certain other
senior officers. |
For purposes of meeting this goal,
unvested restricted stock is counted, but unexercised stock options are not. The
Board also recommends that each director and senior officer retain shares
acquired upon stock option exercises until his or her goal is met. The stock
ownership goal is included in FedExs Corporate Governance Guidelines. As of
August 3, 2015, each director who had been a Board member for over four years
(and Messrs. Martin and Ramo) and each executive officer owned sufficient shares
to comply with this goal.
4 2015 Proxy Statement
Table of
Contents
CORPORATE GOVERNANCE
MATTERS
Policy on Poison
Pills
The Board of Directors has adopted a
policy requiring stockholder approval for any future poison pill prior to or
within twelve months after adoption of the poison pill. (A poison pill is a
device used to deter a hostile takeover. Note that FedEx does not currently
have, nor have we ever had, a poison pill.) The policy on poison pills is
included in FedExs Bylaws and Corporate Governance Guidelines.
Communications
with Directors
Stockholders and other interested
parties may communicate directly with any member (including the Lead Independent
Director) or committee of the Board of Directors by writing to: FedEx
Corporation Board of Directors, c/o Corporate Secretary, 942 South Shady Grove
Road, Memphis, Tennessee 38120. Please specify to whom your letter should be
directed. The Corporate Secretary of FedEx will review all such correspondence
and regularly forward to the Board a summary of all such correspondence and
copies of all correspondence that, in her opinion, deals with the functions of
the Board or its committees or that she otherwise determines requires the
attention of any member, group or committee of the Board of Directors. Board
members may at any time review a log of all correspondence received by FedEx
that is addressed to Board members and request copies of any such
correspondence.
Nomination of
Director Candidates
The Nominating & Governance
Committee will consider director nominees proposed by stockholders. To recommend
a prospective director candidate for the Nominating & Governance Committees
consideration, stockholders may submit the candidates name, qualifications,
including whether the candidate satisfies the requirements set forth in our
Corporate Governance Guidelines and discussed in
Proposal 1 Election of Directors Experience, Qualifications, Attributes and
Skills, and other relevant biographical information in writing to: FedEx
Corporation Nominating & Governance Committee, c/o Corporate Secretary, 942
South Shady Grove Road, Memphis, Tennessee 38120. FedExs Bylaws require
stockholders to give advance notice of stockholder proposals, including
nominations of director candidates. For more information, please see
Stockholder Proposals for 2016 Annual Meeting.
The Board is responsible for
recommending director candidates for election by the stockholders and for
electing directors to fill vacancies or newly created directorships. The Board
has delegated the screening and evaluation process for director candidates to
the Nominating & Governance Committee, which identifies, evaluates and
recruits highly qualified director candidates and recommends them to the Board.
The Nominating & Governance Committee considers potential candidates for
director that may come to the attention of the Nominating & Governance
Committee through current directors, management, professional search firms,
stockholders or other persons. The Nominating & Governance Committee has
engaged a third-party executive search firm to assist in identifying potential
director candidates. The Nominating & Governance Committee considers and
evaluates a director candidate recommended by a stockholder in the same manner
as a nominee recommended by a Board member, management, search firm or other
sources.
If the Nominating & Governance
Committee determines that an additional or replacement director is necessary or
advisable, the Nominating & Governance Committee may take such measures that
it considers appropriate in connection with its evaluation of a potential
director candidate, including interviewing the candidate, engaging an outside
firm to gather additional information and making inquiries of persons with
knowledge of the candidates qualifications and character. In its evaluation of
potential director candidates, including the members of the Board of Directors
eligible for reelection, the Nominating & Governance Committee considers the
current size, composition and needs of the Board of Directors and each of its
committees.
2015 Proxy
Statement 5
Table of
Contents
CORPORATE GOVERNANCE
MATTERS
Majority-Voting
Standard for Director Elections
FedExs Bylaws require that we use a
majority-voting standard in uncontested director elections and contain a
resignation requirement for directors who fail to receive the required majority
vote. The Bylaws also prohibit the Board from changing back to a
plurality-voting standard without the approval of our stockholders. Under the
majority-voting standard, a director nominee must receive more votes cast for
than against his or her election in order to be elected to the Board. In
accordance with the majority-voting standard and resignation requirement, each
director who is standing for reelection at the
annual meeting has tendered an irrevocable resignation from the Board of
Directors that will take effect if (i) the director does not receive more votes
cast for than against his or her election at the annual meeting, and (ii)
the Board accepts the resignation. FedExs Bylaws require the Board of
Directors, within 90 days after certification of the election results, to accept
the directors resignation unless there is a compelling reason not to do so and
to promptly disclose its decision (including, if applicable, the reasons for
rejecting the resignation) in a filing with the SEC.
Policy on Review
and Preapproval of Related Person Transactions
The Board of Directors has adopted a
Policy on Review and Preapproval of Related Person Transactions, which is
included in FedExs Corporate Governance Guidelines. The policy requires that
all proposed related person transactions (as defined in the policy) and all
proposed material changes to existing related person transactions be reviewed
and preapproved by the Nominating & Governance Committee. To the extent the
related person (as defined in the policy) is a director or immediate family
member of a director, the transaction or change must also be reviewed and
preapproved by the full Board. The policy provides that a related person
transaction or a material change to an existing related person transaction may
not be preapproved if it would:
● |
interfere with the
objectivity and independence of any related persons judgment or conduct
in carrying out his or her duties and responsibilities to
FedEx; |
|
|
● |
not be fair as to FedEx;
or |
|
|
● |
otherwise be opposed to
the best interests of FedEx and its
stockholders. |
The policy requires the Nominating
& Governance Committee to annually (i) review each existing related person
transaction that has a remaining term of at least one year or remaining payments
of at least $120,000, and (ii) determine, based upon all material facts and
circumstances and taking into consideration our contractual obligations, whether
it is in the best interests of FedEx and our stockholders to continue, modify or
terminate the transaction or relationship.
Related Person
Transactions
In accordance with the policy described
above, the Nominating & Governance Committee has reviewed the following
related person transactions and determined that they remain in the best
interests of FedEx and our stockholders:
● |
In November 1999, FedEx
entered into a multi-year, $205 million naming rights agreement with
Washington Football, Inc. Under this agreement, FedEx has certain
marketing rights, including the right to name the stadium where the NFL
Washington Redskins professional football team plays FedExField. In
August 2003, Mr. Smith acquired an approximate 10% ownership interest in
the Washington Redskins and joined its Leadership Council, or board of
directors. |
|
|
● |
FedExs policy on personal use of
corporate aircraft requires officers to pay FedEx two times the cost of
fuel, plus applicable passenger ticket taxes and fees, for personal trips. Pursuant to this requirement, Mr. Smith and David
J. Bronczek, the President and Chief Executive Officer of FedEx Express,
paid FedEx $267,374 and $285,207, respectively, during fiscal 2015 in
connection with certain personal use of corporate
aircraft. |
|
|
● |
Mr. Smiths son is
employed by FedEx Express as the Vice President of Global Trade Services;
and William J. Logue is the former President and Chief Executive Officer
of FedEx Freight his brother and brother-in-law are employed by FedEx
Services as a sales manager and sales executive, respectively. The
compensation of each of Mr. Smiths son and Mr. Logues brother and
brother-in-law for fiscal 2015 (including any incentive compensation and
sales commissions) did not exceed $247,000. Mr. Smiths son also received
a stock option grant in fiscal 2015 commensurate with the stock option
grants made to other FedEx Express vice
presidents. |
6 2015 Proxy Statement
Table of
Contents
STOCK
OWNERSHIP
Directors and
Executive Officers
The following table sets forth the
amount of FedExs common stock beneficially owned by each director, each named
executive officer included in the Summary Compensation Table and all directors
and executive officers as a group, as of August 3, 2015. Unless otherwise
indicated, beneficial ownership is direct and the person shown has sole voting
and investment power.
|
Common Stock Beneficially
Owned |
|
Name of Beneficial
Owner |
Number of Shares |
|
|
Number of Option
Shares (1) |
|
Percent of Class
(2) |
|
Frederick W. Smith |
19,533,041 |
(3) |
|
1,513,267 |
|
7.41% |
|
James L.
Barksdale |
59,800 |
|
|
46,565 |
|
* |
|
John A. Edwardson |
20,862 |
|
|
46,565 |
|
* |
|
Marvin R.
Ellison |
|
|
|
4,288 |
|
* |
|
Kimberly A. Jabal |
|
|
|
5,017 |
|
* |
|
Shirley Ann
Jackson |
8,111 |
|
|
2,535 |
|
* |
|
Gary W. Loveman |
16,854 |
|
|
30,325 |
|
* |
|
R. Brad
Martin |
56,500 |
(4) |
|
16,925 |
|
* |
|
Joshua Cooper Ramo |
4,360 |
|
|
12,565 |
|
* |
|
Susan C.
Schwab |
3,201 |
|
|
32,365 |
|
* |
|
David P. Steiner |
5,000 |
|
|
27,965 |
|
* |
|
Paul S.
Walsh |
9,500 |
|
|
41,165 |
|
* |
|
David J. Bronczek |
69,967 |
(5) |
|
239,771 |
|
* |
|
Robert B.
Carter |
46,987 |
|
|
184,873 |
|
* |
|
T. Michael Glenn |
213,091 |
(6) |
|
184,873 |
|
* |
|
Alan B. Graf,
Jr. |
202,273 |
(7) |
|
197,373 |
|
* |
|
All directors and executive
officers as a group (19 persons) |
20,414,877 |
(8) |
|
2,850,842 |
|
8.15% |
|
* |
Less than 1%
of FedExs outstanding common stock. |
(1) |
Reflects the number of shares that can
be acquired at August 3, 2015, or within 60 days thereafter through the
exercise of stock options. These shares are excluded from the column
headed Number of Shares, but included in the ownership percentages
reported in the column headed Percent of Class. |
(2) |
Based on 282,500,880 shares
outstanding on August 3, 2015. |
(3) |
Includes 15,388,652 shares owned by
Mr. Smith (3,900,000 of such shares have been pledged as security by Mr.
Smith), 4,141,280 shares owned by Frederick Smith Enterprise Company, Inc.
(Enterprise), a family holding company (105,000 of such shares have been
pledged as security by Enterprise) and 736 shares owned by Mr. Smiths
spouse. Regions Bank, Memphis, Tennessee, as trustee of a trust of which
Mr. Smith is the lifetime beneficiary, holds 55% of Enterprises
outstanding stock, and Mr. Smith owns 45% directly. Includes 2,373 shares
held in FedExs retirement savings plan. Mr. Smiths business address is
942 South Shady Grove Road, Memphis, Tennessee 38120. |
(4) |
Includes 7,250 shares owned by R. Brad
Martin Family Foundation and 1,500 shares owned by Mr. Martins
spouse. |
(5) |
Includes 690 shares held in FedExs
retirement savings plan. |
(6) |
Includes 88,750 shares owned by Glenn
Family Partners, L.P. Mr. Glenn disclaims beneficial ownership of these
shares except to the extent of his pecuniary interest therein. Also
includes 566 shares held in FedExs retirement savings plan. |
(7) |
Includes 47,400 shares owned by family
trusts and 443 shares held in FedExs retirement savings
plan. |
(8) |
Includes
4,706 shares held in FedExs retirement savings plan and 20 stock units
held in a deferred compensation plan. The stock units are payable in
shares of FedEx common stock on a one-for-one
basis. |
2015 Proxy
Statement 7
Table of
Contents
STOCK
OWNERSHIP
Significant
Stockholders
The following table lists certain
persons known by FedEx to own beneficially more than five percent of FedExs
outstanding shares of common stock as of March 31, 2015.
|
Amount and Nature of Beneficial
Ownership |
|
|
Percent of Class |
|
BlackRock, Inc. |
17,136,196 |
(1) |
|
6.04% |
|
55 East 52nd Street |
|
|
|
|
|
New York, New York 10055 |
|
|
|
|
|
FMR
LLC |
16,095,204 |
(2) |
|
5.67% |
|
245 Summer Street |
|
|
|
|
|
Boston, Massachusetts 02210 |
|
|
|
|
|
PRIMECAP Management Company |
15,189,773 |
(3) |
|
5.35% |
|
225 South Lake Avenue, Suite 400 |
|
|
|
|
|
Pasadena, California 91101 |
|
|
|
|
|
The Vanguard
Group, Inc. |
16,097,593 |
(4) |
|
5.67% |
|
100 Vanguard Boulevard |
|
|
|
|
|
Malvern,
Pennsylvania 19355 |
|
|
|
|
|
(1) |
BlackRock, Inc. is the parent holding company of certain
institutional investment managers, which collectively had sole voting
power over 14,642,932 shares, sole investment power over 17,135,896 shares
and shared investment power over 300 shares. |
(2) |
FMR LLC, a registered investment advisor, and certain affiliated
institutional investment managers had sole voting power over 1,613,705
shares and shared investment power over all 16,095,204
shares. |
(3) |
PRIMECAP Management Company, a registered investment advisor, had
sole voting power over 1,201,266 shares and sole investment power over all
15,189,773 shares. |
(4) |
The Vanguard Group, Inc., a
registered investment advisor, had sole voting power over 462,887 shares,
sole investment power over 15,657,913 shares and shared investment power
over 439,680 shares. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities
Exchange Act of 1934 requires directors and certain officers of FedEx and
persons who own more than ten percent of FedExs common stock to file with the
SEC initial reports of beneficial ownership (Form 3) and reports of subsequent
changes in their beneficial ownership (Form 4 or Form 5) of FedExs common
stock. Such directors, officers and greater-than-ten-percent stockholders are
required to furnish FedEx with copies of the Section 16(a) reports they file.
The SEC has established specific due dates for these reports, and FedEx is
required to disclose in this proxy statement any late filings or failures to
file.
Based solely upon a review of the
copies of the Section 16(a) reports (and any amendments thereto) furnished to
FedEx and written representations from FedExs directors and reporting officers
that no additional reports were required, FedEx believes that its directors and
reporting officers complied with all these filing requirements for the fiscal
year ended May 31, 2015.
8 2015 Proxy Statement
Table of
Contents
COMMITTEES AND
MEETINGS OF
THE BOARD OF
DIRECTORS
Committees
The Board of Directors has a standing
Audit Committee, Compensation Committee, Information Technology Oversight
Committee and Nominating & Governance Committee. Each committees written
charter, as adopted by the Board of Directors, is available on the Investor
Relations page of our website at http://investors.fedex.com in the
Governance & Citizenship section under Committee Charters. Committee
memberships are currently as follows:
|
Audit
Committee |
|
|
|
|
Committee
functions: |
|
Committee
members John A. Edwardson
(Chairman) Kimberly A. Jabal Gary W. Loveman R. Brad
Martin Joshua Cooper Ramo
FY15 meetings held:
9 |
|
|
|
|
|
|
|
● |
oversees the
independent registered public accounting firms qualifications,
independence and performance; |
|
|
|
|
|
|
|
|
● |
assists the Board of Directors in
its oversight of (i) the integrity of FedExs financial statements; (ii)
the effectiveness of FedExs disclosure controls and procedures and
internal control over financial reporting; and (iii) the performance of
the internal auditors; |
|
|
|
|
|
|
|
|
● |
preapproves all audit
and allowable non-audit services to be provided by FedExs independent
registered public accounting firm; |
|
|
|
|
|
|
|
|
● |
reviews and discusses
with management and the Board of Directors (i) the guidelines and policies
that govern the processes by which the company assesses and manages its
exposure to risk and (ii) the companys major financial and other risk
exposures and the steps management has taken to monitor and control such
exposures; and |
|
|
|
|
|
|
|
|
● |
oversees FedExs compliance with legal and regulatory
requirements and the implementation and effectiveness of FedExs corporate
integrity and compliance programs. |
|
|
|
Compensation
Committee |
|
|
|
|
Committee
functions: |
|
Committee members Paul S. Walsh (Chairman) Marvin R. Ellison Shirley Ann
Jackson Susan C. Schwab
FY15 meetings held:
5 |
|
|
|
|
|
|
|
● |
evaluates, together
with the independent members of the Board, the performance of FedExs
Chairman of the Board, President and Chief Executive Officer and
recommends his compensation for approval by the independent
directors; |
|
|
|
|
|
|
|
|
● |
helps discharge the Boards
responsibilities relating to the compensation of executive
management; |
|
|
|
|
|
|
|
|
● |
reviews and discusses
with management the Compensation Discussion and Analysis and produces a
report recommending whether the Compensation Discussion and Analysis
should be included in the proxy statement; and |
|
|
|
|
|
|
|
|
● |
oversees the administration of FedExs equity
compensation plans and reviews the costs and structure of key employee
benefit and fringe-benefit plans and programs. |
|
|
|
Information Technology
Oversight Committee |
|
|
|
|
Committee
functions: |
|
Committee
members
James L. Barksdale
(Chairman) Kimberly A. Jabal R. Brad Martin Joshua Cooper
Ramo Susan C. Schwab
FY15 meetings held:
5 |
|
|
|
|
|
|
|
● |
appraises major
information technology (IT) related projects and technology architecture
decisions; |
|
|
|
|
|
|
|
|
● |
ensures that FedExs IT programs
effectively support FedExs business objectives and
strategies; |
|
|
|
|
|
|
|
|
● |
monitors and assesses
FedExs management of IT-related compliance risks, including IT-related
internal audits; and |
|
|
|
|
|
|
|
|
● |
advises FedExs senior IT management team and the Board
of Directors on IT-related matters. |
|
|
2015 Proxy
Statement 9
Table
of Contents
COMMITTEES AND MEETINGS OF THE BOARD
OF DIRECTORS
|
Nominating & Governance
Committee |
|
|
|
|
Committee
functions: |
|
Committee
members David P. Steiner
(Chairman) James L. Barksdale Marvin. R. Ellison Shirley Ann
Jackson Gary W. Loveman
FY15 meetings held: 6 |
|
|
|
|
|
|
|
● |
identifies individuals
qualified to become Board members; |
|
|
|
|
|
|
|
|
● |
recommends to the Board director
nominees to be proposed for election at the annual meeting of
stockholders; |
|
|
|
|
|
|
|
|
● |
recommends to the Board
directors for appointment to Board committees; and |
|
|
|
|
|
|
|
|
● |
assists the Board in developing and implementing
effective corporate governance programs. |
|
|
In addition, as discussed above under
Corporate Governance Matters Board Risk Oversight, each Board committee has
responsibility for the oversight of specific risks that fall within the
committees areas of responsibility. Also, the Audit Committee is responsible
for reviewing and discussing with management the guidelines and policies that
govern the processes by which the company assesses and manages its exposure to
all risk, including our ERM process.
In response to stockholder demand
letters, two special committees of the Board were formed during fiscal 2015, to
which Messrs. Edwardson and Steiner and Ms. Jabal were appointed. In the
aggregate, these committees met six times during fiscal 2015.
The Board of Directors has approved
maintaining the committees so that, immediately following the annual meeting, if
all of the director nominees are elected, committee memberships will remain the
same as the previous year.
Board Meetings
and Meeting Attendance
During fiscal 2015, the Board of
Directors held six regular meetings and three special meetings. The average
attendance of all directors at Board and committee meetings was 94%. Each
director attended at least 83% of the aggregate meetings of the Board and any
committees on which he or she served, with the exception of Mr. Ellison. Mr.
Ellison attended less than 75% of the meetings of
the Board and committees on which he served due to short-term conflicts relating
to his becoming the President and CEO-designee of J. C. Penney Company, Inc. in
November 2014. The Board of Directors and Mr. Ellison do not expect that Mr.
Ellisons role at J. C. Penney will significantly impact his future Board and
committee meeting attendance.
Attendance at
Annual Meeting of Stockholders
FedEx expects all Board members to
attend annual meetings of stockholders. Each member of the Board of Directors
attended the 2014 annual meeting of stockholders.
10 2015 Proxy Statement
Table
of Contents
DIRECTORS
COMPENSATION
Outside
Directors Compensation
During fiscal 2015, non-management
(outside) directors were paid an annual retainer of $111,000. Chairpersons of
the Compensation, Nominating & Governance and Information Technology
Oversight Committees were paid an additional annual fee of $13,500. The Audit
Committee chairperson was paid an additional annual fee of $22,500. In addition,
each outside director who was elected at FedExs 2014 annual meeting received a
stock option for 2,535 shares of FedEx common stock.
During fiscal 2015, in response to
stockholder demand letters, two special committees of the Board were formed to
which Messrs. Edwardson and Steiner and Ms. Jabal were appointed. Members of the
special committees were paid $2,000 for each in-person meeting attended and
$1,500 for each telephonic meeting attended.
Frederick W. Smith, the only director
who is also a FedEx employee, receives no additional compensation for serving as
a director.
The Compensation Committee annually
reviews director compensation, including, among other things, comparing FedExs
director compensation practices with those of other companies with annual
revenues between $20 billion and $70 billion. Before making a recommendation
regarding director compensation to the Board, the Compensation Committee
considers that the directors independence may be compromised if compensation
exceeds appropriate levels or if FedEx enters into other arrangements beneficial
to the directors.
Retirement Plan
for Outside Directors
In July 1997, the Board of Directors of
FedEx Express (FedExs predecessor) voted to freeze the Retirement Plan for
Outside Directors (that is, no further benefits would be earned under this
plan). Concurrent with the freeze, the Board amended the plan to accelerate the
vesting of the benefits for each outside director who was not yet vested under
the plan. This plan is unfunded and any benefits under the plan are general,
unsecured obligations of FedEx. Once all benefits are paid from the plan, it
will be terminated.
The plan benefit payable to the one
individual who served on the Board during fiscal 2015 who has not yet received
any plan benefits will be paid as a single lump sum distribution. The
lump sum distribution is payable on or before the
fifteenth business day of the month immediately following the later of the date
of the directors retirement and the date he attains age 60. In the event of the
outside directors death, his surviving spouse shall be entitled to receive the
lump sum payment. The following table sets forth for the one director entitled
to receive future benefits under the plan who served on the Board during fiscal
2015, the amount payable to him assuming a hypothetical retirement date of June
1, 2015.
Name |
Lump Sum Payment
Amount ($) |
|
P.S. Walsh |
70,817
|
(1) |
|
(1) |
Discounted from the age 60 normal
retirement date provided for in the
plan. |
2015 Proxy
Statement 11
Table of
Contents
DIRECTORS
COMPENSATION
Fiscal 2015
Director Compensation
The following table sets forth
information regarding the compensation of FedExs non-employee (outside)
directors for the fiscal year ended May 31, 2015:
Name |
|
Fees Earned or Paid in Cash ($)
(1) |
|
Option Awards ($) (2)(3) |
|
All Other Compensation ($) |
|
Total ($) |
J.L. Barksdale |
|
124,500 |
|
144,983 |
|
0 |
|
269,483 |
J.A. Edwardson |
|
143,000 |
|
144,983 |
|
0 |
|
287,983 |
M.R. Ellison |
|
111,000 |
|
144,983 |
|
0 |
|
255,983 |
K.A. Jabal |
|
120,500 |
|
144,983 |
|
0 |
|
265,483 |
S.A. Jackson |
|
111,000 |
|
144,983 |
|
0 |
|
255,983 |
S.R. Loranger (4) |
|
0 |
|
0 |
|
21,687 |
|
21,687 |
G.W. Loveman |
|
111,000 |
|
144,983 |
|
0 |
|
255,983 |
R.B. Martin |
|
111,000 |
|
144,983 |
|
0 |
|
255,983 |
J.C. Ramo |
|
111,000 |
|
144,983 |
|
0 |
|
255,983 |
S.C. Schwab |
|
111,000 |
|
144,983 |
|
0 |
|
255,983 |
D.P. Steiner |
|
134,000 |
|
144,983 |
|
0 |
|
278,983 |
P.S. Walsh |
|
124,500 |
|
144,983 |
|
0 |
|
269,483 |
(1) |
Includes retainer payments and committee chairperson fees (as
applicable). Also includes special committee meeting fees for Messrs.
Edwardson and Steiner and Ms. Jabal. See Outside Directors
Compensation above. |
(2) |
On September 29, 2014, each outside director elected at the 2014
annual meeting received a stock option for 2,535 shares of common stock.
The grant date fair value of each such option was computed in accordance
with FASB ASC Topic 718 and is set forth in this column. Assumptions used
in the calculation of these amounts are included in note 10 to our audited
consolidated financial statements for the fiscal year ended May 31, 2015,
included in our Annual Report on Form 10-K for fiscal 2015. Stock options
granted to the outside directors generally vest fully one year after the
grant date. |
(3) |
The following table sets forth
the aggregate number of outstanding stock options held by each current or
former outside director listed in the above table as of May 31,
2015: |
|
Name |
Options Outstanding |
|
J.L. Barksdale |
46,565 |
|
J.A.
Edwardson |
46,565 |
|
M.R. Ellison |
4,288 |
|
K.A.
Jabal |
5,017 |
|
S.A. Jackson |
2,535 |
|
S.R.
Loranger |
29,830 |
|
G.W. Loveman |
30,325 |
|
R.B.
Martin |
16,925 |
|
J.C. Ramo |
16,925 |
|
S.C.
Schwab |
32,365 |
|
D.P. Steiner |
27,965 |
|
P.S. Walsh |
41,165 |
(4) |
Steven R. Loranger retired as a
director immediately before the 2014 annual meeting. The amount in the
All Other Compensation column for Mr. Loranger includes $12,329 for a
retirement gift and a $9,358 tax reimbursement payment relating to the
gift. |
12 2015 Proxy Statement
Table of Contents
PROPOSAL 1
ELECTION OF DIRECTORS
All of FedExs directors are elected at
each annual meeting of stockholders and hold office until the next annual
meeting of stockholders and until their successors are duly elected and
qualified. The Board of Directors currently consists of twelve members. The
Board proposes that each of the current directors be reelected to the Board.
Each of the nominees elected at this annual meeting will hold office until the
annual meeting of stockholders to be held in 2016 and until his or her successor
is duly elected and qualified.
Each nominee has consented to being
named in this proxy statement and has agreed to serve if elected. If a nominee
is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select
a substitute nominee. If a substitute nominee is selected, the proxy holders may
vote your shares for the substitute nominee.
Under FedExs majority-voting
standard, each of the twelve director nominees must receive more votes cast
for than against his or her election in order to be elected to the Board.
For more information, please see Corporate Governance Matters Majority-Voting
Standard for Director Elections.
YOUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE TWELVE
NOMINEES.
Experience,
Qualifications, Attributes and Skills
The Nominating & Corporate
Governance Committee seeks director nominees with the skills and experience
needed to properly oversee the interests of the company. The Committee carefully
evaluates each candidate to ensure that he or she possesses the experience,
qualifications, attributes and skills that the Committee has found are necessary
for an effective board member. These crucial qualities include, among
others:
● |
The highest level of
personal and professional ethics, integrity and values; |
|
|
● |
Practical wisdom and mature
judgment; |
|
|
● |
An inquiring and
independent mind; |
|
|
● |
Expertise that is
useful to FedEx and complementary to the background and experience of
other Board members; and |
|
|
● |
Willingness to
represent the best interests of all stockholders and objectively appraise
management performance. |
In addition to the qualifications that
each director nominee must have, the Board believes that one or more of FedExs
Board members should possess the experience and expertise listed below because
of their particular relevance to the companys business and structure. These
were all considered by the Board in connection with this years director
nomination process.
● |
Transportation Industry
Experience |
|
|
● |
International
Experience |
|
|
● |
Financial
Expertise |
|
|
● |
Marketing
Expertise |
|
|
● |
Technological
Expertise |
|
|
● |
Energy
Expertise |
|
|
● |
Government
Experience |
|
|
● |
Leadership
Experience |
Diversity: The Board is
committed to diversity and inclusion and is always looking for highly qualified
candidates, including women (Ms. Jabal, Dr. Jackson and Ambassador Schwab) and
minorities (Dr. Jackson and Mr. Ellison), who meet our criteria. The Board
seeks, and believes it has found in this group of nominees, a diverse blend of
experience and perspectives, institutional knowledge and personal chemistry, and
directors who will provide sound and prudent guidance with respect to all of
FedExs operations and interests.
Below you will find each nominees
biography along with other pertinent information, including a selection of each
Board nominees skills and qualifications. Following the biographies, we have
included a chart that exhibits the collective experience, qualifications,
attributes and skills of our Board nominees.
2015 Proxy
Statement 13
Table of
Contents
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees for Election to the Board
Frederick W. Smith |
|
|
Age: 71 Director since: 1971 Committees: None Other public directorships: None |
|
|
Mr. Smith is the companys
founder and has been Chairman, President and Chief Executive Officer of
FedEx since 1998 and Chairman of FedEx Express since 1975. He was
Chairman, President and Chief Executive Officer of FedEx Express from 1983
to 1998, Chief Executive Officer of FedEx Express from 1977 to 1998, and
President of FedEx Express from 1971 to
1975. |
Skills and
Qualifications:
● |
Transportation
Industry: Founder of our company and the pioneer of the express
transportation industry. |
● |
International:
Leads our multinational company and has served on the board of the Council
on Foreign Relations and as chairman of the U.S.China Business Council
and the FrenchAmerican Business Council. |
● |
Energy:
Co-chairman of the Energy Security Leadership
Council. |
James L. Barksdale |
|
|
Age: 72 Director since: 1999 Committees: Information Technology Oversight (Chairman), Nominating &
Governance Other public directorships: Time Warner Inc. |
|
|
Mr. Barksdale is Chairman and
President of Barksdale Management Corporation, an investment management
company, a position he has held since 1999. He is also the former Managing
Partner of The Barksdale Group, a venture capital firm, a position he held
from 1999 to 2013. He was President and Chief Executive Officer of
Netscape Communications Corporation, a provider of software, services and
website resources to Internet users, from 1995 to 1999. He held various
senior management positions at FedEx Express from 1979 to 1992, including
Executive Vice President and Chief Operating Officer, and was a director
of FedEx Express from 1983 to 1991. He was previously a director of Sun
Microsystems, Inc. From January 2012 to June 2012, he served as the
interim Executive Director of the Mississippi Development
Authority. |
Skills and
Qualifications:
● |
Transportation
Industry: Held various senior management positions at our company
during its early years. |
● |
Technology: Has
held executive positions with multiple technology companies. |
● |
Government:
Served on the U.S. Presidents Intelligence Advisory Board for seven
years. |
John A. Edwardson |
|
|
Age: 66 Director since: 2003 Committees: Audit
(Chairman) Other public
directorships: ACE
Limited and Rockwell Collins, Inc. |
|
|
Mr. Edwardson is the former
Chairman and Chief Executive Officer of CDW Corporation, a provider of
technology products and services, serving as Chief Executive Officer from
2001 to September 2011 and as Chairman from 2001 to December 2012. He was
Chairman and Chief Executive Officer of Burns International Services
Corporation, a provider of security services, from 1999 to 2000. He was
President and Chief Operating Officer of UAL Corporation (the parent
company of United Air Lines, Inc.), an airline, from 1995 to 1998. He is a
former director of CDW Corporation. |
Skills and
Qualifications:
● |
Transportation
Industry: Former President and COO of a major airline. |
● |
Financial:
Former CFO of two public companies. |
● |
Technology:
Former CEO of a technology products and services
provider. |
14 2015 Proxy Statement
Table of
Contents
PROPOSAL 1 ELECTION
OF DIRECTORS
Marvin R. Ellison |
|
|
Age: 50 Director since: 2014 Committees: Compensation, Nominating &
Governance Other public
directorships: J. C. Penney Company, Inc. |
|
|
Mr. Ellison has been Chief
Executive Officer of J. C. Penney Company, Inc. since August 1, 2015 and
President since November 1, 2014. Mr. Ellison served as CEO-Designee of J.
C. Penney from November 1, 2014 through July 2015. From August 2008
through October 2014, he served as Executive Vice President U.S. Stores
of The Home Depot, Inc., a home improvement specialty retailer. From June
2002 to August 2008, he served in a variety of operational roles at The
Home Depot, including as President Northern Division and as Senior Vice
President Global Logistics. Prior to joining The Home Depot, Mr. Ellison
spent 15 years at Target Corporation in a variety of operational roles. He
is a former director of H&R Block, Inc. |
Skills and
Qualifications:
● |
Transportation
Industry: Served in a variety of logistics roles during his career,
including as Senior Vice President Global Logistics at The Home
Depot. |
● |
Leadership:
Significant executive leadership experience gained from executive
positions held at The Home Depot and J. C.
Penney. |
Kimberly A. Jabal |
|
|
Age: 46 Director since: 2013 Committees: Audit,
Information Technology Oversight Other public directorships: None |
|
|
Ms. Jabal currently is the Chief
Financial Officer and oversees the legal and human resources functions at
Kong Technologies, Inc. (formerly Path, Inc.), a privately-held social
networking company. Prior to joining Path in March 2013, she served as
vice president of finance at Lytro, Inc., an early-stage company focused
on building the worlds first consumer lightfield camera. She served in
various capacities at Google from 2003 to 2011, including as director of
engineering finance, director of investor relations and director of online
sales finance. Prior to Google, Ms. Jabal spent two years at Goldman Sachs
in technology investment banking and eight years with Accenture working in
information technology. |
Skills and
Qualifications:
● |
Financial: CFO
of a privately-held social networking company. |
● |
Technology: Has extensive
information technology experience, having spent eight years serving in
various capacities with Google and eight years with Accenture designing
and building technical infrastructure for major IT systems implementations
at global companies. |
Shirley Ann Jackson |
|
|
Age: 69 Director since: 1999 Committees: Compensation, Nominating & Governance Other public
directorships: International Business Machines Corporation, Medtronic, Inc. and
Public Service Enterprise Group Incorporated |
|
|
Dr. Jackson is President of
Rensselaer Polytechnic Institute (RPI), a technological research
university, a position she has held since 1999. She was Chairman of the
U.S. Nuclear Regulatory Commission (NRC) from 1995 to 1999 and
Commissioner of the NRC from 1995 to 1999. Dr. Jackson was a member of the
Presidents Council of Advisors on Science and Technology (PCAST) from
2009 until 2014. She has been Co-Chair of the Presidents Intelligence
Advisory Board since November 2014 and a member of the International
Security Advisory Board to the U.S. Secretary of State since July 2011,
and she is a trustee of M.I.T. (member of the M.I.T. Corporation). She was
previously a director of Marathon Oil Corporation, NYSE Euronext and U.S.
Steel Corporation. |
Skills and
Qualifications:
● |
Financial: Has
numerous years of public company audit committee experience, including as
a chair. Dr. Jackson is also a former director of NYSE Euronext and former
chair of the Board of NYSE Regulation. |
● |
Technology:
Earned undergraduate and doctorate degrees in physics from the
Massachusetts Institute of Technology and is the president of a
world-renowned technological research university (RPI). Dr. Jackson is
also a member of the Board of IBM. |
● |
Energy/Government: Former Chairman and Commissioner of the
U.S. Nuclear Regulatory Commission and Co-Chair of the Presidents
Intelligence Advisory Board. |
2015 Proxy
Statement 15
Table of
Contents
PROPOSAL 1
ELECTION OF DIRECTORS
Gary W. Loveman |
|
|
Age: 55 Director since: 2007 Committees: Audit, Nominating &
Governance Other public
directorships: Caesars Entertainment Corporation and Coach, Inc. |
|
|
Mr. Loveman is Chairman of the
Board of Caesars Entertainment Corporation, a provider of branded gaming
entertainment, a position he has held since 2005. Mr. Loveman was
President of Caesars Entertainment Corporation from 2001 through June 2015
and Chief Executive Officer from 2003 through June 2015, and he held
various other executive positions with the company from 1998 to 2001. On
January 15, 2015, Caesars Entertainment Operating Company, Inc., a
majority owned subsidiary of Caesars Entertainment Corporation, and
certain of its wholly owned subsidiaries filed for reorganization under
Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of Illinois. Mr. Loveman was
Associate Professor of Business Administration at the Harvard University
Graduate School of Business Administration from 1989 to
1998. |
Skills and
Qualifications:
● |
International:
Member of the Presidents Export Council, the principal national advisory
committee on international trade. |
● |
Financial:
Earned a Ph.D. in economics from the Massachusetts Institute of
Technology. |
● |
Marketing: Led
several highly successful marketing initiatives at Caesars Entertainment
and previously taught marketing-related
courses. |
R. Brad Martin |
|
|
Age: 63 Director since: 2011 Committees: Audit,
Information Technology Oversight Other public directorships: Chesapeake Energy Corporation and First Horizon
National Corporation |
|
|
Mr. Martin is Chairman of RBM
Venture Company, a private investment company, a position he has held
since 2007, and is the former Interim President of the University of
Memphis, a position he held from July 2013 until May 2014. Mr. Martin was
Chairman and Chief Executive Officer of Saks Incorporated from 1989 to
2006 and remained Chairman until 2007, when he retired. He was previously
a director of Caesars Entertainment Corporation, Dillards, Inc., Gaylord
Entertainment Company, lululemon athletica inc. and Ruby Tuesday,
Inc. |
Skills and
Qualifications:
● |
Financial: Earned an MBA
from Vanderbilt University and has public company audit committee
experience. |
● |
Marketing: Gained valuable
retail marketing experience and successfully applied his marketing
expertise as the former CEO of Saks, a leading department store
retailer. |
● |
Energy: Member of the
boards of Chesapeake Energy Corporation and Pilot Travel Centers
LLC. |
● |
Government: Former Tennessee state
representative. |
Joshua Cooper Ramo |
|
|
Age: 46 Director since: 2011 Committees: Audit,
Information Technology Oversight Other public directorships: Starbucks Corporation |
|
|
Mr. Ramo is Vice Chairman,
Co-Chief Executive Officer, Kissinger Associates, Inc., a strategic
advisory firm, (he has been Vice Chairman since 2011 and Co-Chief
Executive Officer since July 1, 2015). He served as Managing Director of
Kissinger Associates from 2006 to 2011. Prior to joining Kissinger
Associates, he was Managing Partner of JL Thornton & Co., LLC, a
consulting firm. Before that, he worked as a journalist and served as
Senior Editor, Foreign Editor and then Assistant Managing Editor of TIME
Magazine from 1995 to 2003. |
Skills and
Qualifications:
● |
International:
Has been a term member of the Council on Foreign Relations, Asia 21
Leaders Program, World Economic Forums Young Global Leaders and Global
Leaders of Tomorrow. He co-founded the U.S.China Young Leaders Forum in
conjunction with the National Committee on U.S.China
Relations. |
● |
Leadership: Vice
Chairman, Co-Chief Executive Officer, Kissinger
Associates. |
16 2015 Proxy Statement
Table of
Contents
PROPOSAL 1 ELECTION
OF DIRECTORS
Susan C. Schwab |
|
|
Age: 60 Director since: 2009 Committees: Compensation, Information Technology Oversight Other public
directorships: The Boeing
Company, Caterpillar Inc. and Marriott International,
Inc. |
|
|
Ambassador Schwab is a Professor
at the University of Maryland School of Public Policy, a position she has
held since January 2009. She has also served as a strategic advisor to
Mayer Brown LLP, a law firm, since March 2010. She served as U.S. Trade
Representative from 2006 to January 2009 and as Deputy U.S. Trade
Representative from 2005 to 2006. She was Vice Chancellor of the
University System of Maryland and President and Chief Executive Officer of
the University System of Maryland Foundation from 2004 to 2005. She was
Dean of the University of Maryland School of Public Policy from 1995 to
2003. She was Director of Corporate Business Development of Motorola,
Inc., an electronics manufacturer, from 1993 to 1995. She was Assistant
Secretary of Commerce for the U.S. and Foreign Commercial Service from
1989 to 1993. She was previously a director of The Adams Express Company,
Calpine Corporation and Petroleum & Resources
Corporation. |
Skills and
Qualifications:
● |
International/Government: Former U.S. Trade Representative
and former Director-General of the U.S. and Foreign Commercial Service
(Assistant Secretary of Commerce), the export promotion arm of the U.S.
government. |
David P. Steiner |
|
|
Age: 55 Director since: 2009 Committees: Nominating & Governance (Chairman) Other public
directorships: TE
Connectivity Ltd. and Waste Management, Inc. |
|
|
Mr. Steiner is Chief Executive
Officer of Waste Management, Inc., a provider of integrated waste
management services, a position he has held since 2004. He was Executive
Vice President and Chief Financial Officer of Waste Management, Inc. from
2003 to 2004, Senior Vice President, General Counsel and Corporate
Secretary of Waste Management, Inc. from 2001 to 2003, and Vice President
and Deputy General Counsel of Waste Management, Inc. from 2000 to 2001. He
was a partner at Phelps Dunbar L.L.P., a law firm, from 1990 to
2000. |
Skills and
Qualifications:
● |
Transportation: CEO of Waste Management, which
transports waste materials. |
● |
Financial: Has an accounting degree from Louisiana
State University and was CFO of Waste Management before becoming its
CEO. |
● |
Energy: CEO of Waste
Management, which has taken an industry leadership role in converting
waste to renewable energy. |
Paul S. Walsh |
|
|
Age: 60 Director since: 1996 Committees: Compensation (Chairman) Other public directorships: Avanti Communications Group plc (Chairman),
Compass Group PLC (Chairman) and RM2 International
S.A. |
|
|
Mr. Walsh is Chairman of the
Board of Compass Group PLC, a food service and support services company, a
position he has held since February 2014. He also is Chairman of the Board
of Avanti Communications Group plc, a leading satellite operator providing
high speed internet and data services, a position he has held since
November 2013. Since July 2013, Mr. Walsh has been an advisor to Diageo
plc, a beverage company, where he served as Chief Executive Officer from
2000 to June 2013. Mr. Walsh also serves as an advisor for L.E.K.
Consulting, a global strategy consulting firm, and TPG Capital LLP, a
private investment firm. Mr. Walsh also is a director of RM2 International
S.A. and Simpsons Malt Limited, and has been a member of the U.K. Prime
Ministers Business Advisory Group since July 2015. He was Chairman,
President and Chief Executive Officer of The Pillsbury Company, a wholly
owned subsidiary of Diageo plc, from 1996 to 2000, and Chief Executive
Officer of The Pillsbury Company from 1992 to 1996. He was appointed as a
Business Ambassador on the U.K. governments Business Ambassador Network
in August 2012. He was previously a director of Diageo plc, Centrica plc,
Ontex Group NV and Unilever PLC. |
Skills and
Qualifications:
● |
International:
Former CEO of a U.K.-based, large multinational corporation. |
● |
Financial: Has held
executive finance positions, including CFO of a major division, at a
U.K.-based public company. |
● |
Marketing: Led a
company that owes much of its growth and success to highly effective
marketing of its brands. |
● |
Government: Has
held executive positions at companies where government interface is
crucial. |
2015 Proxy
Statement 17
Table of
Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
18
2015 Proxy Statement
Table of
Contents
EXECUTIVE
COMPENSATION
Report of the
Compensation Committee of the Board of Directors
The Compensation Committee has reviewed
and discussed with management the following Compensation Discussion and
Analysis. Based on its review and discussions with management, the Compensation
Committee recommended to the Board of Directors, and the Board approved, that
the Compensation Discussion and Analysis be included in this proxy statement and
in FedExs Annual Report on Form 10-K for the fiscal year ended May 31,
2015.
Compensation Committee
Members
Paul S. Walsh Chairman
Marvin R.
Ellison
Shirley Ann Jackson
Susan C. Schwab
Compensation
Discussion and Analysis
In this section we discuss and analyze
the compensation of our principal executive and financial officers and our three
other most highly compensated executive officers (the named executive
officers) for the fiscal year ended May 31, 2015. For additional information regarding compensation of the named executive
officers, see Summary Compensation Table and other compensation-related
tables and disclosure below.
We are continuing to focus on our
strategic cost reduction programs, finding ways to improve efficiency and
rationalize capacity, improving on our already high levels of service, and
continuing to invest in critical, long-term projects as part of our global
strategy to position the company for stronger growth. In fiscal 2015, we
experienced improved performance by all our transportation segments. Although
our financial performance improved during 2015, adjusted consolidated operating
income was below our aggressive target objective under our fiscal 2015 annual
incentive compensation (AIC) program. Accordingly, and consistent with our
pay-for-performance philosophy, the payouts under our AIC program were below
target. In addition, there were no payouts earned in fiscal 2015 by any
participants, including the named executive officers, under our long-term
incentive compensation (LTI) program, which is tied to financial performance
over a three-year period (fiscal 2013 through fiscal 2015 for the FY2013-FY2015
LTI plan). Although we had strong financial performance in 2014 and 2015, weaker
than expected results in 2013 prevented us from achieving the earnings per share
(EPS) goal required for a payout.
The following table details key
compensation highlights of the last five fiscal years.
2015 Proxy
Statement 19
Table of
Contents
EXECUTIVE
COMPENSATION
Philosophy. FedEx is consistently ranked among the worlds most admired
and trusted employers and respected brands. Maintaining this reputation and
continuing to position FedEx for future success requires high caliber talent to
protect and grow the company in support of our mission of producing superior
financial returns for our shareowners. We design our executive compensation
program to provide a competitive and internally equitable compensation and
benefits package that reflects individual and company performance, job
complexity, and strategic value of the position while ensuring long-term
retention and motivation.
Each of the named executive officers is
a longstanding member of our management, and our Chairman of the Board,
President and Chief Executive Officer, Frederick W. Smith, founded the company
and pioneered the express transportation industry over 40 years ago. As a
result, our named executive officers are especially knowledgeable about our
business and our industry and thus particularly valuable to the company and our
shareowners.
As with tenure, position and level of
responsibility are important factors in the compensation of any FedEx employee,
including our named executive officers. There are internal salary ranges for
each level, and annual target bonus percentages, long-term bonus amounts, and the number of stock
options and restricted shares awarded are all closely tied to management level
and responsibilities. For instance, all FedEx Corporation executive vice
presidents have the same salary range and annual target bonus percentages and
receive the same long-term bonus and the same number of options and restricted
shares in the annual grant.
Our philosophy is to (i) closely align
the compensation paid to our executives with the performance of the company on
both a short-term and long-term basis, and (ii) set performance goals that do
not promote excessive risk while supporting the companys core long-term
financial goals, which include:
● |
Achieving a 10%+ operating
margin; |
|
|
● |
Increasing EPS by 10% to 15% per
year; |
|
|
● |
Growing profitable
revenue; |
|
|
● |
Improving cash flow;
and |
|
|
● |
Increasing returns,
such as return on invested capital. |
Our executive compensation is, in large
measure, highly variable and linked to the above goals and the performance of
the FedEx stock price over time.
2014 Say-on-Pay Advisory Vote
Outcome |
The Compensation Committee annually
considers the results of the most recent advisory vote by shareowners to approve
named executive officer compensation. In the 2014 advisory vote, 96.6% of the
voted shares supported the compensation of FedExs named executive officers, and
the Compensation Committee and the Board of Directors interpret this strong
level of support as affirmation of the
current design, purposes and direction of FedExs executive compensation
programs. In its ongoing evaluation of FedExs executive compensation programs
and practices, the Compensation Committee will
continue to consider the results from future shareowner advisory votes to approve named
executive officer compensation.
Compensation Objectives and
Design-Related Features |
We design our executive compensation
program to further FedExs mission of producing superior financial returns for
our shareowners by pursuing the following objectives:
|
|
How Pursued |
Objective |
|
Generally |
|
Specifically |
Retain and attract highly
qualified and effective executive officers. |
|
Pay competitively. |
|
Use comparison survey data as a
point of reference in evaluating target levels for total direct
compensation, which includes both fixed and variable, at-risk components
tied to stock price appreciation and short- and long-term financial
performance. |
Motivate executive officers to contribute to our future
success and to build long-term shareowner value and reward them
accordingly. |
|
Link a significant part of compensation to FedExs
financial and stock price performance, especially long-term
performance. |
|
Weight executive compensation program in favor of
incentive and equity-based compensation elements (rather than base
salary), especially long-term incentive cash compensation and equity
incentives in the form of stock options and restricted stock. |
Further align executive officer
and shareowner interests. |
|
Encourage and facilitate
long-term shareowner returns and significant ownership of FedEx stock by
executives. |
|
Make annual equity-based grants;
tie long-term cash compensation to growth in our EPS, which strongly
correlates with long-term stock price appreciation; maintain a stock
ownership goal for senior officers and encourage each officer to retain
shares acquired upon stock option exercises until his or her goal is
met. |
20 2015 Proxy Statement
Table of
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EXECUTIVE
COMPENSATION
Commitment to Retain and Attract.
FedEx is widely acknowledged as one of
the worlds most admired and respected companies, and it is our people our
greatest asset who have earned FedEx its strong reputation. Because FedEx
operates a global enterprise in a highly challenging business environment, we
compete for talented management with some of the largest companies in the world
in our industry and in others. Our global recognition and reputation for
excellence in management and leadership make our people attractive targets for
other companies, and our key employees are aggressively recruited. To prevent
loss of our managerial talent, we seek to provide an overall compensation
program that is competitive with all types of companies and continues to retain
and attract outstanding people to conduct our business. Each element of
compensation is intended to fulfill this important obligation.
Market Referencing.
Because retention is imperative and
tenure and management level are determinative factors, we use external survey
data solely as a market reference point to assess the competitiveness of our
compensation programs. The target compensation levels of our named executive
officers are not designed to correspond to a specific percentile of compensation
in those surveys. Instead, our analysis considers multiple market reference
points for the analyzed positions, rather than referring to a specific
percentile.
For the fiscal 2015 executive
compensation review, we considered survey data published by two major consulting
firms engaged by the company: Towers Watson and Aon Hewitt. Each consulting firm
provided target compensation data for general industry companies (excluding
financial services companies) in its respective database with annual revenues
between $20 billion and $70 billion. A list of these companies is attached to
this proxy statement as Appendix
A.
General industry is the appropriate
comparison category because our executives are recruited by and from businesses
outside of FedExs industry peer group. Moreover, our industry peer group does
not provide a sufficient number of companies that are of a comparable size to
FedEx. Using a robust data sample (127 companies for fiscal 2015) mitigates the
impact of outliers, year-over-year volatility of compensation levels and the
risk of selection bias, and increases the likelihood of comparing with companies
with executive officer positions similar to ours. Because the annual revenues of
these companies vary significantly, each consulting firm used regression
analysis to allow for the inclusion of data from a large number of both larger
and smaller companies. The data results provided by each firm were then averaged
to arrive at blended market compensation data for general industry
executives.
When we evaluate the elements of
compensation of our executive officers in light of the referenced survey data,
we consider total direct compensation (TDC). The TDC composition is
illustrated below:
Elements of
TDC |
Short-Term Compensation |
Base Salary |
AIC |
Long-Term Compensation |
LTI |
Stock Options |
Restricted Stock
(includes related tax reimbursement
payments) |
TDC includes AIC at target
(i.e.,
assuming achievement of all objectives) and all long-term components at target.
Long-term components of target TDC are valued consistent with the valuation
methodology used in the referenced surveys. Tax reimbursement payments on
restricted stock awards are included in TDC.
Other elements of compensation of the
named executive officers (such as perquisites and retirement benefits) are not
included in TDC, consistent with our referenced survey information. Accordingly,
these other elements are not referenced against survey data, and decisions as to
these other elements do not influence decisions as to the elements of
compensation that are included in TDC. These other elements of compensation,
however, are reviewed and approved by the Compensation Committee.
While we may reference our target
executive compensation levels against the survey group of companies, we do not
compare our AIC and LTI financial performance goals against these companies or
any other group of companies. Rather, as discussed below, our AIC and LTI
financial performance goals are based upon our internal business objectives
which, when set each year, represent aggressive but reasonably achievable goals.
Accordingly, the relationship between our financial performance and the
financial performance of the survey companies does not affect the relationship
between our executive compensation and the executive compensation of that group
in a given year.
Pay for Performance.
Our executive compensation program is
intended not only to retain and attract highly qualified and effective managers,
but also to motivate them to substantially contribute to FedExs future success
for the long-term benefit of shareowners and appropriately reward them for doing
so. Accordingly, we believe that there should be a strong relationship between
pay and corporate performance
2015 Proxy
Statement 21
Table of
Contents
EXECUTIVE
COMPENSATION
(both financial results and stock
price), and our executive compensation program reflects this belief. In
particular, AIC payments, LTI payments and stock options represent a significant
portion of our executive compensation program, as shown by the chart below, and
this variable compensation is at risk and directly dependent upon the
achievement of pre-established corporate goals and stock price
appreciation:
● |
Fiscal 2015 AIC payouts were tied
to meeting aggressive business plan goals for FedEx Express segment
operating income and consolidated operating income, as well as individual
performance objectives for the named executive officers other than the
Chairman of the Board, President and Chief Executive Officer and the
President and Chief Executive Officer of FedEx Express. Adjusted
consolidated operating income fell below the target objective for annual
financial performance for fiscal 2015. As a result, the named executive
officers received below-target AIC payouts. |
|
|
● |
LTI payouts are tied to meeting
aggregate EPS goals over a three-fiscal-year period. Due to weaker than
expected results in fiscal 2013, there were no LTI payouts for fiscal
2015. |
|
|
● |
The exercise price of stock
options granted under our equity incentive plans is equal to the fair
market value of our common stock on the date of grant, so the options will
yield value to the executive only if the stock price
appreciates. |
The following chart illustrates for
each named executive officer the allocation of fiscal 2015 target TDC between
base salary and incentive and equity-oriented compensation elements (the
restricted stock value includes the related tax reimbursement
payment):
Fiscal 2015 Target TDC
Components
We believe that long-term performance
is the most important measure of our success, as we manage FedExs operations
and business for the long-term benefit of our shareowners. Accordingly, not only
is our executive compensation program weighted towards variable, at-risk pay
components, but we emphasize incentives that are dependent upon long-term
corporate performance and stock price appreciation. These long-term incentives include LTI cash
compensation and equity awards (stock options and restricted stock), which
comprise a significant portion of an executive officers total compensation.
These incentives are designed to motivate and reward our executive officers for
achieving long-term corporate financial performance goals and maximizing
long-term shareowner value.
22 2015 Proxy Statement
Table of
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EXECUTIVE
COMPENSATION
The following chart illustrates for
each named executive officer the allocation of fiscal 2015 target TDC between
long-term incentives LTI, stock options and restricted stock, including the
related tax reimbursement payment and short-term components base salary and
AIC:
Fiscal 2015 Long-Term vs. Short-Term
Compensation
We include target AIC and LTI payouts
(discounted to present value to be consistent with the valuation methodology
used in the survey data) in TDC, so the actual compensation paid out in a given
year may vary widely from target levels because compensation earned under the
AIC and LTI programs is variable and commensurate with the level of achievement
of pre-established financial performance goals. When we fall short of our
business objectives, payments under these variable programs decrease
correspondingly. Conversely, when we achieve superior results, we reward our
executives accordingly under the terms of these programs. As shown by the
following chart, the actual fiscal 2015 TDC of
our named executive officers was below target levels because our financial
performance fell short of our pre-established goals for the AIC and LTI plans.
In fiscal 2014, the actual TDC of our named executive officers was above target
levels because we exceeded our pre-established EPS goal for a target payout
under the FY2012-FY2014 LTI plan. In fiscal 2013, with the exception of Mr. F.W.
Smith, the actual TDC of our named executive officers was above target levels
because we exceeded our pre-established EPS goal for a maximum payout under the
FY2011-FY2013 LTI plan.
Actual TDC vs. Target TDC
(1)
____________________ |
(1) |
|
Actual TDC includes base salary,
actual AIC and LTI payouts (if any), equity-based awards valued at grant
date consistent with the valuation methodology used in the survey data and
tax reimbursement payments related to restricted stock
awards. |
2015 Proxy
Statement 23
Table of
Contents
EXECUTIVE
COMPENSATION
Align Management and Shareowner
Interests. We award stock options and
restricted stock to create and maintain a long-term economic stake in the
company for the officers, thereby aligning their interests with the interests of
our shareowners.
In addition, as discussed above, payout
under our LTI program is dependent upon achievement of an aggregate EPS goal for
a three-fiscal-year period. EPS was selected as the financial measure for the
LTI plan because growth in our EPS strongly correlates to long-term stock price
appreciation.
The following graph illustrates the
relationship between FedExs EPS growth and stock price appreciation (based on
the fiscal year-end stock price and adjusted for stock splits) from 1978 to
2015:
____________________ |
(1) |
|
EPS for fiscal 2015, 2014 and 2013
excludes the net impact of the companys adoption of MTM accounting for
its defined benefit pension and other postretirement plans, including the
impact of lowering the expected return on plan assets assumption from
7.75% to 6.5% in the presentation of segment results for all prior
periods, of $(4.23), $0.43 and $3.12, respectively. |
|
|
|
Stock Ownership Goal for Senior
Officers. In order to encourage significant
stock ownership by FedExs senior management, including the named executive
officers, and to further align their interests with the interests of our
shareowners, the Board of Directors has adopted a stock ownership goal for
senior officers, which is included in FedExs Corporate Governance Guidelines.
With respect to our executive officers, the goal is that within four years after
being appointed to his or her position, each officer own FedEx shares valued at
the following multiple of his or her annual base salary:
● |
5x for the Chairman of the Board,
President and Chief Executive Officer; and |
|
|
● |
3x for the other executive
officers. |
For
purposes of meeting this goal, unvested restricted stock is counted, but
unexercised stock options are not. Until the ownership goal is met, the officer
is encouraged to retain net profit shares resulting from the exercise of stock
options. Net profit shares are the shares remaining after payment of the
option exercise price and taxes owed upon the
exercise of options. As of August 3, 2015, each executive officer exceeded the
stock ownership goal.
Policy Against Hedging and Pledging
Transactions. In addition, we have adopted
comprehensive and detailed policies (the FedEx Securities Manual) that regulate
trading by our insiders, including the named executive officers and Board
members. The Securities Manual includes information regarding quiet periods and
explains when transactions in FedEx stock are permitted. The Securities Manual
and our Corporate Governance Guidelines also set forth certain types of
transactions that are restricted. Specifically, (1) publicly traded (or
exchange-traded) options, such as puts, calls and other derivative securities,
(2) short sales, including sales against the box, and (3) hedging or
monetization transactions, such as zero-cost collars and forward sale contracts,
are strictly prohibited. The Securities Manual and our Corporate Governance
Guidelines also prohibit margin accounts and pledges; provided, however, that
our Lead Independent Director and General Counsel, acting together,
24
2015 Proxy Statement
Table of
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EXECUTIVE
COMPENSATION
may grant an exception to the
prohibition against holding FedEx securities in a margin account or pledging
FedEx securities on a case-by-case basis to any member of the Board of Directors
or the Chairman of the Board, President and Chief Executive Officer if he or she
clearly demonstrates the financial capacity to repay the loan without resort to
the pledged securities.
Based upon this criterion, such an
exception has been granted with respect to the shares that are disclosed in this
proxy statement as having been pledged as security by Frederick W. Smith,
FedExs Chairman of the Board, President and Chief Executive Officer. See Stock
Ownership Directors and Executive Officers. With respect to the shares
pledged by Mr. Smith:
● |
None of the shares pledged by Mr.
Smith were acquired through a FedEx equity compensation
plan. |
|
|
● |
The pledged shares are not used to
shift or hedge any economic risk in owning FedEx shares. These shares
collateralize loans used to fund outside personal business ventures and
prior purchases of FedEx shares. If Mr. Smith had been unable to pledge
these shares, he may have been forced to sell the shares in order to
obtain the necessary funds. |
|
|
● |
The pledged shares represent 1.4%
of FedExs outstanding shares as of August 3, 2015, and therefore, do not
present any appreciable risk for investors or the
company. |
|
|
● |
Mr. Smith is FedExs founder and
one of the companys largest shareowners. Mr. Smith has pledged only 20.5%
of his total share ownership. The number of shares pledged by Mr. Smith
has decreased by 112,000 during the last year and by 1,298,000 over the
last three years. Based on the fiscal year-end stock price ($173.22), the
value of his pledged shares was approximately $694 million. Excluding the
pledged shares, Mr. Smith still substantially exceeds our stock ownership
goal. |
|
|
● |
In accordance with our policy, Mr.
Smith has established his financial capacity to repay the loan without
resorting to the pledged shares. In the unlikely event such a sale were
necessary, based on the 30-day average trading volume for FedEx shares as
of August 3, 2015, it would take three days for the pledged shares to be
sold in the open market. Furthermore, Mr. Smiths unpledged share
ownership is very substantial and would likely be able to prevent any
margin call. |
We have an active shareowner engagement
program in which we meet regularly with our largest shareowners. During these
discussions, none of our largest shareowners have raised any concerns regarding
Mr. Smiths pledged shares.
No other FedEx executive officer or
Board member currently holds FedEx securities that are pledged pursuant to a
margin account, loan or otherwise.
Restricted Stock Program.
FedExs restricted stock program has been
in place for over 20 years and has encouraged FedEx executives to own and retain
company stock. Although none of our largest shareowners have raised any concerns
to us regarding our restricted stock program, during fiscal 2015 the
Compensation Committee again reviewed our restricted stock program and, for all
of the following reasons, determined that it continues to be appropriate for
FedEx.
By facilitating the ownership of FedEx
shares by our executives, we strengthen the alignment of their interests with
those of our investors. When granting restricted stock, FedEx first determines
the total target value of the award and then approves the delivery of that value
in two components: restricted shares and cash payment of taxes due. Therefore,
the total target value of the award is the same as it would be if there were no
tax payments. In particular, because the amount of the tax payment is included
in the calculation of the target value of the restricted stock award, the
officers receive fewer shares in each award than they would in the absence of
the tax payment: fewer by an amount equal in value to the tax
payment.
This methodology prevents the need for
an officer to make a disposition of FedEx stock to cover the tax consequences of
a restricted stock award and dilute his or her interest in FedEx. Conversely,
absent the tax payment, the number of shares received in each award would be
larger by an amount equal in value to the forgone tax payment, thereby having a
dilutive effect on our shareowners equity interest in FedEx. While SEC
disclosure rules require that these payments be included with tax reimbursement
payments and reported as other compensation in the Summary Compensation Table,
we do not believe these payments are tax gross-ups in the traditional sense,
since their value is fully reflected in the number of shares ultimately
delivered to recipients. The following chart illustrates this principle, using
the target value for the fiscal year 2015 restricted stock awards granted to
FedEx Corporation executive vice presidents (as in previous years, Mr. Smith did
not receive a restricted stock award in fiscal 2015):
2015 Proxy
Statement 25
Table of
Contents
EXECUTIVE
COMPENSATION
Target Value of Restricted Stock
Award
Not only is the value to the officer,
as well as the cost to the company, generally the same as it would be otherwise,
but this practice uses fewer shares of stock to arrive at the same benefit and
has proved extremely successful in retaining executives and enabling them to
retain their shares. During fiscal 2014, we broadened our restricted stock
program to include certain lower-level officers and
high-performing managers and individual contributors. We also make tax payments
as part of restricted stock awards to these individuals. In sum, we strongly
believe that our restricted stock program is effectively designed and is aligned
with the best interests of our shareowners.
Role of the Compensation
Committee, its Compensation Consultant and the Chairman of the Board,
President and Chief Executive Officer |
Our Board of Directors is responsible
for the compensation of our executive management. The purpose of the Boards
Compensation Committee, which is composed solely of independent directors, is to
help discharge this responsibility by, among other things:
● |
Reviewing and discussing with
management the factors underlying our compensation policies and decisions,
including overall compensation objectives; |
|
|
● |
Reviewing and discussing with
management the relationship between the companys compensation policies
and practices and the companys risk management, including the extent to
which those policies and practices create risks for the
company; |
|
|
● |
Reviewing and approving all
company goals and objectives (both financial and non-financial) relevant
to the compensation of the Chairman of the Board, President and Chief
Executive Officer; |
|
|
● |
Evaluating, together with the
other independent directors, the performance of the Chairman of the Board,
President and Chief Executive Officer in light of these goals and
objectives and the quality and effectiveness of his
leadership; |
|
|
● |
Recommending to the Board for
approval by the independent directors each element of the compensation of
the Chairman of the Board, President and Chief Executive
Officer; |
|
|
● |
Reviewing the performance
evaluations of all other members of executive management (the Chairman of
the Board, President and Chief Executive Officer is responsible for the
performance evaluations of the non-CEO executive
officers); |
|
|
● |
Reviewing and approving (and, if applicable, recommending
to the Board for approval) each element of compensation,
as well as the terms and conditions of employment, of these
other members of executive management; |
|
|
● |
Granting awards under our equity
compensation plans and overseeing the administration of all such plans;
and |
|
|
● |
Reviewing the costs and structure of our key employee
benefit and fringe-benefit plans and programs. |
The Compensation Committee may form and
delegate authority to any subcommittee as it deems appropriate or advisable in
accordance with the terms of its written charter. To date, however, the
Committee has not formed or delegated authority to any subcommittee.
In furtherance of the Compensation
Committees responsibility, the Committee has engaged Steven Hall & Partners (the consultant) to assist the Committee in
evaluating FedExs executive compensation, including during fiscal 2015. In
connection with this engagement, the consultant reports directly and exclusively
to the Committee. The consultant participates in Committee meetings, reviews
26 2015 Proxy Statement
Table of
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EXECUTIVE
COMPENSATION
Committee materials and provides advice
to the Committee upon its request. For example, the consultant: updates the
Committee on trends and issues in executive compensation and comments on the
competitiveness and reasonableness of FedExs executive compensation program;
assists the Committee in the development and review of FedExs AIC and LTI
programs, including commenting on performance measures and the goal-setting
process; and reviews and provides advice to the Committee for its consideration
in reviewing compensation-related proxy statement disclosure, including this
Compensation Discussion and Analysis, and on any new equity compensation plans
or plan amendments proposed for adoption.
Other than services provided to the
Compensation Committee, the consultant does not perform any services for FedEx.
Additionally, the consultant has robust policies and procedures in place to
prevent conflicts of interest; the fees received by the consultant from FedEx in
the consultants most recently completed fiscal year represented less than 5% of
the consultants revenues; neither the consultant nor any adviser of the
consultant had a business or personal relationship with any member of the
Compensation Committee or any executive officer of FedEx during fiscal 2015; and
no adviser of the consultant directly owns, or directly owned during fiscal
2015, any FedEx stock. Accordingly, the Compensation Committee has determined
the consultant to be independent from the company and that no conflicts of
interest exist related to the consultants
services provided to the Committee. Compensation Committee pre-approval is
required for any services to be provided to the company by the Committees
independent compensation consultant. This ensures that the consultant maintains
the highest level of independence from the company, in both appearance and
fact.
The Chairman of the Board, President
and Chief Executive Officer, who attends most meetings of the Compensation
Committee by invitation of the Committees chairman, assists the Committee in
determining the compensation of all other executive officers by, among other
things:
● |
Approving any annual merit
increases to the base salaries of the other executive officers within
limits established by the Committee; |
|
|
● |
Establishing annual individual
performance objectives for the other executive officers and evaluating
their performance against such objectives (the Committee reviews these
performance evaluations); and |
|
|
● |
Making recommendations, from time
to time, for special stock option and restricted stock grants (e.g., for
motivational or retention purposes) to other executive
officers. |
The other executive officers do not
have a role in determining their own compensation, other than discussing their
annual individual performance objectives and results achieved with the Chairman
of the Board, President and Chief Executive Officer.
Compensation
Elements and Fiscal 2015 Amounts |
Base Salary. Our primary objective with respect to the base salary levels
of our executive officers is to provide sufficient fixed cash income to retain
and attract these highly marketable executives in a competitive market for
executive talent. The base salaries of our executive officers are reviewed and
adjusted (if appropriate) at least annually to reflect, among other things,
economic conditions, base salaries for comparable positions from the executive
compensation survey data discussed above, the tenure of the officers, and the
base salaries of the officers relative to one another, as well as the internal
salary ranges for the officers level.
The named executive officers last
received a base salary increase in July 2011. Effective October 1, 2015,
Frederick W. Smiths annual base salary will be increased by 1.5%, and each
other named executive officers annual base salary will be increased by 3%. As a
result, effective October 1, 2015, the new annual base salaries of FedExs named
executive officers will be as follows:
Name |
Current Annual Base Salary ($) |
|
New Annual Base
Salary ($)
|
F.W.
Smith |
1,266,960 |
|
1,285,968
|
A.B. Graf, Jr. |
902,784 |
|
929,868 |
D.J.
Bronczek |
942,096 |
|
970,356
|
T.M. Glenn |
833,364 |
|
858,360 |
R.B. Carter |
762,960 |
|
785,844 |
Cash Payments Under Annual
Incentive Compensation Program. The
primary objective of our AIC program is to motivate our people to achieve our
annual financial goals and other business objectives and reward them
accordingly. The program provides an annual cash bonus opportunity to our
employees, including the named executive officers, at the conclusion of each
fiscal year based upon the achievement of AIC performance objectives.
For fiscal 2015, the AIC plan included
two company financial performance measures FedEx Express segment operating
income and consolidated operating income. These measures were chosen as the
company financial performance metrics in order to further motivate and
incentivize management to improve the companys core financial performance,
execute our profit improvement initiatives and find ways to improve efficiency
and rationalize capacity.
Target AIC payouts are established as a
percentage of the executive officers base salary (as of the end of the plan
year). Payouts above target levels are based exclusively upon the companys
performance. Accordingly, the executive officer receives above-target payouts
only if the company exceeds the AIC target objective for annual financial
performance.
AIC objectives for company annual financial performance are
typically based upon our business plan for the fiscal year, which is reviewed
and approved by the Board of Directors and
2015 Proxy
Statement 27
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EXECUTIVE
COMPENSATION
which reflects, among other things, the
risks and opportunities identified in connection with our enterprise risk
management process. Consistent with our long-term focus and in order to
discourage unnecessary and excessive risk-taking, we measure performance against
our business plan, rather than a fixed growth rate or an average of growth rates
from prior years, to account for short-term economic and competitive conditions
and anticipated strategic investments that may have adverse short-term profit
implications. We address year-over-year improvement targets through our LTI
plans, as discussed below.
For the fiscal 2015 AIC program, in an effort to
further motivate management to improve the companys performance, the AIC
programs target objectives for both FedEx Express segment operating income and
consolidated operating income were higher than the corresponding business plan
objectives. Accordingly, above-plan performance for both measures was required
to achieve target payouts under the fiscal 2015 AIC program. The payout
opportunity for Messrs. Graf, Glenn and Carter relating to individual
performance was not, however, contingent upon the achievement of any company
financial performance objectives.
The fiscal 2015 AIC target payouts for
the named executive officers, as a percentage of base salary, were as
follows:
Name |
Target Payout (as a percentage of base
salary) |
F.W. Smith |
130 |
%
|
A.B. Graf,
Jr. |
90 |
% |
D.J. Bronczek |
100 |
% |
T.M. Glenn |
90 |
% |
R.B. Carter |
90 |
% |
The maximum fiscal 2015 AIC payout
opportunity for each named executive officer was 200% of his target
bonus.
Chairman of the Board, President and
Chief Executive Officer. Mr. Smiths AIC
payout is tied to the achievement of corporate objectives for company financial
performance for the fiscal year. Mr. Smiths minimum AIC payout is zero. His
target AIC payout is set as a percentage of his base salary, and his maximum AIC
payout is set as a multiple of the target payout. The independent members of the
Board of Directors, upon the recommendation of the Compensation Committee,
approve these percentages. The actual AIC payout ranges, on a sliding scale,
from the minimum to the maximum based upon the performance of the company
against our company financial performance goals.
Mr. Smiths fiscal 2015 AIC payout was
based on the following company financial performance measures (subject to
adjustment as described below):
● |
FedEx Express Segment Operating
Income: A payout of up to 50% of Mr. Smiths target bonus was based on
meeting or exceeding the FedEx Express segment operating income target
objective under the fiscal 2015 AIC program. |
|
|
● |
Consolidated Operating Income: If
the FedEx Express segment operating income target objective under the
fiscal 2015 AIC program was achieved, the balance of Mr. Smiths AIC
payout opportunity was tied to the achievement of corporate objectives for
consolidated operating income, subject to the maximum payout
opportunity. |
In addition, the independent Board
members, upon the recommendation of the Compensation Committee, may adjust this
amount upward or downward based on their annual evaluation of Mr. Smiths
performance, including the quality and effectiveness of his leadership, the
execution of key strategic initiatives and the following corporate performance
measures:
● |
FedExs stock price performance
relative to the Standard & Poors 500 Composite Index, the Dow Jones
Transportation Average, the Dow Jones Industrial Average and
competitors; |
|
|
● |
FedExs stock price to earnings
(P/E) ratio relative to the Standard & Poors 500 Composite Index, the
Dow Jones Industrial Average and competitors; |
|
|
● |
FedExs market
capitalization; |
|
|
● |
FedExs revenue
growth and operating income growth (excluding certain unusual items and
the year-end mark-to-market accounting adjustment for defined benefit
pension and other postretirement plans (the MTM Adjustment)) relative to
competitors; |
|
|
● |
FedExs free cash
flow (excluding business acquisitions), return on invested capital
(excluding certain unusual items and the MTM Adjustment) and weighted
average cost of capital; |
|
|
● |
Analyst coverage and
ratings for FedExs stock; |
|
|
● |
FedExs U.S. and
international revenue market share; and |
|
|
● |
FedExs reputation
rankings by various publications and surveys. |
None of these factors is given any
particular weight in determining whether to adjust Mr. Smiths bonus
amount.
Non-CEO Named Executive Officers.
For fiscal 2015, the entire AIC payout for
Mr. Bronczek, the President and Chief Executive Officer of FedEx Express, was
based on the same company financial performance measures as described above for
Mr. Smith, subject to downward adjustment by Mr. Smith based on Mr. Bronczeks
achievement of individual performance objectives established at the beginning of
the fiscal year.
With respect to Messrs. Graf, Glenn and Carter, 50% of their
fiscal 2015 target AIC payout was based on the achievement of individual
performance objectives established at the beginning of the fiscal year for each
executive. The payout opportunity relating to individual objectives was not
contingent upon achievement of any company financial performance objectives. The
balance of their fiscal 2015 AIC payout was contingent upon achievement of the
FedEx Express segment operating income target objective under the fiscal 2015
AIC program.
28 2015 Proxy Statement
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EXECUTIVE COMPENSATION
If such target was achieved, the
balance of their AIC payout opportunity was based on the achievement of
corporate objectives for consolidated operating income (as described above),
subject to the maximum payout opportunity.
The minimum AIC payout for all non-CEO
named executive officers is zero. The target AIC payout is set as a percentage
of the executives base salary, and the maximum AIC payout is set as a multiple
of the target payout. The actual AIC payout ranges, on a sliding scale, from the
minimum to the maximum based upon the performance of the individual and the
company against the objectives.
Individual performance objectives for
the non-CEO named executive officers vary by management level and by operating
segment and include (but are not limited to):
● |
Provide leadership to support the
achievement of financial goals; |
|
|
● |
Guide and support key strategic
initiatives; |
|
|
● |
Enhance the FedEx customer
experience and meet goals related to internal metrics that measure
customer satisfaction and service quality; |
|
|
● |
Recruit and develop executive
talent and ensure successors exist for all management positions;
and |
|
|
● |
Implement and document good faith
efforts designed to ensure inclusion of females and minorities in the pool
of qualified applicants for open positions and promotional opportunities,
and otherwise promote FedExs commitment to diversity, tolerance and
inclusion in the workplace. |
Individual performance objectives are
designed to further the companys business objectives. Achievement of individual
performance objectives is generally within each officers control or scope of
responsibility, and the objectives are intended to be achieved with an
appropriate level of effort and effective leadership by the officer. The
achievement level of each non-CEO named executive officers individual
performance objectives is based on Mr. Smiths evaluation at the conclusion of
the fiscal year, which is reviewed by the Compensation Committee.
Fiscal 2015 AIC Performance and
Payouts. As noted above, both the FedEx
Express segment operating income target objective and the consolidated operating
income target objective under the fiscal 2015 AIC program were higher than the
corresponding fiscal 2015 business plan objectives. As a result, above-plan
performance was required in order to achieve target payouts under the fiscal
2015 AIC program.
The following table presents the
threshold, target and maximum objectives (if applicable) for FedEx Express
segment operating income and consolidated operating income under our fiscal 2015
AIC program, and our actual (as adjusted) FedEx Express segment operating income
and consolidated operating income for fiscal 2015 (in millions):
|
Company Performance Measure |
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Actual(1) |
|
|
FedEx Express Segment
Operating Income |
|
$1,648 |
(2) |
|
$1,648 |
(2) |
|
n/a |
(2) |
|
$1,860 |
|
|
Consolidated Operating Income |
|
$4,178 |
|
|
$4,338 |
|
|
$4,834 |
|
|
$4,228 |
|
(1) |
The Board of Directors, upon the recommendation of the Compensation
Committee, approved the exclusion of certain items from FedEx Express
segment operating income and consolidated operating income for purposes of
the fiscal 2015 AIC plan. See Appendix B for a reconciliation of
the non-GAAP measures to the most directly comparable GAAP
measures. |
(2) |
Under the fiscal 2015 AIC plan, once the FedEx Express segment
operating income business plan objective was achieved, additional
operating profit was allocated exclusively to fund the FedEx Express
segment fiscal 2015 AIC plan (including with respect to Mr. Smith) until
aggregate funding reached 50% of the aggregate target payout. Accordingly,
the threshold and target objectives for FedEx Express segment operating
income are the same. There was no maximum objective under the FedEx
Express segment operating income metric because once the target objective
for 50% funding was met, any remaining payout was tied to achievement of
consolidated operating income objectives. |
Based upon above-target FedEx Express
operating income performance and below-target consolidated operating income
performance, and each non-CEO named executive officers achievement of
individual performance objectives, payouts to the named executive officers under
the fiscal 2015 AIC program were as follows (compared to the target payout
opportunities):
Name |
Target AIC Payout ($) |
|
Actual AIC Payout ($) |
F.W. Smith |
1,647,048 |
|
981,723 |
A.B. Graf, Jr. |
812,506 |
|
505,581 |
D.J. Bronczek |
942,096 |
|
598,561 |
T.M. Glenn |
750,028 |
|
442,141 |
R.B. Carter |
686,664 |
|
395,793 |
The independent members of the Board of
Directors, upon the recommendation of the Compensation Committee, exercised their discretion (as described above) to
reduce the amount of Mr. Smiths fiscal 2015 AIC payout from $1,078,816,
the formulaic amount resulting solely from the achievement of company financial performance objectives under the fiscal
2015 Proxy
Statement 29
Table of Contents
EXECUTIVE
COMPENSATION
2015 AIC program, to $981,723. This
decision was based upon below-business-plan achievement for fiscal 2015
consolidated operating income.
Fiscal 2016 AIC Plan Design.
In order to provide a greater tie between
individual business segment performance, to restore the motivating power of the
AIC plan and to continue to motivate and incentivize management to improve the
companys core financial performance, execute our profit improvement initiatives
and find ways to improve efficiency and rationalize capacity, several changes
have been made to the fiscal 2016 AIC program.
As in prior years, Mr. Smiths fiscal
2016 AIC payout opportunity will be tied to the achievement of corporate
objectives for company financial performance for the fiscal year, subject to
adjustment by the independent members of the Board of Directors as described
above (provided that, the independent directors also will consider each FedEx
business segments achievement of corporate objectives for financial performance
under the fiscal 2016 AIC program in addition to the factors listed above). Mr.
Smiths fiscal 2016 AIC payout will be based on the following company financial
performance measures (subject to adjustment as described above):
● |
FedEx Express Segment
Operating Income: Mr. Smiths fiscal 2016 AIC payout is conditioned
upon the achievement of the FedEx Express segment operating income
threshold objective for Mr. Smith under the fiscal 2016 AIC
program. |
|
|
● |
Consolidated Operating
Income: If the FedEx Express segment operating income threshold
objective for Mr. Smith under the fiscal 2016 AIC program is achieved, Mr.
Smiths AIC payout opportunity will be tied to the achievement of
corporate objectives for consolidated operating income (excluding the MTM
Adjustment), subject to the maximum payout opportunity. The consolidated
operating income target objective under the fiscal 2016 AIC program is the
same as the fiscal 2016 business plan objective for consolidated operating
income (excluding, in each case, the MTM Adjustment). Subject to
achievement of the FedEx Express segment operating income threshold
objective for Mr. Smith and any adjustment by the
independent directors as described above, Mr. Smiths minimum fiscal 2016
AIC payout will be 50% of his target
payout. |
Mr. Bronczeks fiscal 2016 AIC target
payout opportunity will be based on the achievement of corporate objectives for
FedEx Express segment operating income for fiscal 2016. The FedEx Express
segment operating income target objective under the fiscal 2016 AIC program is
the same as the fiscal 2016 business plan objective for FedEx Express segment
operating income. Above-target payouts for Mr. Bronczek will be tied to the
achievement of corporate objectives for consolidated operating income (excluding
the MTM Adjustment), subject to the maximum payout opportunity. Mr. Bronczeks
fiscal 2016 AIC payout opportunity is not subject to a floor.
The fiscal 2016 AIC payout opportunity
for each of Messrs. Graf, Glenn and Carter will be based on the achievement of
corporate objectives for consolidated operating income (excluding the MTM
Adjustment), subject to a minimum payout of 50% of his target payout (as it may
be adjusted as described below) and the maximum payout opportunity.
Mr. Smith may adjust each officers
bonus amount based on the achievement of individual performance objectives
established at the beginning of the fiscal year. Mr. Smith will determine the
achievement level of each officers individual objectives at the conclusion of
fiscal 2016.
Cash Payments Under LTI Program.
The primary objective of our LTI program
is to motivate management to contribute to our future success and to build
long-term shareowner value and reward them accordingly. The program provides a
long-term cash payment opportunity to members of management, including the named
executive officers, based upon achievement of aggregate EPS goals for the
preceding three-fiscal-year period. The LTI plan design provides for payouts
that correspond to specific EPS goals established by the Board of Directors. The
EPS goals represent total growth in EPS (over a base year) for the three-year
term of the LTI plan. The following chart illustrates the relationship between
EPS growth and payout:
30 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
LTI Payout
Opportunity (as a percentage of target) |
|
Three-Year Average Annual EPS
Growth |
As illustrated by the above chart, the
LTI program provides for:
● |
No LTI payment unless the
three-year average annual EPS growth rate is at least 5%;
|
|
|
● |
Target payouts if the three-year
average annual EPS growth rate is 12.5%; |
|
|
● |
Above-target payouts if the
growth rate is above 12.5%, up to a maximum amount (equal to 150% of the
target payouts) if the growth rate is 15% or higher; and |
|
|
● |
Below-target payouts if the
growth rate is below 12.5%, down to a threshold amount (equal to 25% of
the target payouts) if the growth rate is 5%.
|
Stock Repurchase Program-Related
Adjustments to EPS for LTI Plan Purposes. During fiscal 2014 and the first quarter of fiscal 2015, the company
repurchased 42.2 million shares as part of our stock repurchase program. Because
the positive impact on EPS resulting from this stock repurchase program did not
reflect core business performance, the Board of Directors, upon the
recommendation of the Compensation Committee, approved the exclusion of the
impact of the stock repurchase program (net of interest expense on debt issued
to fund a portion of the program) on fiscal 2014 and fiscal 2015 EPS for
purposes of the FY2013-FY2015 and FY2014-FY2016 LTI plans. As a result, (i)
adjusted fiscal 2014 EPS of $6.68, rather than fiscal 2014 EPS of $6.75 (as
originally reported before the companys adoption of mark-to-market (MTM)
accounting for its defined benefit pension and other postretirement plans), and
(ii) adjusted fiscal 2015 EPS of $8.24, rather than adjusted fiscal 2015 EPS of
$8.87 (as discussed below), are being used for purposes of the FY2013-FY2015 and
FY2014-FY2016 LTI plans. Fiscal 2016 EPS will be adjusted following the end of
that fiscal year using a similar methodology to exclude the impact of the stock
repurchase program for purposes of the FY2014-FY2016 LTI plan.
Mark-to-Market Accounting and Other
Adjustments to EPS for LTI Plan Purposes. The
Board of Directors, upon the recommendation of the Compensation Committee,
approved the exclusion of certain items from fiscal 2015 EPS for purposes of
FedExs FY2013-FY2015, FY2014-FY2016 and FY2015-FY2017 LTI plans and for
establishing the base-year EPS for the FY2016-FY2018 LTI plan. For purposes of
these plans, fiscal 2015 EPS was adjusted to exclude: (i) the net impact of the
companys adoption of MTM accounting for its defined benefit pension and other
postretirement plans, including the impact of lowering the expected return on
plan assets assumption from 7.75% to 6.5% in the presentation of segment results
for all prior periods; (ii) aircraft impairment and related charges recorded in
the fourth quarter; and (iii) a charge in the fourth quarter to increase the
legal reserve associated with the settlement of a legal matter at FedEx Ground
to the amount of the settlement.
As a result, adjusted fiscal 2015 EPS
of $8.87, rather than reported fiscal 2015 EPS of $3.65, is being used for
purposes of the FY2013-FY2015 and FY2014-FY2016 LTI plans (in each case, before
the adjustment relating to the stock repurchase program described above) and the
FY2015-FY2017 LTI plan. The Board of Directors determined that, by excluding
these items, payouts, if any, under these plans will more accurately reflect
FedExs core financial performance in fiscal 2015. See Appendix B for a
reconciliation of the non-GAAP measures to the most directly comparable GAAP
measures.
We recast fiscal 2013 and fiscal 2014
financial results as a result of adopting MTM accounting. The Compensation
Committee and the Board of Directors assessed the impact of recasting the
financial statements on the FY2013-FY2015, FY2014-FY2016 and FY2015-FY2017 LTI
plans. While adjusted EPS for fiscal 2013 and fiscal 2014 is higher than the
current base-year EPS for each of these plans, the forecasted payouts under
these plans are
2015 Proxy
Statement 31
Table of Contents
EXECUTIVE
COMPENSATION
not expected to change by restating the
plan goals in light of the adjusted financial statements. Accordingly, the
base-year number for the FY2013-FY2015 LTI plan did not change, and the current
base-year EPS numbers for the FY2014-FY2016 and FY2015-FY2017 LTI plans, and
fiscal 2013 and fiscal 2014 EPS as previously reported for purposes of the LTI
plans, will continue to be used for determining achievement under the applicable
LTI plans. The Compensation Committee and the Board of Directors will monitor
performance under the FY2014-FY2016 and FY2015-FY2017 LTI plans to ensure there
are no unintended benefits or penalties to plan participants as a result of the
accounting changes.
Fiscal 2015 LTI Performance and
Payouts. For the FY2013-FY2015 LTI plan, we
used fiscal 2012 EPS as originally reported before the companys adoption of MTM
accounting for its defined benefit pension and other postretirement plans
($6.41) as the base-year number. The following table presents the aggregate EPS
threshold (minimum), target and maximum under our FY2013-FY2015 LTI plan, which
was established by the Board of Directors in 2012, and our adjusted aggregate
EPS under the plan for the three-year period ended May 31, 2015:
Performance Measure |
|
Threshold |
|
Target |
|
Maximum |
|
Actual |
FY2013-FY2015 Aggregate EPS |
|
$21.22 |
|
$24.45 |
|
$25.60 |
|
$19.83* |
* |
The actual aggregate
EPS consists of $4.91 for fiscal 2013, $6.68 for fiscal 2014 (which
excludes the $0.07 impact of the stock repurchase program as discussed
above) and $8.24 for fiscal 2015 (which excludes the $0.63 impact of the
stock repurchase program as discussed above). |
Based upon this below-threshold
performance, there were no payouts to the LTI plan participants, including the
named executive officers, under the FY2013-FY2015 LTI plan as illustrated by
the following table (compared to the threshold, target and maximum payout
opportunities):
Name |
Threshold LTI
Payout ($) |
|
Target LTI
Payout ($) |
|
Maximum LTI
Payout ($) |
|
Actual LTI
Payout ($) |
F.W. Smith |
1,000,000 |
|
4,000,000 |
|
6,000,000 |
|
0 |
A.B. Graf, Jr. |
300,000 |
|
1,200,000 |
|
1,800,000 |
|
0 |
D.J. Bronczek |
375,000 |
|
1,500,000 |
|
2,250,000 |
|
0 |
T.M. Glenn |
300,000 |
|
1,200,000 |
|
1,800,000 |
|
0 |
R.B. Carter |
300,000 |
|
1,200,000 |
|
1,800,000 |
|
0 |
LTI Payout
Opportunities. The Board of Directors has
established LTI plans for the three-fiscal-year periods 2014 through 2016 and
2015 through 2017, providing cash payment opportunities upon the conclusion of
fiscal 2016 and 2017, respectively, if certain EPS goals are achieved with
respect to those periods. The FY2014-FY2016 LTI plan uses fiscal 2013 EPS as
originally reported before the companys adoption of MTM accounting for its
defined benefit pension and other postretirement plans ($4.91) as the base-year
number. Typically, the base-year number over which the three-year average annual
EPS growth rate goals are measured for an LTI plan is the final full-year EPS of
the preceding fiscal year. For the FY2015-FY2017 LTI plan, however, the
base-year year number is $7.12, not fiscal 2014 EPS of $6.75 as originally
reported before the companys adoption of MTM accounting. The Board of
Directors, upon the recommendation of the
Compensation Committee, approved this increase in the base-year EPS in order to
exclude the impact of the companys stock repurchase program on a prospective
basis, thereby making subsequent stock repurchase program-related adjustments of
EPS in future years unnecessary for purposes of the FY2015-FY2017 LTI plan.
As described above, adjusted fiscal
2014 EPS of $6.68 and adjusted fiscal 2015 EPS of $8.24 (which excludes the
$0.63 impact of the stock repurchase program) are being used for purposes of the
FY2014-FY2016 LTI plan, and adjusted fiscal 2015 EPS of $8.87 is being used for
purposes of the FY2015-FY2017 LTI plan. The following table presents the
aggregate EPS thresholds, targets and maximums under the FY2014-FY2016 and
FY2015-FY2017 LTI plans and our progress toward these goals as of May 31,
2015:
Performance Period |
Aggregate EPS Threshold |
|
Aggregate EPS Target |
|
Aggregate EPS Maximum |
|
Actual Aggregate EPS as of May 31,
2015 |
FY2014-FY2016 |
$16.25 |
|
$18.72 |
|
$19.61 |
|
$14.92 |
|
|
|
|
|
|
|
(with one year remaining) |
FY2015-FY2017 |
$23.57 |
|
$27.16 |
|
$28.44 |
|
$8.87 |
|
|
|
|
|
|
|
(with two years remaining) |
32 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
The following table sets forth the
potential threshold, target and maximum payouts for the named executive officers
under these two plans:
|
|
|
|
Potential Future Payouts |
Name |
|
Performance Period |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
F.W. Smith |
|
FY2014-FY2016 |
|
1,000,000 |
|
4,000,000 |
|
6,000,000 |
|
|
FY2015-FY2017 |
|
1,000,000 |
|
4,000,000 |
|
6,000,000 |
A.B. Graf, Jr. |
|
FY2014-FY2016 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
FY2015-FY2017 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
D.J. Bronczek |
|
FY2014-FY2016 |
|
375,000 |
|
1,500,000 |
|
2,250,000 |
|
|
FY2015-FY2017 |
|
375,000 |
|
1,500,000 |
|
2,250,000 |
T.M. Glenn |
|
FY2014-FY2016 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
FY2015-FY2017 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
R.B. Carter |
|
FY2014-FY2016 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
FY2015-FY2017 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
Modified Base-Year EPS for the
FY2016-FY2018 LTI Plan and Exclusion of Future MTM Adjustments. The base-year EPS over which the three-year average annual EPS
growth rate goals will be measured for the FY2016-FY2018 LTI plan will be $8.87
(as discussed above).
Because the MTM Adjustment is not
reflective of core business performance, the Board of Directors, upon the recommendation of the Compensation
Committee, determined that the MTM Adjustment will be excluded from fiscal 2016
and fiscal 2017 EPS for purposes of the FY2014-FY2016 and FY2015-2017 LTI plans
and from EPS calculations under future LTI plans, beginning with the
FY2016-FY2018 LTI plan.
Long-Term Equity Incentives
Stock Options and Restricted Stock. Our
primary objective in providing long-term equity incentives to executive officers
is to further align their interests with those of our shareowners by
facilitating significant ownership of FedEx stock by the officers. This creates
a direct link between their compensation and long-term shareowner return.
Amount. Stock options and restricted stock are generally granted to executive
officers on an annual basis. As discussed above, an officers position and level
of responsibility are the primary factors that determine the number of options
and shares of restricted stock awarded to the officer in the annual grant. For
instance, all FedEx Corporation executive vice presidents receive the same
number of options and restricted shares in the annual grant.
The number of stock options and
restricted shares awarded at each management level can vary from year to year.
In determining how many options and shares of restricted stock should be awarded
at each level, the Compensation Committee may consider:
● |
Target TDC levels and referenced
survey data as discussed above, we include the total target value of all
equity-based awards (including tax reimbursement payments for restricted
stock awards) in our calculation of target TDC (using the same valuation
methodology used in the market survey data), and in evaluating the fiscal
2015 target TDC levels for our named executive officers, we referred to
multiple market reference points for comparable positions in the
referenced surveys; |
|
|
● |
The total number of shares then
available to be granted; and |
|
|
● |
Potential shareowner dilution. As
of August 3, 2015, the total number of shares underlying options and
shares of restricted stock outstanding or available for future grant under
our equity compensation plans represented 8.8% of the sum of shares
outstanding plus the shares underlying options outstanding or available
for future grant plus shares of restricted stock available for future
grant. |
Other factors that the Compensation
Committee may consider, especially with respect to special grants outside of the
annual-grant framework, include the promotion of an officer or the desire to
retain a valued executive or recognize a particular officers contributions.
None of these factors is given any particular weight and the specific factors
used may vary among individual executives.
Timing. In selecting dates for awarding equity-based compensation, we do not
consider, nor have we ever considered, the price of FedExs common stock or the
timing of the release of material, non-public information about the company.
Stock option and restricted stock awards are generally made to executive
officers on an annual basis according to a pre-established schedule.
When the Compensation Committee
approves a special grant outside of the annual-grant framework, such grants are
made at a regularly scheduled meeting and the grant date of the awards is the
approval date or the next business day, if the meeting does not fall on a
business day. If the grant is made in connection with the promotion of an
individual or the election of an officer, the grant date may be the effective
date of the individuals promotion or the officers election, if such effective
date is after the approval date.
Pricing. The exercise price of stock options granted under our equity incentive
plans is equal to the fair market value of FedExs common stock on the date of
grant. Under the terms of our equity incentive plans, the fair market value on
the grant date is defined as the average of the high and low trading prices of
FedExs stock on the New York Stock Exchange on that day. We believe this
methodology is the most equitable method for determining the exercise price of
our stock option awards given the intra-day price volatility often shown by our
stock.
2015 Proxy
Statement 33
Table of Contents
EXECUTIVE
COMPENSATION
Vesting. Stock options and restricted stock granted to executive officers
generally vest ratably over four years beginning on the first anniversary of the
grant date. This four-year vesting period is intended to further encourage the
retention of the executive officers, since unvested stock options are forfeited
upon termination of the officers employment for any reason other than death or
permanent disability and unvested restricted stock is forfeited upon termination
of the officers employment for any reason other than death, permanent
disability or retirement.
Tax Reimbursement Payments for
Restricted Stock Awards. As discussed
previously, FedEx pays the taxes resulting from a restricted stock award on
behalf of the recipient. This prevents the need
for the officer to sell a portion of a stock award to pay the corresponding tax
obligation and thus encourages and facilitates FedEx stock ownership by our
officers, thereby further aligning their interests with those of our
shareowners. The total target value of the award is the same as it would be if
there were no tax payments.
Voting and Dividend Rights on
Restricted Stock. Holders of restricted
shares are entitled to vote and receive any dividends on such shares. The
dividend rights are included in the computation of the value of the restricted
stock award for purposes of determining the recipients target TDC.
Fiscal 2015 Awards. On June 9, 2014, the named executive officers were granted
stock option and restricted stock awards as follows:
Name |
Number of Stock Options |
|
Number of Shares of Restricted Stock |
F.W. Smith |
159,485 |
|
0 |
A.B. Graf, Jr. |
19,270 |
|
3,985 |
D.J. Bronczek |
25,545 |
|
5,135 |
T.M. Glenn |
19,270 |
|
3,985 |
R.B. Carter |
19,270 |
|
3,985 |
As in previous years, at the request of
Mr. Smith and in light of his significant stock ownership, the Compensation
Committee did not award him any restricted stock. Instead, his equity awards
were in the form of stock options, which will yield value to him only if the
stock price increases from the date of grant.
The target value of stock options and
restricted stock awarded in fiscal 2015 to each named executive officer remained
substantially the same compared to the fiscal 2014 target value (although the
valuation methodology of stock options for accounting purposes and reporting in
the Summary Compensation Table may yield a higher value).
Perquisites, Tax Reimbursement
Payments and Other Annual Compensation.
FedExs named executive officers receive certain other annual compensation,
including:
● |
certain perquisites, such as
personal use of corporate aircraft (though officers are required to
reimburse FedEx for substantially all of the incremental cost to FedEx of
such usage), security services and equipment, tax return preparation and
financial counseling services, umbrella insurance, physical examinations,
travel privileges on certain airline partners, salary continuation
benefits for short-term disability and supplemental long-term disability
benefits; |
|
|
● |
group term life insurance and
401(k) company-matching contributions; and |
|
|
● |
tax reimbursement payments
relating to restricted stock awards (as discussed above) and certain
business-related use of corporate aircraft. |
We provide this other compensation to
enhance the competitiveness of our executive compensation program and to
increase the productivity (corporate aircraft travel, professional assistance
with tax return preparation and financial planning), safety (security services
and equipment) and health (annual physical
examinations) of our executives so they can focus on producing superior
financial returns for our shareowners. Our tax reimbursement payments relating
to restricted stock awards are a component of the total target value of the
restricted stock grant. As a result, the total target value of the award is the
same as it would be if there were no tax payments and there is no dilutive
effect on our shareowners equity interest in FedEx. The Compensation Committee
reviews and approves each of these elements of compensation, and all of the
independent directors approve each element as it relates to Mr. Smith. The
Committee also reviews and approves FedExs policies and procedures regarding
perquisites and other personal benefits and tax reimbursement payments,
including:
● |
FedExs written policy setting
forth guidelines and procedures regarding personal use of FedEx corporate
aircraft; and |
|
|
● |
FedExs executive security
procedures. |
FedExs executive security procedures,
which prescribe the level of personal security to be provided to the Chairman of
the Board, President and Chief Executive Officer and other executive officers,
are based on bona fide business-related security concerns and are an integral
part of FedExs overall risk management and security program. These procedures
have been assessed by an independent security consulting firm, and deemed
necessary and appropriate for the protection of the officers and their families
given the history of direct security threats against FedEx executives and the
likelihood of additional threats against the officers. The security services and
equipment provided to FedEx executive officers may be viewed as conveying
personal benefits to the executives and, as a result, their values must be
reported in the Summary Compensation Table.
34 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
With respect to Mr. Smith, consistent
with FedExs executive security procedures, the Board of Directors requires him
to use FedEx corporate aircraft for all travel, including personal travel. In
addition, FedEx provides certain physical and personal security services for Mr.
Smith, including on-site residential security at his primary residence. The
Board of Directors believes that Mr. Smiths personal safety and security are of
the utmost importance to FedEx and its shareowners and, therefore, the costs
associated with such security are appropriate and necessary business
expenses.
Post-Employment
Compensation. While none of FedExs named
executive officers has an employment agreement, they are entitled to receive
certain payments and benefits upon termination of employment or a change of
control of FedEx, including:
● |
Retirement benefits under FedExs
401(k) and pension plans, including a tax-qualified, defined contribution
401(k) retirement savings plan called the FedEx Corporation Retirement
Savings Plan, a tax-qualified, defined benefit pension plan called the
FedEx Corporation Employees Pension Plan, and a supplemental
non-tax-qualified plan called the FedEx Corporation Retirement Parity
Pension Plan which is designed to provide to the
executives the benefits that otherwise would be paid under the
tax-qualified pension plan but for certain limits under United States tax
laws; |
|
|
● |
Accelerated vesting of restricted
stock upon the executives retirement (at or after age 60), death or
permanent disability or a change of control of FedEx; |
|
|
● |
Accelerated vesting of stock
options upon the executives death or permanent disability or a change of
control of FedEx; and |
|
|
● |
Lump sum cash payments and
post-employment insurance coverage under their Management Retention
Agreements with FedEx (the MRAs) upon a qualifying termination of the
executive after a change of control of FedEx. The MRAs, as well as the
accelerated vesting of equity awards upon a change of control of FedEx,
are intended to secure the executives continued services in the event of
any threat or occurrence of a change of control, which further aligns
their interests with those of our shareowners when evaluating any such
potential transaction. |
The Compensation Committee approves and
recommends Board approval of all plans, agreements and arrangements that provide
for these payments and benefits.
Risks Arising from Compensation
Policies and Practices |
Management has conducted an in-depth
risk assessment of FedExs compensation policies and practices and concluded
they do not create risks that are reasonably likely to have a material adverse
effect on the company. The Compensation Committee has reviewed and concurred
with managements conclusion. The risk assessment process included, among other
things, a review of (i) all key incentive compensation plans to ensure that they
are aligned with our pay-for-performance philosophy and include performance metrics that meet and support
corporate goals, and (ii) the overall compensation mix to ensure an appropriate
balance between fixed and variable pay components and between short-term and
long-term incentives. The objective of the process was to identify any
compensation plans and practices that may encourage employees to take
unnecessary risks that could threaten the company. No such plans or practices
were identified.
Tax Deductibility of
Compensation |
Section 162(m) of the Internal Revenue
Code limits the income tax deduction by FedEx for compensation paid to the Chief
Executive Officer and the three other highest-paid executive officers (other
than the Chief Financial Officer) to $1,000,000 per year, unless the
compensation is qualified performance-based compensation or qualifies under
certain other exceptions.
● |
Mr. Smiths base salary is not
designed to meet the requirements of Section 162(m) and, therefore, is
subject to the $1,000,000 deductibility limit. |
|
|
● |
FedExs equity compensation plans
satisfy the requirements of Section 162(m) with respect to stock options,
but not with respect to restricted stock awards. Accordingly, compensation
recognized by the four highest-paid executive officers (excluding Mr.
Graf) in connection with stock options is fully deductible, but
compensation with respect to restricted stock awards is subject to the
$1,000,000 deductibility limit. |
|
|
● |
FedExs AIC and LTI plans do not
meet all of the conditions for qualification under Section 162(m).
Compensation received by the four highest-paid executive officers
(excluding Mr. Graf) under each of these plans is subject, therefore, to
the $1,000,000 deductibility limit. |
We do not require all of our
compensation programs to be fully deductible under Section 162(m) because doing
so would restrict our discretion and flexibility in designing competitive
compensation programs to promote varying corporate goals. We believe that our
Board of Directors should be free to make compensation decisions to further and
promote the best interests of our shareowners, rather than to qualify for
corporate tax deductions. In fiscal 2015, we incurred approximately $2.2 million
of additional tax expense as a result of the Section 162(m) deductibility limit
for compensation paid to the Chief Executive Officer and the three other
highest-paid executive officers (other than Mr. Graf).
2015 Proxy
Statement 35
Table of Contents
EXECUTIVE
COMPENSATION
Summary Compensation
Table
In this section we provide certain
tabular and narrative information regarding the compensation of our principal
executive and financial officers and our three other most highly compensated
executive officers for the fiscal year ended May 31, 2015, and for each of the
previous two fiscal years.
Name and Principal Position |
|
Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) (1) |
Option Awards ($) (1) |
Non-Equity Incentive
Plan Compensation ($) (2) |
Change in Pension Value
and Nonqualified Deferred Compensation Earnings ($) (3) |
All Other Compensation ($) (4) |
Total ($) |
Frederick W.
Smith |
|
2015 |
1,266,960 |
0 |
0 |
8,243,126 |
981,723 |
2,942,549 |
372,817 |
13,807,175 |
Chairman, President
and |
|
2014 |
1,266,960 |
0 |
0 |
6,710,435 |
5,754,713 |
|
419,869 |
14,151,977 |
Chief Executive
Officer |
|
2013 |
1,266,960 |
0 |
0 |
5,610,542 |
5,250,000 |
|
465,746 |
12,593,248 |
(Principal Executive
Officer) |
|
|
|
|
|
|
|
|
|
|
Alan B. Graf,
Jr. |
|
2015 |
902,784 |
0 |
572,027 |
995,987 |
505,581 |
2,202,335 |
613,814 |
5,792,528 |
Executive Vice
President |
|
2014 |
902,784 |
0 |
554,068 |
810,732 |
1,804,395 |
265,189 |
514,486 |
4,851,654 |
and Chief Financial
Officer |
|
2013 |
902,784 |
0 |
621,083 |
684,392 |
1,995,001 |
711,553 |
499,157 |
5,413,970 |
(Principal Financial
Officer) |
|
|
|
|
|
|
|
|
|
|
David J.
Bronczek |
|
2015 |
942,096 |
0 |
737,104 |
1,320,316 |
598,561 |
2,992,979 |
654,050 |
7,245,106 |
President and Chief
Executive |
|
2014 |
942,096 |
0 |
713,895 |
1,074,829 |
2,227,188 |
969,457 |
581,432 |
6,508,897 |
Officer FedEx Express |
|
2013 |
942,096 |
0 |
799,692 |
906,498 |
2,490,234 |
792,786 |
491,077 |
6,422,383 |
T. Michael
Glenn |
|
2015 |
833,364 |
0 |
572,027 |
995,987 |
442,141 |
3,038,492 |
562,120 |
6,444,131 |
Executive Vice
President, |
|
2014 |
833,364 |
0 |
554,068 |
810,732 |
1,770,066 |
738,829 |
532,819 |
5,239,878 |
Market Development
and |
|
2013 |
833,364 |
0 |
621,083 |
684,392 |
1,980,007 |
522,945 |
438,002 |
5,079,793 |
Corporate Communications |
|
|
|
|
|
|
|
|
|
|
Robert B.
Carter |
|
2015 |
762,960 |
0 |
572,027 |
995,987 |
395,793 |
730,363 |
522,364 |
3,979,494 |
Executive Vice
President, |
|
2014 |
762,960 |
0 |
554,068 |
810,732 |
1,770,479 |
477,874 |
558,190 |
4,934,303 |
FedEx Information
Services |
|
2013 |
762,960 |
0 |
621,083 |
684,392 |
1,989,519 |
282,935 |
409,256 |
4,750,145 |
and Chief Information
Officer |
|
|
|
|
|
|
|
|
|
|
(1) |
The amounts reported in these columns reflect the aggregate grant
date fair value of restricted stock and option awards granted to the named
executive officer during each year, computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718.
These amounts reflect our calculation of the value of these awards on the
grant date and do not necessarily correspond to the actual value that may
ultimately be realized by the officer. |
|
The fair value of restricted stock awards is equal to the fair
market value of FedExs common stock (the average of the high and low
prices of the stock on the New York Stock Exchange) on the date of grant
multiplied by the number of shares awarded. |
|
For accounting purposes, we use the Black-Scholes option
pricing model to calculate the grant date fair value of stock options.
Assumptions used in the calculation of the amounts in the Option Awards
column are included in note 10 to our audited consolidated financial
statements for the fiscal year ended May 31, 2015, included in our Annual
Report on Form 10-K for fiscal 2015. See the Grants of Plan-Based Awards
During Fiscal 2015 table for information regarding restricted stock and
option awards to the named executive officers during fiscal
2015. |
36 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
(2) |
Reflects cash payouts, if any, under FedExs fiscal 2015, 2014 and
2013 annual incentive compensation plans and FY13-15, FY12-FY14, and
FY11-FY13 long-term incentive plans, as follows (for further discussion of
the fiscal 2015 annual incentive compensation plan and the FY13-FY15
long-term incentive plan, see Compensation Discussion and Analysis
Compensation Elements and Fiscal 2015 Amounts Cash Payments Under Annual
Incentive Compensation Program and Cash Payments Under LTI Program
above): |
|
|
Name |
Year |
|
AIC Payout ($) |
|
LTI Payout ($) |
|
Total Non-Equity Incentive
Plan Compensation ($) |
F.W. Smith |
2015 |
|
981,723 |
|
0 |
|
981,723 |
|
2014 |
|
362,713 |
|
5,392,000 |
|
5,754,713 |
|
2013 |
|
0 |
|
5,250,000 |
|
5,250,000 |
A.B. Graf, Jr. |
2015 |
|
505,581 |
|
0 |
|
505,581 |
|
2014 |
|
186,795 |
|
1,617,600 |
|
1,804,395 |
|
2013 |
|
195,001 |
|
1,800,000 |
|
1,995,001 |
D.J. Bronczek |
2015 |
|
598,561 |
|
0 |
|
598,561 |
|
2014 |
|
205,188 |
|
2,022,000 |
|
2,227,188 |
|
2013 |
|
240,234 |
|
2,250,000 |
|
2,490,234 |
T.M. Glenn |
2015 |
|
442,141 |
|
0 |
|
442,141 |
|
2014 |
|
152,466 |
|
1,617,600 |
|
1,770,066 |
|
2013 |
|
180,007 |
|
1,800,000 |
|
1,980,007 |
R.B. Carter |
2015 |
|
395,793 |
|
0 |
|
395,793 |
|
2014 |
|
152,879 |
|
1,617,600 |
|
1,770,479 |
|
2013 |
|
189,519 |
|
1,800,000 |
|
1,989,519 |
(3) |
Reflects the actuarial increase in the present value of the named
executive officers benefits under the Pension Plan and the Parity Plan
(as each such term is defined under Fiscal 2015 Pension Benefits
Overview of Pension Plans). The present value of the pension benefits for
each named executive officer increased significantly in fiscal 2015
primarily due to a change in the assumed lump sum interest rate and the
mortality tables used for nonqualified pension benefits for financial
reporting purposes. These assumption changes had no impact on the actual
pension benefits payable under the Pension Plan and the Parity Plan. The
present value of the benefits under the Pension Plan and Parity Plan for
Mr. Smith decreased as follows: (a) between fiscal 2013 and 2014 -
$343,627; and (b) between fiscal 2012 and 2013 - $238,617. The amounts in
the table and this footnote were determined using assumptions (e.g., for
interest rates and mortality rates) consistent with those used in the
audited consolidated financial statements included in our annual report on
Form 10-K for the fiscal year ended May 31, 2015. See Fiscal 2015
Pension Benefits below. |
(4) |
Includes: |
|
|
|
● |
the aggregate incremental cost to
FedEx of providing perquisites and other personal
benefits; |
|
|
|
|
● |
group term life insurance
premiums paid by FedEx; |
|
|
|
|
● |
company-matching contributions
under FedExs tax-qualified, defined contribution 401(k) retirement
savings plan called the FedEx Corporation Retirement Savings Plan (the
401(k) Plan); and |
|
|
|
|
● |
tax reimbursement payments
relating to restricted stock awards and certain business-related use of
corporate aircraft. FedEx pays the taxes resulting from a restricted stock
award on behalf of the recipient to prevent the need for the officer to
sell a portion of a stock award to pay the corresponding tax obligation.
While SEC disclosure rules require that these payments be included with
tax reimbursement payments and reported as other compensation in the
Summary Compensation Table, we do not believe these payments are tax
gross-ups in the traditional sense, since their value is fully reflected
in the number of shares ultimately delivered to recipients. See
Compensation Discussion and Analysis Compensation Objectives and
Design-Related Features Restricted Stock Program
above. |
2015 Proxy
Statement 37
Table of Contents
EXECUTIVE
COMPENSATION
The following table shows the amounts
included for each such item:
Name |
|
Year |
|
Perquisites and Other Personal Benefits ($)
* |
|
Life Insurance Premiums ($) |
|
Company Contributions Under
401(k) Plan ($) |
|
Tax Reimbursement Payments ($) * |
|
Total ($) |
F.W. Smith |
|
2015 |
|
362,268 |
|
2,017 |
|
8,532 |
|
0 |
|
372,817 |
|
|
2014 |
|
410,075 |
|
1,836 |
|
7,958 |
|
0 |
|
419,869 |
|
|
2013 |
|
454,690 |
|
2,131 |
|
8,925 |
|
0 |
|
465,746 |
A.B. Graf, Jr. |
|
2015 |
|
167,477 |
|
3,060 |
|
9,100 |
|
434,177 |
|
613,814 |
|
|
2014 |
|
81,955 |
|
3,060 |
|
8,925 |
|
420,546 |
|
514,486 |
|
|
2013 |
|
133,409 |
|
2,934 |
|
6,583 |
|
356,231 |
|
499,157 |
D.J. Bronczek |
|
2015 |
|
82,167 |
|
3,060 |
|
9,350 |
|
559,473 |
|
654,050 |
|
|
2014 |
|
27,590 |
|
3,060 |
|
8,925 |
|
541,857 |
|
581,432 |
|
|
2013 |
|
22,877 |
|
2,934 |
|
6,591 |
|
458,675 |
|
491,077 |
T.M. Glenn |
|
2015 |
|
115,533 |
|
3,060 |
|
9,350 |
|
434,177 |
|
562,120 |
|
|
2014 |
|
87,763 |
|
3,060 |
|
8,925 |
|
433,071 |
|
532,819 |
|
|
2013 |
|
66,900 |
|
2,934 |
|
8,924 |
|
359,244 |
|
438,002 |
R.B. Carter |
|
2015 |
|
72,547 |
|
3,060 |
|
9,251 |
|
437,506 |
|
522,364 |
|
|
2014 |
|
112,249 |
|
3,060 |
|
8,925 |
|
433,956 |
|
558,190 |
|
|
2013 |
|
35,288 |
|
2,934 |
|
6,525 |
|
364,509 |
|
409,256 |
*See the following two tables for
additional details regarding the amounts included in each item.
During fiscal 2015, 2014 and 2013,
unless otherwise noted below, FedEx provided the following perquisites and other
personal benefits to the named executive officers:
● |
Personal use of corporate
aircraft: FedEx maintains a fleet
of corporate aircraft that is used primarily for business travel by FedEx
employees. FedEx has a written policy that sets forth guidelines and
procedures regarding personal use of FedEx corporate aircraft. The policy
requires officers to pay FedEx two times the cost of fuel for personal
trips, plus applicable passenger ticket taxes and fees. These payments are
intended to approximate the incremental cost to FedEx of personal
corporate aircraft usage. |
|
|
● |
Mr. Smith is not required to pay
FedEx for any travel on corporate aircraft by his family members or guests
when they are accompanying him and he is on business travel. Mr. Smith is
required to pay FedEx, however, for any personal travel by him and any
personal travel by his family members or guests when they are accompanying
him and he is on personal travel or when they are traveling without
him. |
|
|
● |
Compensation is included in the
table above for personal corporate aircraft travel (which for this purpose
includes travel to attend a board or stockholder meeting of an outside
company or organization for which the officer serves as a director or
trustee) by a named executive officer and his family members and guests to
the extent, if any, that the aggregate incremental cost to FedEx of all
such travel exceeds the amount the officer paid FedEx for such travel. The
incremental cost to FedEx of personal use of corporate aircraft is
calculated based on the variable operating cost to FedEx, which includes
the cost of fuel, aircraft maintenance, crew travel, landing fees, ramp
fees and other smaller variable costs. Because FedEx corporate aircraft
are used primarily for business travel, fixed costs that do not change
based on usage, such as pilots salaries and purchase and lease costs, are
excluded from this calculation. |
|
|
● |
In addition, when an aircraft is
already flying to a destination for business purposes and the officers or
their family members or guests ride along on the aircraft for personal
travel, there is no additional variable operating cost to FedEx associated
with the additional passengers, and thus no compensation is included in
the table above for such personal travel. With the exception of Mr. Smith,
the officer is still required to pay FedEx for such personal travel if
persons on business travel occupy less than 50% of the total available
seats on the aircraft. The amount of such payment is a pro rata portion
(based on the total number of passengers) of the fuel cost for the flight,
multiplied by two, plus applicable passenger ticket taxes and
fees. |
|
|
● |
For tax purposes, income is
imputed to each named executive officer for personal travel and
business-related travel (travel by the officers spouse or adult guest
who accompanies the officer on a business trip for the primary purpose of
assisting the officer with the business purpose of the trip) for the
excess, if any, of the Standard Industrial Fare Level (SIFL) value of all
such flights during a calendar year over the aggregate fuel payments made
by the officer during that calendar year. The Board of Directors and the
FedEx executive security procedures require Mr. Smith to use FedEx
corporate aircraft for all travel, including personal travel. Accordingly,
FedEx reimburses Mr. Smith for taxes relating to any imputed income for
his personal travel and the personal travel of his family members and
guests when they are accompanying him (no such reimbursement payments have
been made during the last three fiscal years). FedEx reimburses the other
named executive officers for taxes relating to imputed income for
business-related travel. |
|
|
● |
Security services and
equipment: Pursuant to FedExs executive security procedures, the
named executive officers are provided security services and equipment. To
the extent the services and equipment are provided by third parties (e.g.,
out-of-town transportation and other security-related expenses and home
security system installation, maintenance and monitoring), we have
included in the table above the amounts paid by FedEx for such services
and equipment. For Mr. Smith, these amounts totaled $38,484, $53,077 and
$70,948 for fiscal 2015, 2014 and 2013, respectively. To the extent the
security services are provided by FedEx employees, we have included
amounts representing: (a) the number of hours of service provided to the
officer by each such employee multiplied by (b) the total hourly
compensation cost of the employee (including, among other things, pension
|
38 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
|
and other benefit costs). For Mr.
Smith, these amounts totaled $232,198, $267,351 and $269,289 for fiscal
2015, 2014 and 2013, respectively. For additional information regarding
executive security services provided to Mr. Smith, see Compensation
Discussion and Analysis Compensation Elements and Fiscal 2015 Amounts
Perquisites, Tax Reimbursement Payments and Other Annual Compensation
above. |
|
|
● |
Tax return preparation
services: FedEx requires officers
to have their income tax returns prepared by a qualified third party
(other than our independent registered public accounting firm) and pays
all reasonable and customary costs for such services. |
|
|
● |
Financial counseling
services: FedEx reimburses officers
for certain financial counseling services, subject to various
caps. |
|
|
● |
Umbrella insurance
premiums: FedEx pays umbrella
insurance premiums on behalf of officers. |
|
|
● |
Physical
examinations: FedEx pays for
officers to have comprehensive annual physical
examinations. |
|
|
● |
Travel
Privileges: FedEx provides certain
executive officers and their spouses with travel privileges on certain
airline partners. There is a small per-trip ticketing fee incurred by
FedEx in connection with these privileges. |
|
|
● |
Supplemental Disability
Benefits: FedEx provides executive
officers with salary continuation benefits for short-term disability (100%
of base salary for 28 weeks) and supplemental long-term disability
benefits. Both benefit programs are self-funded (i.e., no premiums are
paid to a third-party insurer) and thus there is no incremental cost to
FedEx to provide these benefit programs. |
The following table shows the amounts
included in the table (the aggregate incremental cost to FedEx) for each such
item:
Name |
|
Year |
|
Personal Use of Corporate Aircraft ($)
(a) |
|
Security Services and Equipment ($) |
|
Tax Return Preparation Services ($) |
|
Financial Counseling Services ($) |
|
Umbrella Insurance Premiums ($) |
|
Other ($) (b) |
|
Total ($) |
F.W. Smith |
|
2015 |
|
0 |
|
270,682 |
|
38,979 |
|
50,000 |
|
2,607 |
|
0 |
|
362,268 |
|
|
2014 |
|
0 |
|
320,428 |
|
37,353 |
|
50,000 |
|
2,294 |
|
0 |
|
410,075 |
|
|
2013 |
|
0 |
|
340,237 |
|
62,972 |
|
49,187 |
|
2,294 |
|
0 |
|
454,690 |
A.B. Graf, Jr. |
|
2015 |
|
71,990 |
|
71,055 |
|
10,514 |
|
11,311 |
|
2,607 |
|
0 |
|
167,477 |
|
|
2014 |
|
59,530 |
|
12,640 |
|
0 |
|
7,491 |
|
2,294 |
|
0 |
|
81,955 |
|
|
2013 |
|
74,982 |
|
23,820 |
|
8,355 |
|
23,114 |
|
2,294 |
|
844 |
|
133,409 |
D.J. Bronczek |
|
2015 |
|
23,255 |
|
9,814 |
|
14,200 |
|
32,051 |
|
2,607 |
|
240 |
|
82,167 |
|
|
2014 |
|
0 |
|
4,415 |
|
0 |
|
20,449 |
|
2,294 |
|
432 |
|
27,590 |
|
|
2013 |
|
0 |
|
13,291 |
|
7,100 |
|
0 |
|
2,294 |
|
192 |
|
22,877 |
T.M. Glenn |
|
2015 |
|
0 |
|
92,195 |
|
16,354 |
|
3,484 |
|
2,607 |
|
893 |
|
115,533 |
|
|
2014 |
|
16,177 |
|
40,544 |
|
16,800 |
|
6,900 |
|
2,294 |
|
5,048 |
|
87,763 |
|
|
2013 |
|
16,831 |
|
46,264 |
|
0 |
|
700 |
|
2,294 |
|
811 |
|
66,900 |
R.B. Carter |
|
2015 |
|
0 |
|
38,836 |
|
2,850 |
|
28,182 |
|
2,607 |
|
72 |
|
72,547 |
|
|
2014 |
|
5,249 |
|
85,411 |
|
0 |
|
19,175 |
|
2,294 |
|
120 |
|
112,249 |
|
|
2013 |
|
1,956 |
|
15,562 |
|
5,700 |
|
7,500 |
|
2,294 |
|
2,276 |
|
35,288 |
(a) |
The amounts shown include the following amounts for use of
corporate aircraft to attend board or stockholder meetings of outside
companies or organizations for which the officers serve as directors:
fiscal 2013: Mr. Graf $72,711. The entire amounts shown for Mr. Graf for
fiscal 2015 and 2014, and Messrs. Carter and Glenn for fiscal 2014 and
2013, represent use of corporate aircraft to attend board or stockholder
meetings of outside companies or organizations for which the officers
serve as directors. |
(b) |
For fiscal 2015, 2014 and 2013,
includes physical examinations and/or ticketing fees for airline travel
privileges. |
2015 Proxy
Statement 39
Table of Contents
EXECUTIVE
COMPENSATION
The following table shows the tax
reimbursement payments relating to the items listed, which are included in the
table:
Name |
|
Year |
|
Restricted Stock ($) |
|
Business- Related Use
of Corporate Aircraft ($) |
|
Total ($) |
F.W. Smith |
|
2015 |
|
0 |
|
0 |
|
0 |
|
|
2014 |
|
0 |
|
0 |
|
0 |
|
|
2013 |
|
0 |
|
0 |
|
0 |
A.B. Graf, Jr. |
|
2015 |
|
434,177 |
|
0 |
|
434,177 |
|
|
2014 |
|
420,546 |
|
0 |
|
420,546 |
|
|
2013 |
|
356,231 |
|
0 |
|
356,231 |
D.J. Bronczek |
|
2015 |
|
559,473 |
|
0 |
|
559,473 |
|
|
2014 |
|
541,857 |
|
0 |
|
541,857 |
|
|
2013 |
|
458,675 |
|
0 |
|
458,675 |
T.M. Glenn |
|
2015 |
|
434,177 |
|
0 |
|
434,177 |
|
|
2014 |
|
420,546 |
|
12,525 |
|
433,071 |
|
|
2013 |
|
356,231 |
|
3,013 |
|
359,244 |
R.B. Carter |
|
2015 |
|
434,177 |
|
3,329 |
|
437,506 |
|
|
2014 |
|
420,546 |
|
13,410 |
|
433,956 |
|
|
2013 |
|
356,231 |
|
8,278 |
|
364,509 |
40 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
Grants of Plan-Based Awards During
Fiscal 2015
The following table sets forth
information regarding grants of plan-based awards made to the named executive
officers during the fiscal year ended May 31, 2015:
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards |
|
All-Other Stock Awards: Number of Shares
of Stock or
Units (#) |
|
All Other Option Awards: Number of Securities Underlying Options (#) |
|
Exercise or Base Price
of Option Awards ($/Sh) (1) |
|
Closing Price
on Grant Date ($/Sh) |
|
Grant Date Fair Value
of Stock
and Option Awards ($)
(2) |
Name |
|
Type
of Plan/Award |
|
Grant Date |
|
Approval Date |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
|
|
|
|
F.W.
Smith |
|
Stock Option (3) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
|
|
159,485 |
|
143.545 |
|
143.65 |
|
8,243,126 |
|
|
FY15 AIC
(4) |
|
|
|
|
|
0 |
|
1,647,048 |
|
3,294,096 |
|
|
|
|
|
|
|
|
|
|
|
|
FY15-FY17 LTI
(5) |
|
|
|
|
|
1,000,000 |
|
4,000,000 |
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
A.B. Graf,
Jr. |
|
Restricted Stock
(6) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
3,985 |
|
|
|
|
|
|
|
572,027 |
|
|
Stock Option (3) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
|
|
19,270 |
|
143.545 |
|
143.65 |
|
995,987 |
|
|
FY15 AIC
(4) |
|
|
|
|
|
0 |
|
812,506 |
|
1,625,012 |
|
|
|
|
|
|
|
|
|
|
|
|
FY15-FY17 LTI
(5) |
|
|
|
|
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
|
|
|
|
|
|
|
|
D.J.
Bronczek |
|
Restricted Stock
(6) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
5,135 |
|
|
|
|
|
|
|
737,104 |
|
|
Stock Option (3) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
|
|
25,545 |
|
143.545 |
|
143.65 |
|
1,320,316 |
|
|
FY15 AIC
(4) |
|
|
|
|
|
0 |
|
942,096 |
|
1,884,192 |
|
|
|
|
|
|
|
|
|
|
|
|
FY15-FY17 LTI
(5) |
|
|
|
|
|
375,000 |
|
1,500,000 |
|
2,250,000 |
|
|
|
|
|
|
|
|
|
|
T.M.
Glenn |
|
Restricted Stock
(6) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
3,985 |
|
|
|
|
|
|
|
572,027 |
|
|
Stock Option (3) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
|
|
19,270 |
|
143.545 |
|
143.65 |
|
995,987 |
|
|
FY15 AIC
(4) |
|
|
|
|
|
0 |
|
750,028 |
|
1,500,056 |
|
|
|
|
|
|
|
|
|
|
|
|
FY15-FY17 LTI
(5) |
|
|
|
|
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
|
|
|
|
|
|
|
|
R.B.
Carter |
|
Restricted Stock
(6) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
3,985 |
|
|
|
|
|
|
|
572,027 |
|
|
Stock Option (3) |
|
06/09/2014 |
|
06/08/2014 |
|
|
|
|
|
|
|
|
|
19,270 |
|
143.545 |
|
143.65 |
|
995,987 |
|
|
FY15 AIC
(4) |
|
|
|
|
|
0 |
|
686,664 |
|
1,373,328 |
|
|
|
|
|
|
|
|
|
|
|
|
FY15-FY17 LTI
(5) |
|
|
|
|
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
|
|
|
|
|
|
|
|
(1) |
The exercise price of the options is the fair market value of
FedExs common stock (the average of the high and low prices of the stock
on the New York Stock Exchange) on the grant date. |
|
(2) |
Represents the grant date fair
value of each equity-based award, computed in accordance with FASB ASC
Topic 718. See note 1 to the Summary Compensation Table for information
regarding the assumptions used in the calculation of these
amounts. |
|
(3) |
Stock options granted to the
named executive officers generally vest ratably over four years beginning
on the first anniversary of the grant date. The options may not be
transferred in any manner other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the optionee only
by the optionee. See Compensation Discussion and Analysis
Compensation Elements and Fiscal 2015 Amounts Long-Term Equity
Incentives Stock Options and Restricted Stock above for further
discussion of stock option awards. |
|
(4) |
In July 2014, the Board of
Directors, upon the recommendation of the Compensation Committee,
established this annual performance cash compensation plan, which provided
a cash payment opportunity to the named executive officers at the
conclusion of fiscal 2015. Payment amounts were based upon the achievement
of company financial performance goals for fiscal 2015 and the achievement
of individual objectives established at the beginning of fiscal 2015 for
each officer other than Messrs. Smith and Bronczek. See Compensation
Discussion and Analysis Compensation Elements and Fiscal 2015 Amounts
Cash Payments Under Annual Incentive Compensation Program above for
further discussion of this plan, including actual payment
amounts. |
|
(5) |
The Board of Directors, upon the
recommendation of the Compensation Committee, established this long-term
performance cash compensation plan in June 2014. The plan provides a
long-term cash payment opportunity to the named executive officers at the
conclusion of fiscal 2017 if FedEx achieves an aggregate
earnings-per-share goal established by the Board with respect to the
three-fiscal-year period 2015 through 2017. No amounts can be earned
under the plan until 2017 because achievement of the earnings-per-share
goal can only be determined following the conclusion of the
three-fiscal-year period. The estimated individual future payouts under
the plan are set dollar amounts ranging from threshold (minimum) amounts,
if the earnings-per-share goal achieved is less than target, up to maximum
amounts, if the plan goal is substantially exceeded. There is no assurance
that these estimated future payouts will be achieved. See Compensation
Discussion and Analysis Compensation Elements and Fiscal 2015 Amounts
Cash Payments Under LTI Program above for further discussion of this
plan. |
|
(6) |
Shares of restricted stock
awarded to the named executive officers generally vest ratably over four
years beginning on the first anniversary of the grant date. Holders of
restricted shares are entitled to vote such shares and receive any
dividends paid on FedEx common stock. FedEx pays the taxes resulting from
a restricted stock award on behalf of the recipient (these tax
reimbursement payments are included in the All Other Compensation column
in the Summary Compensation Table). See Compensation Discussion and
Analysis Compensation Elements and Fiscal 2015 Amounts Long-Term
Equity Incentives Stock Options and Restricted Stock above for further
discussion of restricted stock awards. |
2015 Proxy
Statement 41
Table of Contents
EXECUTIVE
COMPENSATION
Outstanding Equity Awards at End of
Fiscal 2015
The following table sets forth for each
named executive officer certain information about unexercised stock options and
unvested shares of restricted stock held at the end of the fiscal year ended May
31, 2015:
|
|
Option Awards |
|
Stock
Awards |
|
|
Number of
Securities Underlying Unexercised Options (#) |
|
Number of
Securities Underlying Unexercised Options (#) |
|
|
Option Exercise Price ($) |
|
Option Expiration Date |
|
Number of Shares or Units
of Stock That
Have Not
Vested (#) (a) |
|
|
Market Value
of Shares or Units
of Stock That
Have Not
Vested ($)
(b) |
Name |
|
Exercisable |
|
Unexercisable
(a) |
|
|
|
|
|
|
F.W.
Smith |
|
200,000 |
|
|
|
|
110.0600 |
|
06/01/2016 |
|
|
|
|
|
|
|
175,000 |
|
|
|
|
114.7400 |
|
07/09/2017 |
|
|
|
|
|
|
|
204,150 |
|
|
|
|
90.8100 |
|
06/02/2018 |
|
|
|
|
|
|
|
271,750 |
|
|
|
|
56.3100 |
|
06/08/2019 |
|
|
|
|
|
|
|
195,500 |
|
|
|
|
78.1900 |
|
06/07/2020 |
|
|
|
|
|
|
|
132,075 |
|
44,025 |
(1) |
|
89.1050 |
|
06/06/2021 |
|
|
|
|
|
|
|
99,337 |
|
99,338 |
(2) |
|
85.2550 |
|
06/04/2022 |
|
|
|
|
|
|
|
50,945 |
|
152,835 |
(3) |
|
96.8650 |
|
06/03/2023 |
|
|
|
|
|
|
|
|
|
159,485 |
(4) |
|
143.5450 |
|
06/09/2024 |
|
|
|
|
|
A.B. Graf,
Jr. |
|
33,155 |
|
|
|
|
110.0600 |
|
06/01/2016 |
|
|
|
|
|
|
|
20,655 |
|
|
|
|
114.7400 |
|
07/09/2017 |
|
|
|
|
|
|
|
5,000 |
|
|
|
|
84.6550 |
|
01/14/2018 |
|
|
|
|
|
|
|
24,100 |
|
|
|
|
90.8100 |
|
06/02/2018 |
|
|
|
|
|
|
|
34,580 |
|
|
|
|
56.3100 |
|
06/08/2019 |
|
|
|
|
|
|
|
23,100 |
|
|
|
|
78.1900 |
|
06/07/2020 |
|
|
|
|
|
|
|
16,110 |
|
5,370 |
(5) |
|
89.1050 |
|
06/06/2021 |
|
|
|
|
|
|
|
12,117 |
|
12,118 |
(6) |
|
85.2550 |
|
06/04/2022 |
|
|
|
|
|
|
|
6,155 |
|
18,465 |
(7) |
|
96.8650 |
|
06/03/2023 |
|
|
|
|
|
|
|
|
|
19,270 |
(8) |
|
143.5450 |
|
06/09/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,668 |
(9) |
|
2,367,571 |
D.J.
Bronczek |
|
27,540 |
|
|
|
|
110.0600 |
|
06/01/2016 |
|
|
|
|
|
|
|
27,540 |
|
|
|
|
114.7400 |
|
07/09/2017 |
|
|
|
|
|
|
|
32,130 |
|
|
|
|
90.8100 |
|
06/02/2018 |
|
|
|
|
|
|
|
46,555 |
|
|
|
|
56.3100 |
|
06/08/2019 |
|
|
|
|
|
|
|
30,775 |
|
|
|
|
78.1900 |
|
06/07/2020 |
|
|
|
|
|
|
|
21,337 |
|
7,113 |
(10) |
|
89.1050 |
|
06/06/2021 |
|
|
|
|
|
|
|
16,050 |
|
16,050 |
(11) |
|
85.2550 |
|
06/04/2022 |
|
|
|
|
|
|
|
8,160 |
|
24,480 |
(12) |
|
96.8650 |
|
06/03/2023 |
|
|
|
|
|
|
|
|
|
25,545 |
(13) |
|
143.5450 |
|
06/09/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,606 |
(14) |
|
3,049,711 |
T.M. Glenn |
|
20,655 |
|
|
|
|
110.0600 |
|
06/01/2016 |
|
|
|
|
|
|
|
20,655 |
|
|
|
|
114.7400 |
|
07/09/2017 |
|
|
|
|
|
|
|
5,000 |
|
|
|
|
103.3500 |
|
09/24/2017 |
|
|
|
|
|
|
|
24,100 |
|
|
|
|
90.8100 |
|
06/02/2018 |
|
|
|
|
|
|
|
34,580 |
|
|
|
|
56.3100 |
|
06/08/2019 |
|
|
|
|
|
|
|
23,100 |
|
|
|
|
78.1900 |
|
06/07/2020 |
|
|
|
|
|
|
|
16,110 |
|
5,370 |
(15) |
|
89.1050 |
|
06/06/2021 |
|
|
|
|
|
|
|
12,117 |
|
12,118 |
(16) |
|
85.2550 |
|
06/04/2022 |
|
|
|
|
|
|
|
6,155 |
|
18,465 |
(17) |
|
96.8650 |
|
06/03/2023 |
|
|
|
|
|
|
|
|
|
19,270 |
(18) |
|
143.5450 |
|
06/09/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,668 |
(19) |
|
2,367,571 |
R.B.
Carter |
|
20,655 |
|
|
|
|
110.0600 |
|
06/01/2016 |
|
|
|
|
|
|
|
20,655 |
|
|
|
|
114.7400 |
|
07/09/2017 |
|
|
|
|
|
|
|
5,000 |
|
|
|
|
103.3500 |
|
09/24/2017 |
|
|
|
|
|
|
|
24,100 |
|
|
|
|
90.8100 |
|
06/02/2018 |
|
|
|
|
|
42 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
|
|
Option Awards |
|
Stock
Awards |
|
|
Number of
Securities Underlying Unexercised Options (#) |
|
Number of
Securities Underlying Unexercised Options (#) |
|
|
Option Exercise Price ($) |
|
Option Expiration Date |
|
Number of Shares or Units
of Stock That
Have Not
Vested (#) (a) |
|
|
Market Value
of Shares or Units
of Stock That
Have Not
Vested ($)
(b) |
Name |
|
Exercisable |
|
Unexercisable
(a) |
|
|
|
|
|
|
R.B. Carter |
|
34,580 |
|
|
|
|
56.3100 |
|
06/08/2019 |
|
|
|
|
|
|
|
23,100 |
|
|
|
|
78.1900 |
|
06/07/2020 |
|
|
|
|
|
|
|
16,110 |
|
5,370 |
(20) |
|
89.1050 |
|
06/06/2021 |
|
|
|
|
|
|
|
12,117 |
|
12,118 |
(21) |
|
85.2550 |
|
06/04/2022 |
|
|
|
|
|
|
|
6,155 |
|
18,465 |
(22) |
|
96.8650 |
|
06/03/2023 |
|
|
|
|
|
|
|
|
|
19,270 |
(23) |
|
143.5450 |
|
06/09/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,668 |
(24) |
|
2,367,571 |
(a) The following table sets forth the
vesting dates of the options and restricted stock included in these
columns:
|
|
Date |
Number |
|
|
|
Date |
Number |
F.W. Smith |
(1) |
06/06/2015 |
44,025 |
|
A.B. Graf, Jr. |
(5) |
06/06/2015 |
5,370 |
|
(2) |
06/04/2015 |
49,669 |
|
|
(6) |
06/04/2015 |
6,059 |
|
|
06/04/2016 |
49,669 |
|
|
|
06/04/2016 |
6,059 |
|
(3) |
06/03/2015 |
50,945 |
|
|
(7) |
06/03/2015 |
6,155 |
|
|
06/03/2016 |
50,945 |
|
|
|
06/03/2016 |
6,155 |
|
|
06/03/2017 |
50,945 |
|
|
|
06/03/2017 |
6,155 |
|
(4) |
06/09/2015 |
39,871 |
|
|
(8) |
06/09/2015 |
4,817 |
|
|
06/09/2016 |
39,871 |
|
|
|
06/09/2016 |
4,818 |
|
|
06/09/2017 |
39,871 |
|
|
|
06/09/2017 |
4,817 |
|
|
06/09/2018 |
39,872 |
|
|
|
06/09/2018 |
4,818 |
|
|
|
|
|
|
(9) |
06/03/2015 |
1,430 |
|
|
|
|
|
|
|
06/04/2015 |
1,821 |
|
|
|
|
|
|
|
06/06/2015 |
1,750 |
|
|
|
|
|
|
|
06/09/2015 |
996 |
|
|
|
|
|
|
|
06/03/2016 |
1,430 |
|
|
|
|
|
|
|
06/04/2016 |
1,822 |
|
|
|
|
|
|
|
06/09/2016 |
996 |
|
|
|
|
|
|
|
06/03/2017 |
1,430 |
|
|
|
|
|
|
|
06/09/2017 |
996 |
|
|
|
|
|
|
|
06/09/2018 |
997 |
D.J. Bronczek |
(10) |
06/06/2015 |
7,113 |
|
T. M. Glenn |
(15) |
06/06/2015 |
5,370 |
|
(11) |
06/04/2015 |
8,025 |
|
|
(16) |
06/04/2015 |
6,059 |
|
|
06/04/2016 |
8,025 |
|
|
|
06/04/2016 |
6,059 |
|
(12) |
06/03/2015 |
8,160 |
|
|
(17) |
06/03/2015 |
6,155 |
|
|
06/03/2016 |
8,160 |
|
|
|
06/03/2016 |
6,155 |
|
|
06/03/2017 |
8,160 |
|
|
|
06/03/2017 |
6,155 |
|
(13) |
06/09/2015 |
6,386 |
|
|
(18) |
06/09/2015 |
4,817 |
|
|
06/09/2016 |
6,386 |
|
|
|
06/09/2016 |
4,818 |
|
|
06/09/2017 |
6,386 |
|
|
|
06/09/2017 |
4,817 |
|
|
06/09/2018 |
6,387 |
|
|
|
06/09/2018 |
4,818 |
|
(14) |
06/03/2015 |
1,843 |
|
|
(19) |
06/03/2015 |
1,430 |
|
|
06/04/2015 |
2,345 |
|
|
|
06/04/2015 |
1,821 |
|
|
06/06/2015 |
2,253 |
|
|
|
06/06/2015 |
1,750 |
|
|
06/09/2015 |
1,283 |
|
|
|
06/09/2015 |
996 |
|
|
06/03/2016 |
1,842 |
|
|
|
06/03/2016 |
1,430 |
|
|
06/04/2016 |
2,345 |
|
|
|
06/04/2016 |
1,822 |
|
|
06/09/2016 |
1,284 |
|
|
|
06/09/2016 |
996 |
|
|
06/03/2017 |
1,843 |
|
|
|
06/03/2017 |
1,430 |
|
|
06/09/2017 |
1,284 |
|
|
|
06/09/2017 |
996 |
|
|
06/09/2018 |
1,284 |
|
|
|
06/09/2018 |
997 |
2015 Proxy
Statement 43
Table of Contents
EXECUTIVE
COMPENSATION
|
|
Date |
Number |
R.B. Carter |
(20) |
06/06/2015 |
5,370 |
|
(21) |
06/04/2015 |
6,059 |
|
|
06/04/2016 |
6,059 |
|
(22) |
06/03/2015 |
6,155 |
|
|
06/03/2016 |
6,155 |
|
|
06/03/2017 |
6,155 |
|
(23) |
06/09/2015 |
4,817 |
|
|
06/09/2016 |
4,818 |
|
|
06/09/2017 |
4,817 |
|
|
06/09/2018 |
4,818 |
|
(24) |
06/03/2015 |
1,430 |
|
|
06/04/2015 |
1,821 |
|
|
06/06/2015 |
1,750 |
|
|
06/09/2015 |
996 |
|
|
06/03/2016 |
1,430 |
|
|
06/04/2016 |
1,822 |
|
|
06/09/2016 |
996 |
|
|
06/03/2017 |
1,430 |
|
|
06/09/2017 |
996 |
|
|
06/09/2018 |
997 |
(b)Computed by multiplying the closing
market price of FedExs common stock on May 29, 2015 (which was $173.22) by the
number of shares.
Option Exercises and Stock Vested
During Fiscal 2015
The following table sets forth for each
named executive officer certain information about stock options that were
exercised and restricted stock that vested during the fiscal year ended May 31,
2015:
|
Option Awards |
|
Stock
Awards |
Name |
Number
of Shares Acquired on Exercise (#) |
|
Value
Realized on
Exercise ($) (1) |
|
Number
of Shares Acquired on Vesting (#) |
|
Value Realized on
Vesting ($) (2) |
F.W. Smith |
250,000 |
|
20,849,328 |
|
0 |
|
0 |
A.B. Graf, Jr. |
34,425 |
|
2,801,949 |
|
7,001 |
|
1,000,953 |
D.J. Bronczek |
45,900 |
|
3,376,354 |
|
9,011 |
|
1,288,329 |
T.M. Glenn |
34,425 |
|
2,387,645 |
|
7,001 |
|
1,000,953 |
R.B. Carter |
14,508 |
|
1,077,896 |
|
7,001 |
|
1,000,953 |
(1) |
If the shares were sold immediately upon exercise, the value
realized on exercise of the option is the difference between the actual
sales price and the exercise price of the option. Otherwise, the value
realized is the difference between the fair market value of FedExs common
stock (the average of the high and low prices of the stock on the New York
Stock Exchange) on the date of exercise and the exercise price of the
option. |
|
(2) |
Represents the fair market value
of the shares on the vesting date. |
44 2015 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
Fiscal 2015 Pension
Benefits
The following table sets forth for each
named executive officer the present value of accumulated benefits at May 31,
2015, under FedExs defined benefit pension plans. For information regarding
benefits triggered by retirement under our stock option and restricted stock
plans, see Potential Payments Upon Termination or Change of Control
below.
Name |
Plan Name |
Number of
Years Credited Service (#) |
Present Value of Accumulated Benefit ($)
(1) |
Payments During Fiscal 2015 ($) |
F.W. Smith |
FedEx Corporation
Employees Pension Plan |
43 |
1,494,927 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
43 |
26,442,822 |
0 |
A.B. Graf, Jr. |
FedEx Corporation
Employees Pension Plan |
35 |
1,700,821 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
35 |
14,028,191 |
0 |
D.J. Bronczek |
FedEx Corporation
Employees Pension Plan |
39 |
1,854,115 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
39 |
18,159,258 |
0 |
T.M. Glenn |
FedEx Corporation
Employees Pension Plan |
34 |
1,738,204 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
34 |
13,217,346 |
0 |
R.B. Carter |
FedEx Corporation
Employees Pension Plan |
22 |
1,008,778 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
22 |
5,681,567 |
0 |
(1) |
These amounts were determined using assumptions (e.g., for interest
rates and mortality rates) consistent with those used in the audited
consolidated financial statements included in our annual report on Form
10-K for the fiscal year ended May 31, 2015. The benefits are expressed as
lump sum amounts, even though the benefits using the traditional pension
benefit formula under the Pension Plan (as defined below) are generally
not payable as a lump sum distribution (only $1,000 or less may be
distributed as a lump sum under the Pension Plan). The benefits using the
Portable Pension Account formula under the Pension Plan may be paid as a
lump sum. |
|
|
The present value of the Pension
Plan traditional pension benefit is equal to the single life annuity
payable at the normal retirement date (age 60), or June 1, 2015, if the
officer is past normal retirement age, converted based on an interest rate
of 4.416% and the RP2014 mortality table with the MP2014 generational
mortality improvement scale (as adjusted for purposes of the Pension Plan
and Parity Plan (as defined below)) discounted to May 31, 2015, using an
interest rate of 4.416%. The present value of the Parity Plan traditional
pension benefit is equal to the single life annuity payable at the normal
retirement age, or June 1, 2015, if the officer is past normal retirement
age, converted based on an interest rate of 3% for lump sums paid through
May 31, 2016, 4% for lump sums paid between June 1, 2016 and May 31, 2017,
and 4.5% for lump sums paid on and after June 1, 2017, and the 1994 Group
Annuity Reserving Table and discounted to May 31, 2015, using an interest
rate of 4.416%. The present value of the Portable Pension Account
(discussed below) is equal to the officers account balance at May 31,
2015, projected to the normal retirement date, if applicable, based on an
interest rate of 4% (compounded quarterly) and discounted to May 31, 2015,
using an interest rate of 4.416%. |
Overview of
Pension Plans |
FedEx maintains a tax-qualified,
defined benefit pension plan called the FedEx Corporation Employees Pension
Plan (the Pension Plan). For fiscal 2015, the maximum compensation limit under
a tax-qualified pension plan was $260,000. The Internal Revenue Code also limits
the maximum annual benefits that may be accrued under a tax-qualified, defined
benefit pension plan. In order to provide 100% of the benefits that would
otherwise be denied certain management-level participants in the Pension Plan
due to these limitations, FedEx also maintains a supplemental, non-tax-qualified
plan called the FedEx Corporation Retirement Parity Pension Plan (the Parity
Plan). Benefits under the Parity Plan are general, unsecured obligations of
FedEx.
Effective May 31, 2003, FedEx amended
the Pension Plan and the Parity Plan to add a cash balance feature, which is
called the Portable Pension Account. Eligible employees as of May 31, 2003, had
the option to make a one-time election to accrue future pension benefits under
either the cash balance formula or the traditional pension benefit
formula. In either case, employees retained all benefits previously accrued
under the traditional pension benefit formula and continued to receive the
benefit of future compensation increases on benefits accrued as of May 31, 2003.
Eligible employees hired after May 31, 2003, accrue benefits exclusively under
the Portable Pension Account.
Beginning June 1, 2008, eligible
employees who participate in the Pension Plan and the Parity Plan, including the
named executive officers, accrue all future pension benefits under the Portable
Pension Account. In addition, benefits previously accrued under the Pension Plan
and the Parity Plan using the traditional pension benefit formula were capped as
of May 31, 2008, and those benefits will be payable beginning at retirement.
Effective June 1, 2008, each participant in the Pension Plan and the Parity Plan
who was age 40 or older on that date and who has an accrued traditional pension
benefit will receive a transition compensation credit, as described in
2015 Proxy
Statement 45
Table of Contents
EXECUTIVE
COMPENSATION
more detail below. Employees who
elected in 2003 to accrue future benefits under the Portable Pension Account
will continue to accrue benefits under that formula.
The named executive officers also
participate in the 401(k) Plan. The annual matching company contribution under
the 401(k) Plan is a maximum of 3.5% of eligible earnings.
In order to provide 100% of the
benefits that would otherwise be limited due to certain limitations imposed by
United States tax laws, Parity Plan participants, including the named
executive officers, receive additional Portable
Pension Account compensation credits equal to 3.5% of any eligible earnings
above the maximum compensation limit for tax-qualified plans.
Normal retirement age for the majority
of participants, including the named executive officers, under the Pension Plan
and the Parity Plan is age 60. The traditional pension benefit under the Pension
Plan for a participant who retires between the ages of 55 and 60 will be reduced
by 3% for each year the participant receives his or her benefit prior to age
60.
Traditional
Pension Benefit |
Under the traditional pension benefit
formula, the Pension Plan and the Parity Plan provide 2% of the average of the
five calendar years (three calendar years for the Parity Plan) of highest
earnings during employment multiplied by years of credited service for benefit
accrual up to 25 years. Eligible compensation for the traditional pension
benefit under the Pension Plan and the Parity Plan for the named executive
officers includes salary and annual incentive compensation.
A named executive officers capped
accrued traditional pension benefit was calculated using his years of credited
service as of either May 31, 2003 or May 31, 2008, depending on whether he chose
to accrue future benefits under the cash balance formula or the traditional
pension benefit formula in 2003, and his eligible earnings history as of May 31,
2008.
The benefit under the Portable Pension
Account is expressed as a notional cash balance account. For each plan year in
which a participant is credited with a year of service, compensation credits are
added based on the participants age and years of service as of the end of the
prior plan year and the participants eligible compensation for the prior
calendar year based on the following table:
Age + Service on May 31 |
Compensation Credit |
Less than 55 |
5% |
55-64 |
6% |
65-74 |
7% |
75
or over |
8% |
On May 31, 2014, the sum of age plus
years of service for the named executive officers was as follows: Mr. Smith
111; Mr. Graf 94; Mr. Bronczek 97; Mr. Glenn 91; and Mr. Carter
75. Eligible compensation under the
Portable Pension Account feature for the named executive officers includes
salary and annual incentive compensation. Messrs. Smith, Graf and Bronczek
elected the Portable Pension Account feature on June 1, 2003. Messrs. Glenn and
Carter began accruing benefits under the Portable Pension Account on June 1,
2008.
Transition compensation credits are an
additional compensation credit percentage to be granted to participants in the
Pension Plan and the Parity Plan who were age 40 or older on June 1, 2008, and
who have an accrued benefit under the traditional pension benefit formula. For
each plan year in which an eligible participant is credited with a year of
service, transition compensation credits will be added based on the participants age and years of service
as of the end of the prior plan year and the participants eligible compensation
for the prior calendar year based on the following table:
Age + Service on May 31 |
Transition Compensation Credit * |
Less than 55 |
2% |
55-64 |
3% |
65-74 |
4% |
75
or over |
5% |
*For years of credited service over 25, transition
compensation credits are 2% per year. |
An eligible participant will receive
transition compensation credits for five years (through May 31, 2013) or until
he or she has 25 years of credited service, whichever is longer. For
participants with 25 or more years of service, transition compensation credits
are 2% per year and ceased as of May 31, 2013. An eligible participants first
transition compensation credit was added to his or her Portable Pension Account
as of May 31, 2009.
Interest credits are added to a
participants Portable Pension Account benefit as of the end of each fiscal
quarter (August 31, November 30, February 28 and May 31) after a participant
accrues his or her first compensation credit. The May 31 interest credit is
added prior to the May 31 compensation credit or transition compensation credit
(or additional compensation credit under the Parity Plan). Interest credits are
based on the Portable Pension Account notional balance and a quarterly
interest-crediting factor, which is equal to the greater of (a) 1/4 of the
one-year Treasury constant
46 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
maturities rate for April of the
preceding plan year plus 0.25% and (b) 1% (1/4 of 4%). The quarterly
interest-crediting factor, when compounded quarterly, cannot produce an annual
rate greater than the average 30-year Treasury rate for April of the preceding
plan year (or, if larger, such other rate as may be required for certain tax law
purposes). In no event, however, will the
quarterly interest-crediting factor be less than 0.765%. Interest credits will
continue to be added until the last day of the month before plan benefits are
distributed. The quarterly interest-crediting factor for the plan year ended May
31, 2014, was 1%. The quarterly interest-crediting factor for the plan year
ended May 31, 2015, was 1%.
Upon a participants retirement, the
vested traditional pension benefit under the Pension Plan is payable as a
monthly annuity. Upon a participants retirement or other termination of
employment, an amount equal to the vested Portable Pension Account notional
balance under the Pension Plan is payable to the participant in the form of a
lump sum payment or an annuity.
All Parity Plan benefits are paid as a
single lump sum distribution as follows:
● |
For the portion of the benefit
accrued under the Portable Pension Account formula, the lump sum benefit
will be paid six months following the date of the participants
termination of employment; and |
|
|
● |
For the portion of the benefit
accrued under the traditional pension benefit formula, the lump sum
benefit will be paid the later of the date the participant turns age 55 or
six months following the date of the participants termination of
employment. |
Potential Payments Upon Termination
or Change of Control
This section provides information
regarding payments and benefits to the named executive officers that would be
triggered by termination of the officers employment (including resignation, or
voluntary termination; severance, or involuntary termination; and retirement) or
a change of control of FedEx.
Each of the named executive officers is
an at-will employee and, as such, does not have an employment contract. In
addition, if the officers employment terminates for any reason other than
retirement, death or permanent disability, any
unvested stock options are automatically terminated and any unvested shares of
restricted stock are automatically forfeited. Accordingly, there are no payments
or benefits that are triggered by any termination event (including resignation
and severance) other than retirement, death or permanent disability, or in
connection with a change of control of FedEx.
Benefits Triggered by Retirement,
Death or Permanent Disability Stock Option and Restricted Stock
Plans |
Retirement. When an employee retires:
● |
if retirement occurs at or after
age 60, all restrictions applicable to the restricted shares held by the
employee lapse on the date of retirement; |
|
|
● |
if retirement occurs at or after
age 55, but before age 60, the restrictions applicable to restricted
shares held by the employee continue until the earlier of the specified
expiration of the restriction period, the employees permanent disability
or the employees death; and |
|
|
● |
all of the employees unvested
stock options terminate. |
For information regarding retirement
benefits under our pension plans, see Fiscal 2015 Pension Benefits
above.
Death or Permanent Disability.
When an employee dies or becomes
permanently disabled:
● |
all restrictions applicable to
the restricted shares held by the employee immediately lapse; and
|
|
|
● |
all of the employees unvested
stock options immediately vest. |
The following table quantifies for each
named executive officer the value of his unvested restricted shares and stock
options, the vesting of which would be accelerated upon death or permanent
disability (assuming the officer died or became permanently disabled on May 31,
2015):
2015 Proxy
Statement 47
Table of Contents
EXECUTIVE
COMPENSATION
Benefits Triggered by Death or
Permanent Disability |
Name |
|
Value of Unvested Restricted Shares ($)
(1) |
|
Value of Unvested Stock Options ($)
(2) |
|
Total ($) |
F.W. Smith |
|
0 |
|
28,843,864 |
|
28,843,864 |
A.B. Graf, Jr. |
|
2,367,571 |
|
3,499,390 |
|
5,866,961 |
D.J. Bronczek |
|
3,049,711 |
|
4,637,367 |
|
7,687,078 |
T.M. Glenn |
|
2,367,571 |
|
3,499,390 |
|
5,866,961 |
R.B. Carter |
|
2,367,571 |
|
3,499,390 |
|
5,866,961 |
(1) |
Computed by
multiplying the closing market price per share of FedExs common stock on
May 29, 2015 (which was $173.22) by the number of unvested shares of
restricted stock held by the officer as of May 31, 2015. |
(2) |
Represents the
difference between the closing market price per share of FedExs common
stock on May 29, 2015 (which was $173.22) and the exercise price of each
unvested option held by the officer as of May 31,
2015. |
In addition, FedEx provides each named
executive officer with:
● |
$1,500,000 of group term life
insurance coverage; |
|
|
● |
$500,000 of business travel
accident insurance coverage for death or certain injuries suffered as a
result of an accident while traveling on company business;
and |
|
|
● |
A supplemental long-term
disability program, with a monthly benefit equal to 60% of the officers
basic monthly earnings (provided the officer continues to meet the
definition of disability, these benefits generally continue until age
65). |
Benefits Triggered by Change of
Control or Termination after Change of Control Stock Option and
Restricted Stock Plans and Management Retention
Agreements |
Stock Option and Restricted Stock
Plans. Our stock option plans provide
that, in the event of a change of control (as defined in the plans), each holder
of an unexpired option under any of the plans has the right to exercise such
option without regard to the date such option would first be exercisable. Except
with respect to stock options granted under FedExs 2010 Omnibus Stock Incentive
Plan, this right continues, with respect to holders whose employment with FedEx
terminates following a change of control, for a period of twelve months after
such termination or until the options expiration date, whichever is
sooner.
Our restricted stock plans provide
that, in the event of a change of control (as defined in the plans), depending
on the change of control event, either (i) the restricted shares will be
canceled and FedEx shall make a cash payment to each holder in an amount equal
to the product of the highest price per share received by the holders of FedExs
common stock in connection with the change of
control multiplied by the number of restricted shares held or (ii) the
restrictions applicable to any such shares will immediately lapse.
Under FedExs 2010 Omnibus Stock
Incentive Plan, our Compensation Committee may exercise its discretion to
provide for a treatment different than described above with respect to any
particular stock option or restricted stock award, as set forth in the related
award agreement. To date, such discretion has not been exercised.
The following table quantifies for each
named executive officer the value of his unvested restricted shares and stock
options, the vesting of which would be accelerated upon a change of control
(assuming that the change of control occurred on May 31, 2015, and that the
highest price per share received by FedExs stockholders in connection with the
change of control was the closing market price on May 29, 2015, which was
$173.22):
48 2015 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
Benefits Triggered by Change of
Control (1) |
Name |
|
Value of Unvested Restricted Shares ($)
(2) |
|
Value of Unvested Stock Options ($)
(3) |
|
Total ($) |
F.W. Smith |
|
0 |
|
28,843,864 |
|
28,843,864 |
A.B. Graf, Jr. |
|
2,367,571 |
|
3,499,390 |
|
5,866,961 |
D.J. Bronczek |
|
3,049,711 |
|
4,637,367 |
|
7,687,078 |
T.M. Glenn |
|
2,367,571 |
|
3,499,390 |
|
5,866,961 |
R.B. Carter |
|
2,367,571 |
|
3,499,390 |
|
5,866,961 |
(1) |
As discussed below, the officer is also entitled under his MRA (as
defined below) to a two-year employment agreement upon a change of control
and certain guaranteed compensation and benefits during the term of the
two-year employment period. |
(2) |
Computed by multiplying the closing market price per share of
FedExs common stock on May 29, 2015 (which was $173.22) by the number of
unvested shares of restricted stock held by the officer as of May 31,
2015. |
(3) |
Represents the difference between the closing market price per
share of FedExs common stock on May 29, 2015 (which was $173.22) and the
exercise price of each unvested option held by the officer as of May 31,
2015. |
Management Retention Agreements.
FedEx has entered into Management
Retention Agreements (MRAs) with each of its executive officers, including the
named executive officers. The purpose of the MRAs is to secure the executives
continued services in the event of any threat or occurrence of a change of
control (as defined in the MRAs; such term has the same meaning as used in
FedExs equity compensation plans). The terms and conditions of the MRAs with
the named executive officers are summarized below.
Term. Each MRA renews annually for consecutive one-year terms, unless FedEx
gives at least thirty days, but not more than ninety days, prior notice that
the agreement will not be extended. The non-extension notice may not be given at
any time when the Board of Directors has knowledge that any person has taken
steps reasonably calculated to effect a change of control of FedEx.
Employment Period. Upon a change of control, the MRA immediately establishes a
two-year employment agreement with the executive officer. During the employment
period, the officers position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities may not be materially
diminished.
Compensation. During the two-year employment period, the executive officer
receives base salary (no less than his or her highest base salary over the
twelve-month period prior to the change of control) and is guaranteed the same
annual incentive compensation opportunities as in effect during the 90-day
period immediately prior to the change of control. The executive officer also
receives incentive (including long-term performance bonus) and retirement plan
benefits, expense reimbursement, fringe benefits, office and staff support,
welfare plan benefits and vacation benefits. These benefits must be no less than
the benefits the officer had during the 90-day period immediately prior to the
change of control.
Termination. The MRA terminates immediately upon the executive officers
death, voluntary termination or retirement. FedEx may terminate the MRA for
disability, as determined in accordance with the procedures under FedExs
long-term disability benefits plan. Once disability is established, he or she
receives 180 days prior notice of termination. During the employment period,
FedEx also may terminate the officers employment for cause (which includes
any act of dishonesty by the officer intended to result in substantial personal
enrichment, the conviction of the officer of a felony and certain material
violations by the officer of his or her obligations under the MRA).
Benefits for Qualifying Termination.
A qualifying termination is a termination
of the executives employment by FedEx other than for cause, disability or death
or by the officer for good reason (principally relating to a material
diminution in the officers authority, duties or responsibilities or a material
failure by FedEx to compensate the officer as provided in the MRA).
In the event of a qualifying
termination, the executive officer will receive a lump sum cash payment equal to
two times his or her base salary (the highest annual rate in effect during the
twelve-month period prior to the date of termination) plus two times target annual incentive
compensation. The payments will be made to the officer on the date that is six
months after his or her date of termination (or, if earlier than the end of such
six-month period, within 30 days following the date of the executives death).
In addition, the executive officer will receive 18 months of continued coverage
of medical, dental and vision benefits.
An executive officers benefits under
the MRA will be reduced to the largest amount that would result in none of the
MRA payments being subject to any excise tax. If the Internal Revenue Service
otherwise determines that any MRA benefits
2015 Proxy
Statement 49
Table of Contents
EXECUTIVE
COMPENSATION
are subject to excise taxes, the
executive officer is required to repay FedEx the minimum amount necessary so
that no excise taxes are payable.
In exchange for these benefits, the
executive officer has agreed that, for the one-year period following his or her
termination, he or she will not own, manage, operate, control or be employed by
any enterprise that competes with FedEx or any of its affiliates.
The following table quantifies for each
named executive officer the payments and benefits under his MRA triggered by a
qualifying termination of the officer immediately following a change of control
(assuming that the change of control and qualifying termination occurred on May
31, 2015, and that the highest price per share received by FedExs stockholders
in connection with the change of control was the closing market price of FedExs
common stock on May 29, 2015, which was $173.22):
Payments and Benefits Triggered by
Qualifying Termination after Change of
Control |
Name |
Lump Sum Cash Payment 2x Base Salary and 2x Target
Annual Bonus ($) |
|
Health Benefits ($) |
|
Total ($) |
F.W. Smith |
5,828,016 |
|
52,649 |
|
5,880,665 |
A.B. Graf, Jr. |
3,430,580 |
|
37,053 |
|
3,467,633 |
D.J. Bronczek |
3,768,384 |
|
35,599 |
|
3,803,983 |
T.M. Glenn |
3,166,784 |
|
33,830 |
|
3,200,614 |
R.B. Carter |
2,899,248 |
|
29,261 |
|
2,928,509 |
50 2015 Proxy Statement
Table of Contents
PROPOSAL 2 ADVISORY VOTE TO
APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are asking stockholders to approve,
on a non-binding basis, the following advisory resolution at the annual meeting:
RESOLVED, that the compensation paid
to FedExs named executive officers, as disclosed in this proxy statement
pursuant to the compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis, the accompanying
compensation tables and the related narrative discussion, is hereby APPROVED.
This advisory vote is not intended to
address any specific element of executive compensation, but instead is intended
to address the overall compensation of the named executive officers as disclosed
in this proxy statement.
Our executive compensation program is
designed not only to retain and attract highly qualified and effective
executives, but also to motivate them to substantially contribute to FedExs
future success for the long-term benefit of stockholders and reward them for
doing so. Accordingly, our Board of Directors and Compensation Committee believe
that there should be a strong relationship between pay and corporate performance
(both financial results and stock price), and our executive compensation program
reflects this belief. As more fully discussed in the Compensation Discussion and
Analysis beginning on page 19:
● |
Annual and long-term incentive
payments and stock options represent a significant portion of our
executive compensation program. This variable compensation is at risk
and directly dependent upon the achievement of pre-established corporate
goals or stock price appreciation. In fiscal 2015, 90% of the Chairman,
President and Chief Executive Officers target total direct compensation
consisted of variable, at-risk components.
With respect to the other named executive officers, 58%-59% of their
fiscal 2015 target total direct compensation consisted of variable,
at-risk components. |
|
|
● |
Annual bonus payments for fiscal
2015 were tied to meeting aggressive business plan goals for FedEx Express
segment operating income and consolidated operating income. Because the
target objective for consolidated operating income for fiscal 2015 was not
achieved, the named executive officers received below-target annual bonus
payouts for fiscal 2015. |
|
|
● |
Long-term incentive payouts are
tied to meeting aggregate earnings-per-share goals over a
three-fiscal-year period. Based upon below-threshold earnings-per-share
performance over the last three fiscal years, there were no long-term
incentive payouts for fiscal 2015. |
|
|
● |
The exercise price of stock
options granted under our equity incentive plans is equal to the fair
market value of our common stock on the date of grant, so the options will
yield value to the executive only if the stock price
appreciates. |
|
|
● |
Our stock ownership goal
effectively promotes meaningful and significant stock ownership by our
named executive officers and further aligns their interests with those of
our stockholders. As of August 3, 2015, each named executive officer
exceeded the stock ownership goal. |
We urge you to read the Compensation
Discussion and Analysis, as well as the Summary Compensation Table and related
compensation tables and narrative appearing on pages 36 through 50, which
provides detailed information on our compensation philosophy, policies and
practices and the compensation of our named executive officers.
Effect of the
Proposal
This advisory resolution, commonly
referred to as a say-on-pay resolution, is not binding on FedEx, the Board of
Directors or the Compensation Committee. The vote on this proposal will,
therefore, not affect any compensation already paid or awarded to any named
executive officer and will not overrule any decisions made by the Board of
Directors or the Compensation Committee. Because
we highly value the opinions of our stockholders, however, the Board of
Directors and the Compensation Committee will consider the results of this
advisory vote when making future executive compensation decisions.
2015 Proxy
Statement 51
Table of Contents
PROPOSAL 2 ADVISORY VOTE TO
APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
Vote Required for
Approval
The affirmative vote of a majority of
the shares present at the meeting, in person or represented by proxy, and
entitled to vote is required to approve this proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR THIS PROPOSAL.
52 2015 Proxy Statement
Table of Contents
EQUITY COMPENSATION
PLANS
Equity Compensation Plans Approved
by Stockholders
Stockholders approved FedExs 1997,
1999 and 2002 Stock Incentive Plans, as amended, FedExs Incentive Stock Plan,
as amended, and FedExs 2010 Omnibus Stock Incentive Plan, as amended. Although options are still outstanding under the
1997, 1999 and 2002 plans and the Incentive Stock Plan, no shares are available
under these plans for future grants.
Equity Compensation Plans Not
Approved by Stockholders
In connection with its acquisition of
Caliber System, Inc. in January 1998, FedEx assumed Calibers officers deferred
compensation plan. This plan was approved by Calibers board of directors, but
not by Calibers or FedExs stockholders. Following FedExs acquisition of
Caliber, Caliber stock units under the plan were converted to FedEx common stock
equivalent units. In addition, the employers 50% matching contribution on
compensation deferred under the plan was made in
FedEx common stock equivalent units. Subject to the provisions of the plan,
distributions to participants with respect to their stock units may be paid in
shares of FedEx common stock on a one-for-one basis. Effective January 1, 2003,
no further deferrals or employer matching contributions will be made under the
plan. Participants may continue to acquire FedEx common stock equivalent units
under the plan, however, pursuant to dividend equivalent rights.
Summary Table
The following table sets forth certain
information as of May 31, 2015, with respect to compensation plans under which
shares of FedEx common stock may be issued.
Equity Compensation Plan
Information |
|
Plan Category |
Number of Shares to be Issued Upon Exercise
of Outstanding Options, Warrants and Rights |
|
|
Weighted-Average Exercise Price of Outstanding
Options, Warrants and Rights |
|
Number of Shares Remaining Available for Future
Issuance Under Equity Compensation Plans (Excluding
Shares Reflected in the First Column) |
|
|
|
Equity compensation plans
approved by stockholders |
14,221,824 |
(1) |
|
$101.54 |
|
13,157,142 |
(2) |
|
|
Equity compensation plans not
approved by stockholders |
1,432 |
(3) |
|
N/A |
|
|
|
|
|
Total |
14,223,256 |
|
|
$101.54 |
|
13,157,142 |
|
|
(1) |
Represents shares of common stock issuable upon exercise of
outstanding options granted under FedExs stock option plans. This number
does not include: 1,840 shares of common stock issuable under a retirement
plan assumed by FedEx for former non-employee directors of Caliber System,
Inc. |
(2) |
Shares available for equity grants under FedExs 2010 Omnibus Stock
Incentive Plan, as amended (no more than 2,279,531 of the shares available
under the 2010 Omnibus Stock Incentive Plan may be used for full-value
awards). |
(3) |
Represents shares of FedEx common stock issuable pursuant to the
officers deferred compensation plan assumed by FedEx in the Caliber
acquisition as described under Equity Compensation Plans Not Approved
by Stockholders above. |
2015 Proxy
Statement 53
Table of Contents
REPORT OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
The Audit Committee assists the Board
of Directors in its oversight of FedExs financial reporting process. The Audit
Committees responsibilities are more fully described in its charter, which is
available on the FedEx website at http://investors.fedex.com in the
Governance & Citizenship section under Committee Charters.
Management has the primary
responsibility for the financial statements and the financial reporting process,
including internal control over financial reporting. FedExs independent
registered public accounting firm is responsible for performing an audit of
FedExs consolidated financial statements and expressing an opinion on the fair
presentation of those financial statements in conformity with United States
generally accepted accounting principles. The independent registered public
accounting firm also is responsible for performing an audit of and expressing an
opinion on the effectiveness of FedExs internal control over financial
reporting.
In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed with management the
audited consolidated financial statements for the fiscal year ended May 31,
2015, including a discussion of, among other things:
● |
the acceptability and quality of
the accounting principles; |
|
|
● |
the reasonableness of significant
accounting judgments and critical accounting policies and estimates;
|
|
|
● |
the clarity of disclosures in the
financial statements; and |
|
|
● |
the adequacy and effectiveness of
FedExs financial reporting procedures, disclosure controls and procedures
and internal control over financial reporting, including managements
assessment and report on internal control over financial
reporting. |
The Audit Committee also discussed with
the Chief Executive Officer and Chief Financial Officer of FedEx their
respective certifications with respect to FedExs Annual Report on Form 10-K for
the fiscal year ended May 31, 2015.
The Audit Committee reviewed and
discussed with the independent registered public accounting firm the audited
consolidated financial statements for the fiscal year ended May 31, 2015, the
firms judgments as to the acceptability and quality of FedExs accounting
principles and such other matters as are required to be discussed with the Audit
Committee under the standards of the Public
Company Accounting Oversight Board (United States) (the PCAOB), including
those matters required to be discussed by Auditing Standard No. 16,
Communications with Audit
Committees. The Audit Committee also reviewed
and discussed with the independent registered public accounting firm its audit
of the effectiveness of FedExs internal control over financial
reporting.
In addition, the Audit Committee
received the written disclosures and the letter from the independent registered
public accounting firm required by applicable requirements of the PCAOB
regarding the firms communications with the Audit Committee concerning
independence, and discussed with the independent registered public accounting
firm the firms independence.
The Audit Committee discussed with
FedExs senior internal audit executive and independent registered public
accounting firm the overall scope and plans for their respective audits. The
Audit Committee meets with the senior internal audit executive and the
independent registered public accounting firm, with and without management
present, to discuss the results of their examinations, their evaluations of
FedExs internal controls and the overall quality of FedExs financial
reporting.
In reliance on the reviews and
discussions referred to above, and the receipt of unqualified opinions from
Ernst & Young LLP dated July 14, 2015, with respect to the consolidated
financial statements of FedEx as of and for the fiscal year ended May 31, 2015,
and with respect to the effectiveness of FedExs internal control over financial
reporting, the Audit Committee recommended to the Board of Directors, and the
Board approved, that the audited consolidated financial statements be included
in FedExs Annual Report on Form 10-K for the fiscal year ended May 31, 2015,
for filing with the Securities and Exchange Commission.
Audit Committee Members
John A. Edwardson Chairman
Kimberly A.
Jabal
Gary W. Loveman
R. Brad Martin
Joshua Cooper Ramo
54 2015 Proxy Statement
Table of Contents
AUDIT AND NON-AUDIT
FEES
The following table sets forth fees for
services Ernst & Young LLP provided to FedEx during fiscal 2015 and 2014,
which were preapproved by FedExs Audit Committee in accordance with the Policy
on Engagement of Independent Auditor (discussed on the following
page):
|
2015 |
|
2014 |
Audit fees |
$15,939,000 |
|
$14,253,000 |
Audit-related fees |
737,000 |
|
824,000 |
Tax fees |
391,000 |
|
377,000 |
All other fees |
89,000 |
|
817,000 |
Total |
$17,156,000 |
|
$16,271,000 |
|
|
|
|
● |
Audit Fees. Represents fees for professional services provided for
the audit of FedExs annual financial statements, the audit of FedExs
internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act of 2002, the review of FedExs quarterly financial
statements, audit services provided in connection with other statutory or
regulatory filings, and consents and comfort letters in connection with
registered securities offerings and registration
statements. |
|
|
● |
Audit-Related
Fees. Represents fees for assurance and
other services related to the audit of FedExs financial statements. The
fees for fiscal 2015 and fiscal 2014 were for benefit plan audits and
international accounting and reporting compliance. Fiscal 2014 fees also
were for due diligence related to mergers and
acquisitions. |
|
|
● |
Tax Fees. Represents fees for professional services provided
primarily for domestic and international tax compliance and advice. Tax
compliance and preparation fees totaled $209,000 and $149,000 in fiscal
2015 and 2014, respectively. |
|
|
● |
All Other Fees. Represents fees for products and services provided to
FedEx not otherwise included in the categories above. The fees for fiscal
2015 were for online technical resources and advisory services related to
information technology risk management. The fees for fiscal 2014 were for
online technical resources and advisory services related to acquisition
integration planning and information technology risk
management. |
FedExs Audit Committee has determined
that the provision of non-audit services by Ernst & Young is compatible with
maintaining Ernst & Youngs independence.
2015 Proxy
Statement 55
Table of Contents
PROPOSAL 3 RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Appointment of Independent
Registered Public Accounting Firm
Ernst & Young LLP audited FedExs
annual financial statements for the fiscal year ended May 31, 2015, and FedExs
internal control over financial reporting as of May 31, 2015. The Audit
Committee has appointed Ernst & Young to be FedExs independent registered
public accounting firm for the fiscal year ending May 31, 2016.
Ernst & Young has been FedExs
external auditor continuously since 2002. The members of the Audit Committee and
the Board of Directors believe that the continued retention of Ernst
& Young to serve as FedExs independent
registered public accounting firm is in the best interests of the company and
our stockholders.
The stockholders are asked to ratify
this appointment at the annual meeting. Representatives of Ernst & Young
will be present at the meeting to respond to appropriate questions and to make a
statement if they so desire.
Policies Regarding Independent
Auditor
The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of our
independent registered public accounting firm, including the audit fee
negotiations associated with the retention of the firm. Additionally, in
conjunction with the mandated rotation of the independent registered public
accounting firms lead engagement partner, the Audit Committee and its
chairperson are directly involved in the selection of any new lead engagement
partner. To help ensure the independence of the independent registered public
accounting firm, the Audit Committee has adopted two policies: the Policy on
Engagement of Independent Auditor; and the Policy on Hiring Certain Employees
and Partners of the Independent Auditor.
Pursuant to the Policy on Engagement of
Independent Auditor, the Audit Committee preapproves all audit services and
non-audit services to be provided to FedEx by its independent registered public
accounting firm. The Audit Committee may delegate to one or more of its members
the authority to grant the required approvals, provided that any exercise of
such authority is presented at the next Audit Committee meeting.
The Audit Committee may preapprove for
up to one year in advance the provision of particular types of permissible
routine and recurring audit-related, tax and other non-audit services, in each
case described in reasonable detail and subject to a specific annual monetary
limit also approved by the Audit Committee. The Audit Committee must be informed
about each such service that is actually provided. In cases where a service is
not covered by one of those approvals, the service must be specifically
preapproved by the Audit Committee no earlier than one year prior to the
commencement of the service.
Each audit or non-audit service that is
approved by the Audit Committee (excluding tax services performed in the
ordinary course of FedExs business and excluding other services for which the
aggregate fees are expected to be less than $25,000) will be reflected in a
written engagement letter or writing specifying the services to be performed and
the cost of such services, which will be signed by either a member of the Audit
Committee or by an officer of FedEx authorized by the Audit Committee to sign on
behalf of FedEx.
The Audit Committee will not approve
any prohibited non-audit service or any non-audit service that individually or
in the aggregate may impair, in the Audit Committees opinion, the independence
of the independent registered public accounting firm.
In addition, FedExs independent
registered public accounting firm may not provide any services, including
financial counseling and tax services, to any FedEx officer, Audit Committee
member or FedEx managing director (or its equivalent) in the Finance department
or to any immediate family member of any such person. The Policy on Engagement
of Independent Auditor is available in the Governance & Citizenship section
under Policies and Guidelines of the Investor Relations page of our website at
http://investors.fedex.com.
Pursuant to the Policy on Hiring
Certain Employees and Partners of the Independent Auditor, FedEx will not hire a
person who is concurrently a partner or other professional employee of the
independent registered public accounting firm or, in certain cases, an immediate
family member of such a person. Additionally, FedEx will not hire a former
partner or professional employee of the independent registered
56 2015 Proxy Statement
Table of
Contents
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
public accounting firm in an accounting
role or a financial reporting oversight role if he or she remains in a position
to influence the independent registered public accounting firms operations or
policies, has capital balances in the independent registered public accounting
firm or maintains certain other financial arrangements with the independent
registered public accounting firm. FedEx will not hire a former member of the
independent registered public accounting firms audit engagement team (with certain exceptions) in a financial reporting
oversight role without waiting for a required cooling-off period to
elapse.
FedExs Executive Vice President and
Chief Financial Officer will approve any hire who was employed during the
preceding three years by the independent registered public accounting firm, and
will annually report all such hires to the Audit Committee.
Vote Required For Ratification
The Audit Committee is responsible for
selecting FedExs independent registered public accounting firm. Accordingly,
stockholder approval is not required to appoint Ernst & Young as FedExs
independent registered public accounting firm for fiscal year 2016. The Board of
Directors believes, however, that submitting the appointment of Ernst &
Young to the stockholders for ratification is a matter of good corporate
governance. If the stockholders do not ratify the appointment, the Audit
Committee will review its future selection of the independent registered public
accounting firm.
The ratification of the appointment of
Ernst & Young as FedExs independent registered public accounting firm
requires the affirmative vote of a majority of the shares present at the
meeting, in person or represented by proxy, and entitled to vote.
YOUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
2015 Proxy
Statement 57
Table of
Contents
PROPOSAL 4 STOCKHOLDER PROPOSAL: INDEPENDENT BOARD
CHAIRMAN
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that John
Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, the
beneficial owner of 50 shares of FedEx common stock, intends to present the
following proposal for consideration at the annual meeting:
Proposal 4 Independent Board
Chairman
Resolved: The shareholders request
our Board of Directors to adopt as policy, and amend the bylaws as necessary, to
require the Chair of the Board of Directors, whenever possible, to be an
independent member of the Board. The Board would have the discretion to phase in
this policy for the next CEO transition, implemented so it did not violate any
existing agreement. If the Board determines that a Chair who was independent
when selected is no longer independent, the Board shall select a new Chair who
satisfies the requirements of the policy within a reasonable amount of time.
Compliance with this policy is waived if no independent director is available
and willing to serve as Chair. This proposal requests that all the necessary
steps be taken to accomplish the above.
When our CEO is our board chairman, this
arrangement can hinder our boards ability to monitor our CEOs performance.
Many companies already have an independent Chairman. An independent Chairman is
the prevailing practice in the United Kingdom and many international markets.
This proposal topic won 50%-plus support at 5 major U.S. companies in 2013
including 73%-support at Netflix.
Our clearly improvable corporate
governance (as reported in 2015) is an added incentive to vote for this
proposal:
GMI said Frederick Smith received $28
million in 2014 Total Realized Pay and had $24 million in accumulated pension
benefits. Meanwhile Paul Steven Walsh chaired our executive pay committee. Mr.
Walsh had 19-years long-tenure which detracts from his independence. Two more
directors with long-tenure were on our executive pay committee, Shirley Ann
Jackson (who received our highest negative votes and was overextended with seats
on the boards of 5 public companies) and Susan Carroll Schwab (who was
designated a flagged director by GMI due to her involvement with the Calpine
Corporation bankruptcy). Another long-tenured director, James Barksdale, was on
our nomination committee. Mr. Barksdale was also an inside-related
director.
The following KeyMetrics were the most
important factors driving the GMI Environmental, Social and Governance rating
for FedEx:
● |
Related Party Transactions |
● |
Board Integrity |
● |
Overextended Directors |
● |
Severance Vesting |
● |
Restatements or Special Charges |
● |
History of significant
restatements, special charges, and/or write-offs. |
GMI reported these material 2014
Environmental, Social and Governance events:
Federal prosecutors said several
addicts died soon after receiving shipments of illegal prescription drugs via
FedEx. The deaths were included in an indictment filed against FedEx that adds
money laundering to a list of charges FedEx is facing over allegations it
knowingly shipped illegal prescription drugs from two online
pharmacies.
California regulators targeted FedEx in
a civil complaint alleging FedEx illegally shipped and handled hazardous waste
hundreds of times since 2008.
FedEx Corp. was accused in a federal
indictment of delivering prescription pain pills, sedatives, anti-anxiety drugs
and other controlled substances for illegal Internet pharmacies.
Returning to the core topic of this
proposal from the context of our clearly improvable corporate governance, please
vote to protect shareholder value:
Independent Board Chairman
Proposal 4
58 2015 Proxy Statement
Table of
Contents
PROPOSAL 4
STOCKHOLDER PROPOSAL: INDEPENDENT BOARD CHAIRMAN
Board of Directors Statement in Opposition
The Board of Directors and its
Nominating & Governance Committee have considered this proposal and
concluded that its adoption is unnecessary and not in the best interests of our
stockholders.
FedEx and its stockholders are
best served when leadership choices are made by the Board on a case-by-case
basisnot pursuant to a predetermined policy. FedExs Bylaws provide that the Chairman of the Board of Directors shall
be the Chief Executive Officer, unless the Board decides otherwise. This
approach provides the Board with the necessary flexibility to determine whether
the positions should be held by the same person or by separate persons based on
the leadership needs of FedEx at any particular time. Adopting a policy to
restrict the Boards discretion in selecting the Chairman of the Board, as well
as restricting the ability to combine the positions of Chairman and Chief
Executive Officer, would deprive the Board of the ability to select the most
qualified and appropriate individual to lead the Board as Chairman.
The Board has given careful
consideration to separating the roles of Chairman and Chief Executive Officer
and has determined that, at this time, FedEx and its stockholders are best
served by having Mr. Smith, FedExs founder, serve as both Chairman of the Board
of Directors and Chief Executive Officer. Mr. Smiths combined role as Chairman
and Chief Executive Officer promotes unified leadership and direction for the
Board and executive management and it allows for a single, clear focus for the
chain of command to execute FedExs strategic initiatives and business
plans.
Mr. Smith has served as both Chairman
of the Board and Chief Executive Officer of FedEx since 1977. Mr. Smith is the
pioneer of the express transportation industry and his record of innovation,
achievement and leadership speaks for itself. Under Mr. Smiths leadership,
FedEx has become one of the most trusted and respected brands in the world. For
fourteen consecutive years FedEx has ranked in the top 20 in FORTUNE magazines Worlds
Most Admired Companies list, ranking number 12 overall and number one in the
delivery industry on the most recent 2015 list. Mr. Smith has been named one of
the top 30 chief executives in the world by Barrons magazine for nine
consecutive years. Under Mr. Smiths leadership, FedEx has also experienced
strong long-term financial growth and stockholder return. FedExs compound
annual growth rates for revenue, earnings per share and stock price since its
initial public offering in 1978 are approximately 17%, 8% and 16%, respectively.
The Board of Directors believes that our stockholders have been well served by
having Mr. Smith act as both Chairman and Chief Executive Officer.
Selecting an appropriate leadership
structure is one of the most important tasks of any board. If the proposal were
implemented, it would prevent future Boards from having the flexibility to
determine the best leadership structure for FedEx, regardless of what the Board believes to be in the best interests
of the company and its stockholders, to their potential detriment.
FedExs strong and independent
Board of Directors effectively oversees our management and provides vigorous
oversight of FedExs business and affairs. The Board of Directors is composed of independent, active and effective
directors. Over the past two years, we have added highly qualified, independent
directors to the Board in Kimberly A. Jabal, the Chief Financial Officer of Kong
Technologies, Inc. (formerly Path, Inc.), and Marvin R. Ellison, President and
Chief Executive Officer of J. C. Penney Company, Inc. Eleven out of our twelve
directors standing for reelection meet the independence requirements of the New
York Stock Exchange and the Securities and Exchange Commission and the Boards
standards for determining director independence. Mr. Smith is the only director
who is also a member of executive management.
Our Lead Independent Director, who has a robust set of duties and
responsibilities, provides independent leadership. The Chairperson of the Nominating
& Governance Committee, who is elected annually by a majority of the independent Board members, serves as the Lead
Independent Director. The Lead Independent Director:
● |
presides at all meetings of the
Board if the Chairman of the Board and Chief Executive Officer is not
present; |
|
|
● |
serves as a liaison between the
Chairman of the Board and Chief Executive Officer and independent Board
members; |
|
|
● |
presides over the executive
sessions of non-management directors, which occur at every in-person Board
meeting; |
|
|
● |
may also be designated by the
Chairman of the Board and Chief Executive Officer to preside at any Board
or stockholder meeting; |
|
|
● |
reviews and approves all Board
meeting agendas and schedules; |
|
|
● |
consults with the Chairman of the
Board and Chief Executive Officer regarding other information sent to the
Board in connection with Board meetings or other Board
action; |
|
|
● |
may call meetings of the
non-management Board members as he deems necessary or appropriate; and
|
|
|
● |
is available to communicate with
stockholders, as appropriate, if requested by such stockholders.
|
Mr. David P. Steiner, our Lead
Independent Director, is an exemplary director and the consummate professional.
We consider the breadth of his experience in the transportation industry,
energy sector and public company leadership to be a tremendous asset to our
company. The Board of Directors carefully considered Mr. Steiners
qualifications when electing him as Chairman of the Nominating & Governance
Committee.
2015 Proxy
Statement 59
Table
of Contents
PROPOSAL 4
STOCKHOLDER PROPOSAL: INDEPENDENT BOARD CHAIRMAN
FedExs Board of Directors and
its committees vigorously oversee the effectiveness of management policies and
decisions, including the execution of key strategic initiatives.
Each of the Boards Audit, Compensation, and Nominating
& Governance Committees is composed entirely of independent directors.
Consequently, independent directors directly oversee such critical matters as
the integrity of FedExs financial statements, the compensation of executive
management, including Mr. Smiths compensation, the selection and evaluation of
directors, and the development and implementation of corporate governance
programs. The Compensation Committee, together with the other independent
directors, conducts an annual performance review of the Chairman and Chief
Executive Officer, assessing FedExs financial and non-financial performance and
the quality and effectiveness of Mr. Smiths leadership. In addition, the
Nominating & Governance Committee oversees the processes by which Mr. Smith
is evaluated.
Consistent with our philosophy of
empowering each member of our Board of Directors, each Board member may place
items on the agenda for Board meetings or raise subjects that are not on the
agenda for that meeting. In addition, each Board member has complete and open
access to any member of management and to the chairman of each Board committee
for the purpose of discussing any matter related to the work of such committee. Lastly, the Board and each Board committee has
the authority to retain independent legal, financial and other advisors as they
deem appropriate. See Corporate Governance Matters Board Leadership
Structure on page 1 for more information on our governance
practices.
Requiring that the Chairman of the
Board be an independent director is not necessary to ensure that our Board
provides independent and effective oversight of FedExs business and affairs.
Such oversight is maintained at FedEx through the composition of our Board,
including our Lead Independent Director, the strong leadership and engagement of
our other independent directors and Board committees, and our highly effective
corporate governance structures and processes already in place.
The Board believes the current
leadership model, when combined with our independent board governance structure,
strikes an appropriate balance between strong and consistent leadership and
independent and effective oversight of FedExs business and affairs. The
proposal seeks to replace FedExs balanced approach to board leadership with an
inflexible approach that does not permit the Board, regardless of circumstances,
to exercise judgment about which arrangements would best serve the interests of
our stockholders. Accordingly, we recommend that you vote against this
proposal.
Vote Required for Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL.
60 2015 Proxy Statement
Table of
Contents
PROPOSAL 5 STOCKHOLDER PROPOSAL:
TAX PAYMENTS ON RESTRICTED
STOCK AWARDS
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that the
International Brotherhood of Teamsters General Fund, 25 Louisiana Avenue, N.W.,
Washington, D.C. 20001, the beneficial owner of 176 shares of FedEx common
stock, intends to present the following proposal for consideration at the annual
meeting:
RESOLVED: The stockholders of FedEx Corporation (the Company) urge
the compensation committee of the board of directors to adopt a policy that the
Company will not pay the personal taxes owed on restricted stock awards on
behalf of named executive officers. This policy should be forward-looking and
become effective when the Company next adopts or amends its equity compensation
plans after the 2015 annual shareholder meeting. This policy should be
implemented without violating the Companys existing contractual obligations or
the terms of any existing compensation or benefit plan.
SUPPORTING
STATEMENT: Our Company has a policy under
which it pays the taxes on restricted stock awards received by named executive
officers. FedEx determines the total target value of the award and provides that
value in two components: restricted shares and cash payment of taxes due. The
number of shares delivered to the officers is reduced by the amount of taxes
owed.
Last years proxy statement reports
that four officers received a total of 24,530 shares of restricted stock on June
3, 2013. To alleviate the officers from the tax burden on these awards, FedEx
paid $1,829,430 on their behalf. This amount is comparable to amounts paid to
cover executives taxes in previous years, including $1,538,659 in 2013 and
$1,533,150 in 2012.
We do not believe covering officers
taxes is an effective use of corporate resources. Our Companys primary
competitor in the United States, United Parcel Service, does not pay its
officers taxes on restricted stock awards. FedEx officers are among the most
highly compensated employees at our firm and therefore, are better equipped than
many of our workers to pay their own taxes.
The Securities and Exchange Commission
required FedEx to include the taxes paid on behalf of officers in the Summary
Compensation Table of its 2014 proxy statement as other compensation. In that
reporting, FedEx acknowledged the requirement but argued, we do not believe
these payments are tax gross-ups in the traditional sense, since their value
is fully reflected in the number of shares ultimately delivered to
recipients.
A difference in how the tax payments
are calculated and reported, however, does not excuse the Companys decision to
continue with the outdated and much criticized practice of paying officers
personal taxes. Such a practice sends a signal that the board is either unaware
of or disregards investor concerns about executive payments that are untied to
performance.
We urge our fellow shareholders to vote
in favor of this proposal.
Board of Directors Statement in Opposition
The Board of Directors and its
Compensation and Nominating & Governance Committees have considered this
proposal and concluded that its adoption is unnecessary and not in the best
interests of our stockholders.
FedExs restricted stock program has
been in place for over 20 years and has encouraged FedEx executives to own and
retain company stock. By facilitating the ownership of FedEx shares by our
executives, we strengthen the alignment of their interests with those of our
investors. When granting restricted stock, the Compensation Committee first
determines the total target value of the award and then approves the delivery of
that value in two components: restricted shares and cash payment of taxes due.
The total target value of the award would be the same regardless of whether the
company allocated a portion to tax payments.
Because the amount of the tax payment is included in the calculation of the
target value of the restricted stock award, the officers receive fewer shares in
each award by an amount equal in value to the tax payment.
This methodology prevents the need for
an officer to make a disposition of FedEx stock to cover the tax consequences of
a restricted stock award and dilute his or her interest in FedEx. Absent the tax
payment, the number of shares received in each award would be larger by an
amount equal in value to the forgone tax payment, thereby having a dilutive
effect on our stockholders equity interest in FedEx. While SEC disclosure rules
require that these payments be included with tax reimbursement payments and
reported as other compensation in the Summary Compensation Table, we do
2015 Proxy Statement
61
Table of Contents
PROPOSAL 5 STOCKHOLDER PROPOSAL:
TAX PAYMENTS ON RESTRICTED STOCK AWARDS
not believe these payments are tax
gross-ups in the traditional sense, since their value is fully reflected in the
number of shares ultimately delivered to recipients. The following chart
illustrates this principle, using the target value for the fiscal year 2015
restricted stock awards granted to FedEx
Corporation executive vice presidents (as in previous years, Frederick W. Smith,
FedExs Chairman of the Board, President and Chief Executive Officer, did not
receive a restricted stock award in fiscal 2015):
Target Value of Restricted Stock
Award
Not only is the value to the officer,
as well as the cost to the company, generally the same as it would be if we did
not provide a cash payment to cover taxes, but this practice uses fewer shares
of stock to arrive at the same benefit and has proved extremely successful in
retaining executives and enabling them to retain their shares. We recently
broadened our restricted stock program to include certain lower-level
officers and high-performing managers and
individual contributors. We also make tax payments as part of restricted stock
awards to these individuals.
In sum, we strongly believe that our
restricted stock program is effectively designed and is aligned with the best
interests of our stockholders. Accordingly, we recommend that you vote against
this proposal.
Vote Required for
Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE AGAINST THIS PROPOSAL.
62 2015 Proxy Statement
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Contents
PROPOSAL 6 STOCKHOLDER PROPOSAL: RECOVERY OF UNEARNED MANAGEMENT
BONUSES
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that the
Comptroller of the City of New York, One Centre Street, New York, New York
10007-2341, as custodian and a trustee of the New York City Employees
Retirement System, New York City Police Pension Fund and the New York City
Teachers Retirement System, collectively the beneficial owner of 466,250 shares
of FedEx common stock, and Myra K. Young, 9295 Yorkship Court, Elk Grove,
California 95758, the beneficial owner of 50 shares of FedEx common stock,
intend to present the following proposal for consideration at the annual
meeting:
RESOLVED, that shareholders of FedEx Corporation (FedEx) urge the
Compensation Committee of the Board of Directors (the Committee) to adopt an
executive compensation recoupment policy (the Policy) to provide that the
Committee will (a) review, and determine whether to seek recoupment of,
incentive compensation paid, granted or awarded to a senior executive if, in the
Committees judgment, (i) there has been misconduct resulting in a violation of
law or FedEx policy that causes significant financial or reputational harm to
FedEx and (ii) the senior executive either committed the misconduct or failed in
his or her responsibility to manage or monitor conduct or risks; and (b)
disclose to shareholders the circumstances of any recoupment. The Policy should
also provide that if no recoupment under the Policy occurred in the previous
fiscal year, a statement to that effect will be included in the proxy
statement.
Recoupment includes (a) recovery of
compensation already paid and (b) forfeiture, recapture, reduction or
cancellation of amounts awarded or granted to an executive over which FedEx
retains control. These amendments should operate prospectively and be
implemented in a way that does not violate any contract, compensation plan, law
or regulation.
SUPPORTING STATEMENT:
In 2014, the U.S. Department of Justice
indicted FedEx with conspiracy to distribute controlled substances for its
alleged role in transporting painkillers and other prescription drugs that had
been sold illegally; if found guilty, the company reportedly faces a potential
fine of a least $1.6 billion.
(http://www.wsj.com/articles/fedex-indicted-for-role-in-distributing-controlled-substances-prescription-drugs-1405637242)
In 2013, FedEx agreed to pay $16.5
million to settle a class action lawsuit alleging that it systematically
overcharged its business customers by improperly assessing them residential
surcharges. In 2012, FedEx agreed to pay $3 million to settle allegations from
the U.S. Department of Labor regarding discriminatory hiring practices for
part-time package handlers in its ground division.
Such legal and regulatory allegations
and settlements cause both financial harm and reputational damage.
As long-term shareholders, we believe
that compensation policies should promote sustainable value creation. In our
view, allowing recoupment upon a finding of business-related misconduct would
reinforce the value of integrity in generating sustainable
performance.
Former GE general counsel and Harvard
senior fellow Ben Heineman, Jr. has advocated recoupment policies with
business-related misconduct triggers, calling them a powerful mechanism for
holding senior leadership accountable to the fundamental mission of the
corporation: proper risk taking balanced with proper risk management and the
robust fusion of high performance with high integrity.
(http://blogs.law.harvard.edu/corpgov/2010/08/13/making-sense-out-of-clawbacks/)
Our proposal recognizes the importance
of giving the Committee discretion to decide whether recoupment is appropriate
in particular circumstances. The Committee can consider recoupment in
conjunction with other possible responses to misconduct such as reduction of
future compensation and termination of employment.
Finally, shareholders cannot monitor
enforcement without disclosure. We are sensitive to privacy concerns and urge
FedEx to adopt a policy that does not violate privacy expectations (subject to
laws requiring fuller disclosure).
We urge shareholders to vote for this
proposal.
2015 Proxy
Statement 63
Table of Contents
PROPOSAL 6 STOCKHOLDER PROPOSAL:
RECOVERY OF UNEARNED MANAGEMENT BONUSES
Board of Directors Statement in
Opposition
The Board of Directors and its
Compensation and Nominating & Governance Committees have considered this
proposal and concluded that its adoption is unnecessary and not in the best
interests of our stockholders.
The SEC recently proposed rules
relating to executive compensation recoupment policies. Once final rules are
implemented, the Board of Directors will adopt a compensation recovery policy.
Section 954 of the Dodd-Frank Act
mandates that the Securities and Exchange Commission adopt rules related to the
recoupment of executive compensation. In July 2015, the SEC proposed rules that
would direct the stock exchanges to adopt listing standards requiring listed
companies to adopt executive compensation recoupment policies and satisfy
related disclosure obligations.
The Board of Directors will develop and
implement an executive compensation recoupment policy for FedEx that fully
satisfies all applicable requirements of the New York Stock Exchange listing
standards once they are adopted following the SECs adoption of final
rules.
Existing legal requirements address executive compensation recoupment.
Section 304 of the Sarbanes-Oxley Act of
2002 requires the recovery of incentive awards from our Chief Executive Officer
and Chief Financial Officer if we are required to restate our financial
statements due to material noncompliance with any financial reporting
requirements as a result of misconduct. We maintain a system of internal
controls that ensures the integrity and accuracy of our business and financial
records. Additionally, we have strong internal control processes and procedures
to detect fraud or deliberate error in the
preparation and review of financial records and financial statements to help
ensure that any misconduct that could result in such a restatement would be
exposed.
FedExs existing policies provide
effective alternatives to recoupment in the case of misconduct.
We may impose sanctions other than
recoupment on executives who violate company policies or otherwise act contrary
to the companys best interests. We hold all of our employees, particularly our
executive officers, to the highest standards of legal and ethical conduct, which
standards are an integral part of FedEx culture.
FedExs Code of Business
Conduct and Ethics (the Code) provides an effective disincentive for any type
of misconduct or fraud, including with respect to financial records or financial
statements. The Code requires our employees to adhere to strong ethical
standards and promote full and accurate disclosure in our public communications
and in the reports and documents that we file with regulatory authorities. In
addition, FedEx employees may use the FedEx Alert Line to report any known or
suspected violation of law, the Code or any other FedEx policy, any other
unethical behavior related to FedEx, any questionable accounting, internal
accounting controls or auditing matters, or fraud related to FedEx.
Certain members of our management,
including our executive officers, are required to annually certify their
compliance with the Code, and violations of the Code are subject to disciplinary
procedures, up to and including termination. We also would likely prosecute any
criminal conduct to the fullest extent permitted by law.
For these reasons, we believe that this
proposal is unnecessary and not in the best interests of our stockholders.
Accordingly, we recommend that you vote against this proposal.
Vote Required for
Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE AGAINST THIS PROPOSAL.
64 2015 Proxy Statement
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PROPOSAL 7 STOCKHOLDER PROPOSAL: PROXY ACCESS FOR
SHAREHOLDERS
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that Marco
Consulting Group Trust I, 550 W. Washington Blvd., Suite 900, Chicago, Illinois
60661, the beneficial owner of 26,498 shares of FedEx common stock, intends to
present the following proposal for consideration at the annual meeting:
Resolved: Shareholders of FedEx Corporation (the Company) ask the board of
directors (the Board) to adopt, and present for shareholder approval, a proxy
access bylaw. Such a bylaw shall require the Company to include in proxy
materials prepared for a shareholder meeting at which directors are to be
elected the name, Disclosure and Statement (as defined herein) of any person
nominated for election to the board by a sharehodler or group (the Nominator)
that meets the criteria established below. The Company shall allow shareholders
to vote on such nominee on the Companys proxy card.
The number of shareholder-nomined
candidates appearing in proxy materials shall not exceed one quarter of the
directors then serving. This bylaw, which shall supplement existing rights under
Company bylaws, should provide that a Nominator must:
|
a) |
have beneficially owned 3% or
more of the Companys outstanding common stock continuously for at least
three years before submitting the nomination; |
|
b) |
given the Company, within the
time period identified in its bylaws, written notice of the information
required by the bylaws and any Securities and Exchange Commission rules
about (i) the nominee, including consent to being named in the proxy
materials and to serving as director if elected; and (ii) the Nominator,
including proof it owns the required shares (the Disclosure);
and |
|
c) |
certify that (i) it will assume
liability stemming from any legal or regulatory violation arising out of
the Nominators communications with the Company shareholders, including
the Disclosure and Statement; (ii) it will comply with all applicable laws
and regulations if it uses soliciting material other than the Companys
proxy materials; and (c) to the best of its knowledge, the required shares
were acquired in the ordinary course of business and not to change or
influence control at the Company. |
The Nominator may submit with the
Disclosure a statement not exceeding 500 words in support of the nominee (the
Statement). The Board shall adopt procedures for promptly resolving disputes
over whether notice of a nomination was timely, whether the Disclosure and
Statement satisfy the bylaw and applicable federal regulations, and the priority
to be given to multiple nominations exceeding the one-quarter limit.
SUPPORTING STATEMENT
We believe proxy access is a
fundamental shareholder right that will make directors more accountable and
contribute to increased shareholder value. The CFA Institutes 2014 assessment
of pertinent academic studies and the use of proxy access in other markets
similarly concluded that proxy access:
● |
Would benefit both the markets and corporate boardrooms,
with little cost or disruption. |
● |
Has the potential to raise overall US market
capitalization by up to $140.3 billion if adopted market-wide.
(http://www.cfapubs.org/dio/pdf/10.2469/ccb.
v2014.n9.1) |
The proposed bylaw terms enjoy strong
investor support votes for similar shareholder proposals averaged 55% from
2012 through September 2014 and similar bylaws have been adopted by companies
of various sizes across industries, including Chesapeake Energy,
Hewlett-Packard, Western Union and Verizon.
We urge shareholders to vote FOR this
proposal.
2015 Proxy
Statement 65
Table of Contents
PROPOSAL 7 STOCKHOLDER PROPOSAL:
PROXY ACCESS FOR SHAREHOLDERS
Board of Directors Statement in
Opposition
The Board of Directors and its
Nominating & Governance Committee have considered this proposal and
concluded that its adoption is unnecessary and not in the best interests of our
stockholders.
Proxy access would bypass our
independent Nominating &
Governance Committees process for identifying and recommending director
nominees. An effective board of directors
is composed of individuals with a diverse and complementary blend of
experiences, skills and perspectives. Our independent Nominating &
Governance Committee and Board of Directors are best situated to assess the
particular qualifications of potential director nominees and determine whether
they will contribute to an effective and well-rounded Board that operates openly
and collaboratively. Allowing stockholders to nominate directors in our proxy
statement would seriously undercut the role of the Nominating & Governance
Committee and the Board in one of the most crucial elements of corporate
governance, the election of directors.
Our Nominating & Governance
Committee has developed criteria and a process for identifying and recommending
director candidates for election by our stockholders, which are set forth in our
Corporate Governance Guidelines and discussed above under Corporate Governance
Matters Nomination of Director Candidates and Proposal 1 Election of
Directors Experience, Qualifications, Attributes and Skills. In undertaking
this responsibility, the Nominating & Governance Committee has a fiduciary
duty to act in good faith for the best interests of FedEx and all of our
stockholders. This process is designed to identify and nominate director
candidates who possess a combination of skills, professional experience and
diversity of backgrounds necessary to oversee our business and who can
contribute to the overall effectiveness of our Board. With this process, we
believe that our Nominating & Governance Committee and Board are able to
achieve the optimal balance of director skills and qualifications that best
serve FedEx and all of our stockholders.
Our stockholders can recommend
prospective director candidates for the Nominating & Governance Committees
consideration. As discussed above under
Corporate Governance Matters Nomination of Director Candidates, our
Nominating & Governance Committee considers director nominees proposed by
our stockholders. Nominees proposed by stockholders for the Committees
consideration are evaluated and considered in the same manner as a nominee
recommended by a Board member, management, search firm or other
source.
FedExs corporate governance
policies ensure that the Board of Directors is held accountable and provide
stockholders with access to the Board. The Board is accountable to FedExs stockholders through the shareholder
rights that are embedded in our governing documents. For example:
● |
All directors are elected
annually; |
|
|
● |
Our Bylaws require that we use a
majority-voting standard in uncontested director elections and include a
resignation requirement for directors who fail to receive the required
majority vote. The Bylaws also prohibit the Board from changing back to a
plurality-voting standard without the approval of our
stockholders; |
|
|
● |
All supermajority stockholder voting
requirements in our Certificate of Incorporation and Bylaws have been
eliminated; |
|
|
● |
Our Bylaws require stockholder approval for any
future poison pill prior to or within twelve months after adoption of
the poison pill; and |
|
|
● |
Stockholders are allowed to call a special
stockholders meeting, subject to the conditions set forth in our
Bylaws. |
In addition, our stockholders currently
have the right to:
● |
Communicate directly with any director
(including our Lead Independent Director), any Board committee or the full
Board; |
|
|
● |
Propose director nominees to the Nominating
& Governance Committee, as discussed above; |
|
|
● |
Submit proposals like this one for inclusion in
FedExs proxy statement, subject to the rules and regulations of the
Securities and Exchange Commission; and |
|
|
● |
Submit other proposals, including nominations
of director candidates, directly at an annual meeting, subject to our
Bylaws. |
The Board believes that FedExs
existing corporate governance policies provide the appropriate balance between
ensuring Board accountability to stockholders and enabling the Board to
effectively oversee FedExs business and affairs for the long-term benefit of
stockholders. In addition, these policies provide our stockholders with
meaningful access to Board members.
66 2015 Proxy Statement
Table of Contents
PROPOSAL 7 STOCKHOLDER PROPOSAL:
PROXY ACCESS FOR SHAREHOLDERS
Proxy access could decrease the
effectiveness of our corporate governance. Allowing stockholders to use company proxy materials for contested
director elections will not improve FedExs corporate governance. Rather, proxy
access could harm our company, Board of Directors and stockholders
by:
● |
Significantly Disrupting
Company and Board Operations. With
proxy access, contested director elections could become routine. Divisive
proxy contests would regularly and substantially disrupt company affairs
and the effective functioning of our Board of Directors. We would be
compelled to devote significant financial resources in support of
Board-nominated candidates, and our management and directors would be
required to divert their time from managing and overseeing company
business to supporting Board director nominees. |
|
|
● |
Balkanizing the Board of
Directors. The election of
stockholder-nominated directors could create factions on the Board,
leading to dissension and delay and thereby impeding the Boards ability
to function effectively. A politicized Board of Directors cannot
effectively serve the best interests of all our
stockholders. |
|
|
● |
Discouraging Highly Qualified
Director Candidates from Serving. The
prospect of routinely standing for election in a contested situation would
deter highly qualified individuals from Board service. Such prospect also
may cause our incumbent directors to become excessively risk averse, thereby impairing their ability to provide sound
and prudent guidance with respect to all of our operations and
interests. |
|
|
● |
Enhancing the Ability of
Special Interest Groups to Elect Directors. Proxy access could facilitate the nomination of directors who are
more interested in furthering the particular agendas of the stockholders
who nominated them, rather than the interests of all stockholders and
FedExs long-term business goals. |
The proposals thresholds for
nomination are too low and do not encourage Board representation focused on the
long-term best interests of all FedEx stockholders. The proposals thresholds, which would enable a holder or
group of holders of as little as 3% of our outstanding shares held for three
years to include a director nominee in the companys proxy statement, are too
low. Moreover, the proposal does not limit the number of holders that can form a
group to reach the 3% threshold. These ownership requirements do not represent a
sufficiently substantial, long-term interest in FedEx that justifies the
significant costs and disruption of possible regular proxy contests. In
addition, these low ownership thresholds would make it easier for stockholders
with interests that may not be shared by all stockholders to use the companys
proxy materials to publicize and campaign for their narrow agenda rather than
the long-term best interests of all our stockholders.
For these reasons, we believe that this
proposal is unnecessary and not in the best interests of our stockholders.
Accordingly, we recommend that you vote against this proposal.
Vote Required for
Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE AGAINST THIS PROPOSAL.
2015 Proxy
Statement 67
Table of Contents
PROPOSAL 8 STOCKHOLDER PROPOSAL:
POLITICAL DISCLOSURE AND ACCOUNTABILITY
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that the
Comptroller of the City of New York, One Centre Street, New York, New York
10007-2341, as custodian and a trustee of the New York City Fire Department
Pension Fund and the New York City Board of Education Retirement System,
collectively the beneficial owner of 14,647 shares of FedEx common stock,
intends to present the following proposal for consideration at the annual
meeting:
Resolved: The shareholders of FedEx
Corporation (FedEx) hereby request the Company to prepare and periodically
update a report, to be presented to the pertinent board of directors committee
and posted on the Companys website, that discloses monetary and non-monetary
expenditures that FedEx makes on political activities, namely:
■ |
expenditures that FedEx cannot
deduct as an ordinary and necessary business expense under section
162(e) of the Internal Revenue Code (the Code) because they are incurred
in connection with (a) influencing legislation, (b) participating or
intervening in any political campaign on behalf of (or in opposition to)
any candidate for public office; and (c) attempting to influence the
general public, or segments thereof, with respect to elections,
legislative matters, or referenda; |
|
● |
contributions to or
expenditures in support of or opposition to political candidates,
political parties, political committees; |
■ |
dues, contributions or other
payments made to tax-exempt social welfare organizations and political
committees operating under sections 501(c)(4) and 527 of the Code,
respectively, and to tax-exempt entities that write model legislation and
operate under section 501(c)(3) of the Code; and |
■ |
the portion of dues or other
payments made to a tax-exempt entity such as a trade association that are
used for an expenditure or contribution and that would not be deductible
under section 162(e) of the Code if made directly by the
Company. |
The report shall identify all
recipients and the amount paid to each recipient from Company funds.
Supporting statement
We believe this proposal, a similar
version of which received 25% support of shares voted last year, promotes good
governance.
As long-term shareholders, we support
transparency and accountability in corporate spending on political activities.
Disclosure is consistent with public policy and in the best interest of FedEx
and its shareholders. Indeed, the Supreme Courts 2010 Citizens United decision
which liberalized rules for corporate participation in election-related
activities recognized the importance of disclosure to shareholders, saying:
[D]isclosure permits citizens and shareholders to react to the speech of
corporate entities in a proper way. This transparency enables the electorate to
make informed decisions and give proper weight to different speakers and
messages.
FedEx states in its 2014 proxy
statement that it actively participates in the political process, including by
making political contributions. In our view, in the absence of a system of
transparency and accountability, company assets could be used for policy
objectives that may be inimical to the long-term interests of and may pose risks
to FedEx and its shareholders.
Although the Supreme Court cited the
importance of disclosure, companies may anonymously channel significant amounts
of money into the political process through trade associations and non-profit
groups that need not disclose contributions. Such payments can dwarf the
contributions that must be publicly reported.
Given the vagaries of the political
process and the uncertainty that political spending will produce any return for
shareholders, we believe that companies should be fully transparent by
disclosing how they spend shareholder money in this area.
68 2015 Proxy Statement
Table of Contents
PROPOSAL 8 STOCKHOLDER PROPOSAL:
POLITICAL DISCLOSURE AND ACCOUNTABILITY
Board of Directors Statement in
Opposition
The Board of Directors and its
Nominating & Governance Committee have considered this proposal and
concluded that its adoption is unnecessary and not in the best interests of our
stockholders.
The Board believes it is in the best
interests of our stockholders for FedEx to be an effective participant in the
political process. We are subject to extensive regulation at the federal and
state levels and are involved in a number of legislative initiatives across a
broad spectrum of policy areas that can have an immediate and dramatic effect on
our operations. We ethically and constructively promote legislative and
regulatory actions that further the business objectives of FedEx and attempt to
protect FedEx from unreasonable, unnecessary or burdensome legislative or
regulatory actions at all levels of government.
As more fully described in our policy
regarding political contributions (which is available in the Governance &
Citizenship section of the Investor Relations page of our website at
http://investors.fedex.com), we actively participate in the political process with the
ultimate goal of promoting and protecting the economic future of FedEx and our
stockholders and employees.
An important part of participating
effectively in the political process is making prudent political contributions
and focused lobbying expenditures but only where permitted by applicable law.
Political contributions of all types are subject to extensive governmental
regulation and public disclosure requirements, and FedEx is fully committed to
complying with all applicable campaign finance laws. For example, corporate
contributions are subject to certain limitations at the federal level, and we
make none. While some states allow corporate contributions to candidates or
political parties, it is FedExs policy not to make such contributions. FedEx
also does not make corporate contributions to groups organized under section 527
of the Internal Revenue Code, other than membership dues, event sponsorships,
and contributions to the organizational committees of the Democratic and
Republican national party conventions and the annual conferences of the
Democratic and Republican Governors Associations.
None of these expenditures are used to
support any election-related activity or ballot initiatives at the federal,
state or local level. These limited corporate expenditures are approved by the
Corporate Vice President of Government Affairs, in consultation with appropriate
members of FedEx senior management. The Executive Vice President and General
Counsel provides periodic updates to the Board of Directors on FedExs political
activities. FedEx is already subject to extensive federal, state and local
lobbying registration and public disclosure requirements. For example, FedEx
files quarterly reports with the United States House of Representatives and Senate
that disclose a list of our lobbying activities, and these reports are publicly
available at http://lobbyingdisclosure.house.gov/.
As a result of these policies and
mandatory public disclosure requirements, the Board has concluded that ample
public information exists regarding FedExs political contributions and lobbying
expenditures to alleviate the concerns cited in this proposal.
FedEx also provides an opportunity for
its employees to participate in the political process by joining FedExs
non-partisan political action committee (FedExPAC). FedExPAC
allows our employees to pool their financial resources to support federal, state and
local candidates, political party committees and political action committees.
The political contributions made by FedExPAC are funded entirely by the
voluntary contributions of our employees. No corporate funds are used.
Appropriate members of FedEx senior management decide which candidates,
campaigns and committees FedExPAC will support based on a nonpartisan effort to
advance and protect the interests of FedEx and our stockholders and employees.
Moreover, FedExPACs activities are subject to comprehensive regulation by the
federal government, including detailed disclosure requirements, which include
monthly reports with the Federal Election Commission. These reports are publicly
available at http://fec.gov/ and include an itemization of FedExPACs receipts and
disbursements, including any political contributions.
Our participation in the political
process is designed to promote and protect the economic future of FedEx and our
stockholders and employees, and we make political contributions, including
lobbying expenditures, and maintain memberships with a variety of trade
associations expressly for that purpose. Participation as a member of these
associations comes with the understanding that we may not always agree with all
of the positions of the organizations or other members, but that we believe the
associations take many positions and address many issues in a meaningful and
influential manner and in a way that will work to continue to provide strong
financial returns.
We have in place effective reporting
and compliance procedures to ensure that our political contributions are made in
accordance with applicable law and we closely monitor the appropriateness and
effectiveness of the political activities undertaken by the most significant
trade associations in which we are a member. For example, we have policies that
govern FedEx employee involvement in trade associations and accounting
procedures that allow us to record and monitor these expenditures.
2015 Proxy
Statement 69
Table of Contents
PROPOSAL 8 STOCKHOLDER PROPOSAL:
POLITICAL DISCLOSURE AND ACCOUNTABILITY
Finally, the Board believes that the
expanded disclosure requested in this proposal could place FedEx at a
competitive disadvantage by revealing its strategies and priorities. Because
parties with interests adverse to FedEx also participate in the political
process to their business advantage, any unilateral expanded disclosure, above
what is required by law and equally applicable to all similar parties engaged in
public debate, could benefit those parties while harming the interests of FedEx
and our stockholders. The Board believes that any reporting requirements that go
beyond those required under existing law should be applicable to all
participants in the process, rather than FedEx alone (as the proponent
requests).
In short, we believe that this proposal
is duplicative and unnecessary, as a comprehensive system of reporting and
accountability for political contributions and lobbying expenditures already
exists. If adopted, the proposal would apply only to FedEx and to no other
company and would cause FedEx to incur undue cost and administrative burden, as
well as competitive harm, without commensurate benefit to our stockholders.
Accordingly, we recommend that you vote against this proposal.
Vote Required for
Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE AGAINST THIS PROPOSAL.
70 2015 Proxy Statement
Table of Contents
PROPOSAL 9 STOCKHOLDER PROPOSAL:
POLITICAL LOBBYING AND CONTRIBUTIONS
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that Clean
Yield Asset Management, P.O. Box 874, 16 Beaver Meadow Road, Norwich, Vermont
05055, on behalf of its client, Rachel Hexter-Fried, the beneficial owner of 300
shares of FedEx common stock, and the Dominican Sisters of Hope, 205 Avenue C,
#10E, New York, New York 10009, the beneficial owner of 70 shares of FedEx
common stock, intend to present the following proposal for consideration at the
annual meeting:
Whereas, corporate lobbying exposes our company to risks that could adversely
affect the companys stated goals, objectives, and ultimately shareholder value,
and
Whereas, we rely on the information provided by our company and, therefore, have
a strong interest in full disclosure of our companys lobbying to evaluate
whether it is consistent with our companys expressed goals and in the best
interests of stockholders.
Resolved, the stockholders
of FedEx request the Board authorize the preparation of a report, updated
annually, disclosing:
1. |
Company policy and
procedures governing lobbying, both direct and indirect, and grassroots
lobbying communications. |
|
|
2. |
Payments by FedEx used
for (a) direct or indirect lobbying or (b) grassroots lobbying
communications, in each case including the amount of the payment and the
recipient. |
|
|
3. |
FedExs membership in
and payments to any tax-exempt organization that writes and endorses model
legislation. |
|
|
4. |
Description of
managements and the Boards decision making process and oversight for
making payments described in section 2 and 3
above. |
For purposes of this proposal, a
grassroots lobbying communication is a communication directed to the general
public that (a) refers to specific legislation or regulation, (b) reflects a
view on the legislation or regulation and (c) encourages the recipient of the
communication to take action with respect to the legislation or regulation.
Indirect lobbying is lobbying engaged in by a trade association or other
organization of which FedEx is a member.
Both direct and indirect lobbying and
grassroots lobbying communications include efforts at the local, state and
federal levels. Neither lobbying nor grassroots lobbying communications
include efforts to participate or intervene in any political campaign or to
influence the general public or any segment thereof with respect to an election
or referendum.
The report shall be presented to the
Audit Committee or other relevant oversight committees and posted on FedExs
website.
Supporting Statement
As stockholders, we encourage
transparency and accountability in FedExs use of corporate funds to influence
legislation and regulation. FedEx sits on the board of the Chamber of Commerce,
which is characterized as by far the most muscular business lobby group in
Washington (Chamber of Secrets, Economist, April 21, 2012), spending
more than $1 billion on lobbying since 1998. FedEx does not disclose its
memberships in, or payments to, trade associations, or the portions of such
amounts used for lobbying. Absent a system of accountability, company assets
could be used for objectives contrary to FedExs long-term interests.
FedEx spent $25.6 million in 2013 and
2014 on direct federal lobbying activities (opensecrets.org). These figures do
not include state lobbying expenditures, where FedEx also lobbies but disclosure
is uneven or absent. For example, FedEx spent over $263,000 lobbying in
California for 2014 (http://cal-access.ss.ca.gov/). And FedEx does not disclose
its membership in tax-exempt organizations that write and endorse model
legislation, such as FedExs service on the Commerce, Insurance and Economic
Development Task Force of the American Legislative Exchange Council (ALEC). More
than 100 companies, including 3M, Unilever and Visa, have publicly left
ALEC.
2015 Proxy
Statement 71
Table of Contents
PROPOSAL 9 STOCKHOLDER PROPOSAL:
POLITICAL LOBBYING AND CONTRIBUTIONS
Board of Directors Statement in
Opposition
The Board of Directors and its
Nominating & Governance Committee have considered this proposal and
concluded that its adoption is unnecessary and not in the best interests of our
stockholders.
The Board believes it is in the best
interests of our stockholders for FedEx to be an effective participant in the
political process. We are subject to extensive regulation at the federal and
state levels and are involved in a number of legislative initiatives across a
broad spectrum of policy areas that can have an immediate and dramatic effect on
our operations. We ethically and constructively promote legislative and
regulatory actions that further the business objectives of FedEx and attempt to
protect FedEx from unreasonable, unnecessary or burdensome legislative or
regulatory actions at all levels of government.
As more fully described in our policy
regarding political contributions (which is available in the Governance &
Citizenship section of the Investor Relations page of our website at
http://investors.fedex.com), we actively participate in the political process with the
ultimate goal of promoting and protecting the economic future of FedEx and our
stockholders and employees.
An important part of participating
effectively in the political process is making prudent political contributions
and focused lobbying expenditures but only where permitted by applicable law.
Political contributions of all types are subject to extensive governmental
regulation and public disclosure requirements, and FedEx is fully committed to
complying with all applicable campaign finance laws. For example, corporate
contributions are subject to certain limitations at the federal level, and we
make none. While some states allow corporate contributions to candidates or
political parties, it is FedExs policy not to make such contributions. FedEx
also does not make corporate contributions to groups organized under section 527
of the Internal Revenue Code, other than membership dues, event sponsorships,
and contributions to the organizational committees of the Democratic and
Republican national party conventions and the annual conferences of the
Democratic and Republican Governors Associations.
None of these expenditures are used to
support any election-related activity or ballot initiatives at the federal,
state or local level. These limited corporate expenditures are approved by the
Corporate Vice President of Government Affairs, in consultation with appropriate
members of FedEx senior management. The Executive Vice President and General
Counsel provides periodic updates to the Board of Directors on FedExs political
activities. FedEx is already subject to extensive federal, state and local
lobbying registration and public disclosure requirements. For example, FedEx
files quarterly reports with the United States House of Representatives and
Senate that disclose a list of our lobbying activities, and these reports are
publicly available at http://lobbyingdisclosure.house.gov/.
As a result of these policies and
mandatory public disclosure requirements, the Board has concluded that ample
public information exists regarding FedExs political contributions and lobbying
expenditures to alleviate the concerns cited in this proposal.
FedEx also provides an opportunity for
its employees to participate in the political process by joining FedExs
non-partisan political action committee (FedExPAC). FedExPAC
allows our employees to pool their financial resources to support federal, state and
local candidates, political party committees and political action committees.
The political contributions made by FedExPAC are funded entirely by the
voluntary contributions of our employees. No corporate funds are used.
Appropriate members of FedEx senior management decide which candidates,
campaigns and committees FedExPAC will support based on a nonpartisan effort to
advance and protect the interests of FedEx and our stockholders and employees.
Moreover, FedExPACs activities are subject to comprehensive regulation by the
federal government, including detailed disclosure requirements, which include
monthly reports with the Federal Election Commission. These reports are publicly
available at http://fec.gov/ and include an itemization of FedExPACs receipts and
disbursements, including any political contributions.
Our participation in the political
process is designed to promote and protect the economic future of FedEx and our
stockholders and employees, and we make political contributions, including
lobbying expenditures, and maintain memberships with a variety of trade
associations expressly for that purpose. Participation as a member of these
associations comes with the understanding that we may not always agree with all
of the positions of the organizations or other members, but that we believe the
associations take many positions and address many issues in a meaningful and
influential manner and in a way that will work to continue to provide strong
financial returns.
We have in place effective reporting
and compliance procedures to ensure that our political contributions are made in
accordance with applicable law and we closely monitor the appropriateness and
effectiveness of the political activities undertaken by the most significant
trade associations in which we are a member. For example, we have policies that
govern FedEx employee involvement in trade associations and accounting
procedures that allow us to record and monitor these expenditures.
Finally, the Board believes that the
expanded disclosure requested in this proposal could place FedEx at a
competitive disadvantage by revealing its strategies and priorities. Because
parties with interests adverse to FedEx also participate in the political
process to their business advantage, any unilateral expanded disclosure, above
what is required by law and equally
72 2015 Proxy Statement
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PROPOSAL 9 STOCKHOLDER PROPOSAL:
POLITICAL LOBBYING AND CONTRIBUTIONS
applicable to all similar parties
engaged in public debate, could benefit those parties while harming the
interests of FedEx and our stockholders. The Board believes that any reporting
requirements that go beyond those required under existing law should be
applicable to all participants in the process, rather than FedEx alone (as the
proponent requests).
In short, we believe that this proposal
is duplicative and unnecessary, as a comprehensive system of reporting and
accountability for political contributions and lobbying expenditures already
exists. If adopted, the proposal would apply only to FedEx and to no other
company and would cause FedEx to incur undue cost and administrative burden, as
well as competitive harm, without commensurate benefit to our stockholders.
Accordingly, we recommend that you vote against this proposal.
Vote Required for
Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE AGAINST THIS PROPOSAL.
2015 Proxy
Statement 73
Table of Contents
PROPOSAL 10 STOCKHOLDER PROPOSAL:
ALIGNMENT BETWEEN CORPORATE VALUES AND POLITICAL CONTRIBUTIONS
FedEx is not responsible for the
content of this stockholder proposal or supporting statement.
FedEx has been notified that the
NorthStar Asset Management, Inc. Funded Pension Plan, PO Box 301840, Boston,
Massachusetts 02130, the beneficial owner of 193 shares of FedEx common stock,
intends to present the following proposal for consideration at the annual
meeting:
Whereas:
In Citizens United v. Federal Election Commission, the Supreme Court interpreted the right to freedom of speech to include
certain corporate political expenditures involving electioneering
communications, which resulted in greater public and shareholder
scrutiny;
The Conference Board Handbook on Corporate Political Activity (2011) recommends corporations review their political
expenditures to examine the proposed expenditures to ensure that they are in
line with the companys values and publicly stated policies, positions, and
business strategies and that they do not pose reputational, legal, or other
risks to the company;
Political contributions made by the
company include inconsistencies between donations and corporate values.
According to the Center for Political Accountability (CPA), FedEx Corporation
and FedExPAC together have spent more than $4 million on political activities
since 2002, all without comprehensive disclosure. According to CPA, these gaps
in transparency and accountability may expose the company to reputational, legal
and business risks that could threaten shareholder value;
FedExs Environmental Policy Statement
declares that FedEx recognizes that the long-term health of our business is
directly connected to the health of the planet and local communities. Yet since
2009, FedExPAC, alone, has designated over a quarter of its contributions to
politicians voting against the American Clean Energy
and Security Act of 2009 and for deregulating greenhouse
gases;
FedExs nondiscrimination policy states
that we will not tolerate
discrimination of any kind involving
gender,
sexual orientation, gender identity, gender expression
Yet since 2009,
FedExPAC, alone, has designated more than 40% of its contributions to
politicians voting against hate crimes legislation and the repeal of Dont Ask Dont
Tell, and sponsoring the Federal Marriage Amendment Act, which would eliminate
equal marriage rights across the nation.
Resolved: Shareholders request that the Board of Directors report to shareholders
annually at reasonable expense, excluding confidential information, a congruency
analysis between corporate values as defined by FedExs stated policies
(including our Environmental Policy Statement and our nondiscrimination policy)
and Company and FedExPAC political and electioneering contributions, including a
list of any such contributions occurring during the prior year which raise an
issue of misalignment with corporate values, and stating the justification for
such exceptions.
Supporting
Statement: Proponents recommend that Company
management develop coherent criteria for determining congruency, such as
identifying legislative initiatives that are considered most germane to core
company values, and that the report include managements analysis of risks to
our companys brand, reputation, or shareholder value, as well as acts of
stewardship by the Company to inform funds recipients of company values, and
the recipients divergence from those values, at the time contributions are
made. Expenditures for electioneering communications means spending directly,
or through a third party, at any time during the year, on printed, internet or
broadcast communications, which are reasonably susceptible to interpretation as
in support of or opposition to a specific candidate.
74 2015 Proxy Statement
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PROPOSAL 10 STOCKHOLDER PROPOSAL:
ALIGNMENT BETWEEN CORPORATE VALUES AND POLITICAL CONTRIBUTIONS
Board of Directors Statement in
Opposition
The Board of Directors and its
Nominating & Governance Committee have considered this proposal and
concluded that its adoption is unnecessary and not in the best interests of our
stockholders.
FedEx is one of the most trusted and
respected companies in the world. Among the many reputation awards we received
during fiscal 2015, FedEx ranked 12th in FORTUNE magazines Worlds Most
Admired Companies list the 14th consecutive year we have been ranked in the
top 20 on the list. Additionally, FedEx ranked 18th on Forbes 2014 Americas
Most Reputable Companies list, which measures the corporate reputations of the
largest U.S. companies based on consumers trust, esteem, admiration, and good
feeling towards a company. Lastly, in 2015 FedEx was listed on Corporate Responsibility Magazines 100 Best Corporate Citizens list.
The FedEx brand is one of the most
widely recognized in the world and one of our most important and valuable
assets. We have a strong reputation among customers and the general public for
high standards of social and environmental responsibility and corporate
governance and ethics. The FedEx brand name and our corporate reputation are
powerful sales and marketing tools. We recognize that adverse publicity relating
to company activities could tarnish our reputation and reduce the value of our
brand. As a result, we devote significant resources to promoting and protecting
our brand and reputation.
At the same time, it is necessary and
in the best interests of our stockholders for FedEx to be an effective
participant in the political process. We are subject to extensive regulation at
the federal and state levels and are involved in a number of legislative
initiatives across a broad spectrum of policy areas that can have an immediate
and dramatic effect on our operations. We ethically and constructively promote
legislative and regulatory actions that further the business objectives of FedEx
and attempt to protect FedEx from unreasonable, unnecessary or burdensome
legislative or regulatory actions at all levels of government.
Our participation in the political
process is designed to promote and protect the economic future of FedEx and our
stockholders and employees, and we make political contributions and maintain
memberships with a variety of trade associations expressly for that purpose.
Participation in the political process and as a member of these associations
comes with the understanding that we may not always agree with all of the
positions of these recipients or organizations. We believe, however, that these
recipients and associations take many positions and address many issues of
importance to FedEx in a meaningful manner and in a way that will work to
continue to provide strong financial returns.
Supporting individuals and organizations whose positions on a wide array of
issues help advance the best interests of FedEx and our stockholders and
employees is consistent with our corporate values.
Furthermore, our political contribution
policies and procedures help ensure that our participation in the political
process does not harm our brand or reputation. For example:
● |
FedEx has a policy of making no
corporate contributions at the federal or state level. |
|
|
● |
FedEx does not make corporate
contributions to groups organized under section 527 of the Internal
Revenue Code, other than membership dues, event sponsorships, and
contributions to the organizational committees of the Democratic and
Republican national party conventions and the annual conferences of the
Democratic and Republican Governors Associations. |
|
|
● |
These limited corporate political
contributions are approved by the Corporate Vice President of Government
Affairs, in consultation with appropriate members of FedEx senior
management. The Executive Vice President and General Counsel provides
periodic updates to the Board of Directors on FedExs political
activities. |
|
|
● |
All contributions by FedExs
non-partisan political action committee (FedExPAC) are approved by
appropriate members of FedEx senior management and are based on a
nonpartisan effort to advance and protect the interests of FedEx and our
stockholders and employees. The political
contributions made by FedExPAC are funded entirely by the voluntary
contributions of our employees. No corporate funds are
used. |
We believe that providing the report
recommended by this proposal and adopting the policy requested in the supporting
statement are unnecessary and would be unduly burdensome, given the level of
detail it seeks and the complexity of the political advocacy process. It could
also undermine our ability to make political contributions in support of those
whose policy positions are supportive of the legitimate business interests of
FedEx.
In short, the Board believes that our
current policies and procedures governing political contributions adequately
protect our corporate brand, values and reputation, while allowing FedEx to
actively and effectively participate in the political process with the ultimate
goal of promoting and protecting the economic future of the company and our
stockholders and employees. Accordingly, we recommend that you vote against this
proposal.
2015 Proxy
Statement 75
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PROPOSAL 10 STOCKHOLDER PROPOSAL:
ALIGNMENT BETWEEN CORPORATE VALUES AND POLITICAL CONTRIBUTIONS
Vote Required for
Approval
If this proposal is properly presented
at the meeting, approval requires the affirmative vote of a majority of the
shares present at the meeting, in person or represented by proxy, and entitled
to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE AGAINST THIS PROPOSAL.
76 2015 Proxy Statement
Table of Contents
INFORMATION ABOUT THE ANNUAL
MEETING
Who is entitled to vote at the
annual meeting?
The record date for the meeting is
August 3, 2015. Only stockholders of record at the close of business on that
date are entitled to vote at the meeting. The only class of stock entitled to be
voted at the meeting is FedEx common stock. Each outstanding share of common stock is entitled to one vote for all matters
before the meeting. At the close of business on the record date there were
282,500,880 shares of FedEx common stock outstanding.
What is the difference between
holding shares as a stockholder of record and as a beneficial owner? Am I
entitled to vote if my shares are held in street name?
If your shares are registered in your
name with FedExs transfer agent, Computershare Trust Company, N.A., you are the
stockholder of record (or registered stockholder) of those shares, and these
proxy materials have been provided directly to you by FedEx.
If your shares are held by a bank,
brokerage firm or other nominee, you are considered the beneficial owner of
shares held in street name. If your shares are held in street name, these
proxy materials are being forwarded to you by your bank, brokerage firm or other
nominee (the bank or broker), along with a voting instruction form. As the
beneficial owner, you have the right to direct your bank or broker how to vote
your shares by using the voting instruction form or by following its
instructions for voting by telephone or on the Internet (if made available by
your bank or broker with respect to any shares you hold in street name), and the
bank or broker is required to vote your shares in accordance with your
instructions.
If you do not give voting instructions,
your broker will nevertheless be entitled to vote your shares in its discretion
on the ratification of the appointment of the independent registered public
accounting firm (Proposal 3). Absent your instructions, the broker will not be
permitted, however, to vote your shares on the election of directors (Proposal
1), the advisory vote to approve named executive officer compensation (Proposal
2) or the adoption of the seven stockholder proposals (Proposals 4 through 10),
and your shares will be considered broker non-votes on those proposals. See
How will broker non-votes be treated? below.
As the beneficial owner of shares, you
are invited to attend the annual meeting. If you are a beneficial owner,
however, you may not vote your shares in person at the meeting unless you obtain
a legal proxy, executed in your favor, from your bank or broker.
What does it mean if I receive more
than one proxy card or voting instruction form?
If you receive more than one proxy card
or voting instruction form that means your shares are registered differently and
are held in more than one account. To ensure that all your shares are voted,
please sign and return by mail all proxy cards and voting instruction forms or vote each account over the Internet or by
telephone (if made available by the bank or broker with respect to any shares
you hold in street name).
2015 Proxy
Statement 77
Table of Contents
INFORMATION ABOUT THE ANNUAL
MEETING
How many shares must be present to
hold the meeting?
A quorum must be present at the meeting
for any business to be conducted. The presence at the meeting, in person or
represented by proxy, of the holders of a majority of the shares of common stock
outstanding on the record date will constitute a
quorum. Proxies received but marked as abstentions or treated as broker
non-votes will be included in the calculation of the number of shares considered
to be present at the meeting.
What if a quorum is not present at
the meeting?
If a quorum is not present at the
meeting, the holders of a majority of the shares entitled to vote at the meeting
who are present, in person or represented by proxy, or the chairman of the
meeting, may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at
the time the adjournment is taken, and no other notice will be given.
How do I vote?
1. |
YOU MAY VOTE BY MAIL.
If you properly complete, sign and date the accompanying proxy card or
voting instruction form and return it in the enclosed envelope, it will be
voted in accordance with your instructions. The enclosed envelope requires
no additional postage if mailed in the United States. |
|
2. |
YOU MAY VOTE BY
TELEPHONE OR ON THE INTERNET. If you are a registered stockholder, you may
vote by telephone or on the Internet by following the instructions
included on the proxy card. If you vote by telephone or on the Internet,
you do not have to mail in your proxy card. If you wish to attend the
meeting in person, however, you will need to bring your admission ticket.
Internet and telephone voting are available 24 hours a day. Votes
submitted through the Internet or by telephone must be received by 11:59
p.m. Eastern time on September 27, 2015. |
If you are the beneficial owner of
shares held in street name, you still may be able to vote your shares
electronically by telephone or on the Internet. The availability of telephone
and Internet voting will depend on the
voting process of your bank or broker. We recommend that you follow the
instructions set forth on the voting instruction form provided to
you.
NOTE: If you vote on the Internet,
you may elect to have next years proxy statement and annual report to
stockholders delivered to you electronically. We strongly encourage you to
enroll in electronic delivery. It is a cost-effective way for us to provide you
with proxy materials and annual
reports.
3. |
YOU MAY VOTE IN PERSON
AT THE MEETING. If you are a registered stockholder and attend the
meeting, you may deliver your completed proxy card in person.
Additionally, we will pass out ballots to registered stockholders who wish
to vote in person at the meeting. If you are a beneficial owner of shares
held in street name who wishes to vote at the meeting, you will need to
obtain a legal proxy from your bank or broker, bring it with you to the
meeting, and hand it in with a signed ballot that will be provided to you
at the meeting. Beneficial owners will not able to vote their shares at
the meeting without a legal proxy. |
How do I vote my shares held in a
FedEx employee stock purchase plan or in any FedEx benefit plan?
If you own shares of FedEx common stock
through a FedEx employee stock purchase plan or any FedEx or subsidiary benefit
plan, you can direct the record holder or the plan trustee to vote the shares
held in your account in accordance with your instructions by completing the
proxy or voting instruction card and returning it
in the enclosed envelope or by registering your instructions via the Internet or
telephone as directed on the proxy card. If you register your voting
instructions by telephone or on the Internet, you do not have to mail in the
proxy card. If you wish to attend the meeting
78 2015 Proxy Statement
Table of Contents
INFORMATION ABOUT THE ANNUAL
MEETING
in person, however, you will need to
bring the admission ticket attached to the proxy or voting instruction card with
you. In order to instruct a record holder or plan trustee on the voting of
shares held in your account, your instructions must be received by September 23, 2015. If your voting instructions are not
received by that date, each plan trustee will vote your shares in the same
proportion as the plan shares for which voting instructions have been
received.
Who can attend the
meeting?
Only stockholders eligible to vote or
their authorized representatives will be admitted to the meeting. If you plan to
attend the meeting, detach and bring with you the stub portion of your proxy
card, which is marked Admission Ticket. You also must bring a valid
government-issued photo identification, such as a drivers license or a
passport. If you received your proxy materials through the Internet, you should
follow the instructions provided to print a paper admission ticket.
If your shares are held in street name,
you must bring the Admission Ticket that either accompanies or is the stub
portion of your voting instruction form. Alternatively, you may bring other
proof of ownership, such as a brokerage account statement, which clearly shows your ownership of FedEx common stock as of
the record date. In addition, you must bring a valid government-issued photo
identification, such as a drivers license or a passport.
Security measures will be in
place at the meeting to help ensure the safety of attendees. Metal detectors
similar to those used in airports will be located at the entrance to the meeting
room, and briefcases, handbags and packages will be inspected. No cameras or
recording devices of any kind, or signs, placards, banners or similar materials,
may be brought into the meeting. Anyone who refuses to comply with these
requirements will not be admitted.
Can I change my vote after I submit
my proxy?
Yes, if you are a registered
stockholder you may revoke your proxy and change your vote prior to the
completion of voting at the meeting by:
● |
submitting a valid, later-dated
proxy card or a later-dated vote by telephone or on the Internet in a
timely manner (the latest-dated, properly completed proxy that you submit
in a timely manner, whether by mail, by telephone or on the Internet, will
count as your vote); or |
|
|
● |
giving written notice of such
revocation to the Secretary of FedEx prior to or at the meeting or by
voting in person at the meeting. |
Your attendance at the meeting itself
will not revoke your proxy unless you give written notice of revocation to the
Secretary before your proxy is voted or you vote in person at the
meeting.
If your shares are held in street name,
you should contact your bank or broker and follow its procedures for changing
your voting instructions. You also may vote in person at the meeting if you
obtain a legal proxy from your bank or broker.
Will my vote be kept
confidential?
Yes, your vote will be kept
confidential and not disclosed to FedEx unless:
● |
required by law;
|
|
|
● |
you expressly request disclosure
on your proxy; or |
|
|
● |
there is a proxy
contest. |
Who will count the
votes?
FedExs transfer agent, Computershare
Trust Company, N.A., will tabulate and certify the votes. A representative of
the transfer agent will serve as the inspector of election.
2015 Proxy
Statement 79
Table of Contents
INFORMATION ABOUT THE ANNUAL
MEETING
What if I am a registered
stockholder and do not specify how my shares are to be voted on my proxy
card?
If you properly submit a proxy but do
not indicate any voting instructions, your shares will be voted:
● |
FOR the election of each of the
twelve nominees named in this proxy statement to the Board of
Directors; |
|
|
● |
FOR the advisory proposal to
approve named executive officer compensation; |
|
|
● |
FOR the ratification of the
appointment of Ernst & Young LLP as FedExs independent registered
public accounting firm; and |
|
|
● |
AGAINST each of the stockholder
proposals. |
Will any other business be conducted
at the meeting?
Certain stockholders have notified us
of their intent to propose a resolution at the meeting requesting that the Board
of Directors issue a report by January 2016, at reasonable cost and omitting
proprietary information, describing the legal steps FedEx has taken and/or could
take to distance itself from the Washington D.C. NFL team name (the Floor
Proposal). We have not received notice of, and are not aware of, any business
to come before the meeting other than the agenda items referred to in this proxy
statement and the possible submission of the Floor Proposal.
The Floor Proposal is not included in
this proxy statement. If the Floor Proposal is presented at the meeting, the
proxy holders will have discretionary voting authority under Rule 14a-4(c) under
the Securities Exchange Act of 1934 with respect to the Floor Proposal and
intend to exercise such discretion to vote AGAINST such proposal. If any other
matter properly comes before the stockholders for a vote at the meeting, the
proxy holders will vote your shares in accordance with their best
judgment.
What happens if a director nominee
does not receive the required majority vote?
Each nominee is a current director who
is standing for reelection. Accordingly, each nominee has tendered an
irrevocable resignation from the Board of Directors that will take effect if the
nominee does not receive the required majority vote and the Board accepts the
resignation. If the Board accepts the resignation, the nominee will no longer
serve on the Board of Directors, and if the Board
rejects the resignation, the nominee will continue to serve until his or her
successor has been duly elected and qualified or until his or her earlier
disqualification, death, resignation or removal. See Corporate Governance
Matters Majority-Voting Standard for Director Elections above.
What happens if a director nominee
is unable to stand for election?
If a director nominee named in this
proxy statement is unable to stand for election, the Board of Directors may
either reduce the number of directors to be elected or select a substitute
nominee. If a substitute nominee is selected, the proxy holders may vote your
shares for the substitute nominee.
What happens if a stockholder
proposal is approved?
Approval of a stockholder proposal
would merely serve as a recommendation to the Board to take the necessary steps
to implement such proposal.
80 2015 Proxy Statement
Table of Contents
INFORMATION ABOUT THE ANNUAL
MEETING
How will abstentions be
treated?
Abstentions will have no effect on the
election of directors (Proposal 1). For each of the other proposals, abstentions
will be treated as shares present for quorum purposes and entitled to vote, so
they will have the same practical effect as votes against the
proposal.
How will broker non-votes be
treated?
If your shares are held in street name,
in order to ensure your shares are voted in the way you would like, you must
provide voting instructions to your bank or broker by the deadline provided in
the materials you receive from your bank or broker.
If you hold your shares in
street name and you do not instruct your broker how to vote your shares, your
broker may vote your shares in its discretion on the ratification of the
appointment of the independent registered public accounting firm (Proposal 3).
Your shares will be treated as broker non-votes on all the other proposals,
including the election of directors (Proposal 1).
Broker non-votes will be treated as
shares present for quorum purposes, but not entitled to vote. Thus, absent
voting instructions from you, your broker may not vote your shares on the
election of directors (Proposal 1), the advisory vote to approve named executive
officer compensation (Proposal 2) or the adoption of the seven stockholder
proposals (Proposals 4 through 10). A broker non-vote with respect to these
proposals will not affect their outcome.
Will the meeting be
webcast?
Yes, you are invited to visit the News & Events section of the Investor
Relations page of our website (http://investors.fedex.com)
at 8:00 a.m. Central time on September 28, 2015, to access the live webcast of the meeting. An archived copy of the webcast will
be available on our website for at least one year. The information on FedExs website, however, is not incorporated by
reference in, and does not form part of, this proxy statement.
2015 Proxy
Statement 81
Table of Contents
ADDITIONAL
INFORMATION
Proxy Solicitation
FedEx will bear all costs of this proxy
solicitation. In addition to soliciting proxies by this mailing, our directors,
officers and regular employees may solicit proxies personally or by mail,
telephone, facsimile or other electronic means, for which solicitation they will
not receive any additional compensation. FedEx will reimburse brokerage firms,
custodians, fiduciaries and other nominees for
their out-of-pocket expenses in forwarding solicitation materials to beneficial
owners upon our request. FedEx has retained Morrow & Co., LLC, 470 West
Ave., Stamford, CT 06902, to assist in the solicitation of proxies for a fee of
$12,500 plus reimbursement of certain disbursements and expenses.
Householding
We have adopted a procedure approved by
the SEC called householding. Under this procedure, stockholders of record who
have the same address and last name and do not participate in electronic
delivery will receive only one copy of this proxy statement and the 2015 Annual
Report to Stockholders, unless contrary instructions have been received from one
or more of these stockholders. This procedure will reduce our printing costs and
postage fees.
Stockholders who participate in
householding will continue to receive separate proxy cards. Also, householding
will not in any way affect dividend check mailings.
If you are eligible for householding,
but you and other stockholders of record with whom you share an address
currently receive multiple copies of our annual report and proxy statement, or
if you hold stock in more than one account, and in either case you wish to
receive only a single copy of our annual report and proxy statement for your
household, please contact our transfer agent at
Computershare Investor Services (for overnight mail delivery: 211 Quality
Circle, Suite 210, College Station, Texas 77845; for regular mail delivery: P.O.
Box 30170, College Station, Texas 77842; by telephone: in the U.S. or Canada,
1-800-446-2617; outside the U.S. or Canada, 1-781-575-2723).
If you participate in householding and
wish to receive a separate copy of this proxy statement and the 2015 Annual
Report to Stockholders, or if you do not wish to participate in householding and
prefer to receive separate copies of future annual reports and proxy statements,
please contact Computershare as indicated above. A separate copy of this proxy
statement and the 2015 Annual Report to Stockholders will be delivered promptly
upon request.
Beneficial owners of shares held in
street name can request information about householding from their banks,
brokerage firms or other holders of record.
82 2015 Proxy Statement
Table of Contents
STOCKHOLDER PROPOSALS FOR
2016
ANNUAL MEETING
Stockholder proposals intended to be
presented at FedExs 2016 annual meeting must be received by FedEx no later than
April 19, 2016, to be eligible for inclusion in FedExs proxy statement and form
of proxy for next years meeting. Proposals should be addressed to FedEx
Corporation, Attention: Corporate Secretary, 942 South Shady Grove Road,
Memphis, Tennessee 38120.
For any proposal that is not submitted
for inclusion in next years proxy statement (as described in the preceding
paragraph), but is instead sought to be presented directly at the 2016 annual
meeting, including nominations of director candidates, FedExs Bylaws require
stockholders to give advance notice of such proposals. The required notice,
which must include the information and documents set forth in the Bylaws, must
be given no more than 120 days and no less than 90 days in advance of the
anniversary date of the immediately preceding annual meeting. Accordingly, with
respect to our 2016 annual meeting of stockholders, our Bylaws require notice
to be provided to FedEx Corporation, Attention:
Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120, as
early as May 31, 2016, but no later than June 30, 2016. Our Bylaws are available
under Policies and Guidelines in the Governance & Citizenship section of
the Investor Relations page of our website at http://investors.fedex.com. Except as
otherwise provided by law, the chairman of the meeting will declare out of order
and disregard any nomination or other business proposed to be brought before the
meeting by a stockholder that is not made in accordance with our
Bylaws.
By order of the Board of
Directors,
Christine P. Richards
Executive Vice
President, General Counsel and Secretary
2015 Proxy
Statement 83
Table of Contents
APPENDIX
A |
|
COMPANIES IN EXECUTIVE COMPENSATION COMPARISON SURVEY GROUP |
|
3M Company |
GlaxoSmithKline
plc |
7-Eleven, Inc. |
Google Inc. |
ABB (ASEA Brown
Boveri) |
HCA Holdings,
Inc. |
Abbott
Laboratories |
Home Box Office,
Inc. |
Accenture plc |
Henkel of America,
Inc. |
Adecco S.A. |
Hess
Corporation |
Air Liquide S.A. |
Hoffman-La Roche
Inc. |
Alcoa Inc. |
Honeywell International
Inc. |
Amazon.com, Inc. |
Iberdrola Renewables,
LLC |
AMR Corporation |
Iberdrola USA |
Arrow Electronics,
Inc. |
INEOS Olefins &
Polymers USA |
Ascension Health |
Intel
Corporation |
AstraZeneca PLC |
International Paper
Company |
BAE Systems plc |
Johnson &
Johnson |
Bayer Business &
Technology Services |
Johnson Controls,
Inc. |
Bayer
CropScience |
Kaiser Foundation Health
Plan, Inc. |
Bayer HealthCare |
KDDI
Corporation |
Bayer
MaterialScience |
Kimberly-Clark
Corporation |
Bechtel Systems &
Infrastructure, Inc. |
KPMG LLP |
Best Buy Co.,
Inc. |
Lenovo Group
Limited |
Bunge Limited |
Linde A.G. (The Linde
Group) |
Burlington Northern Santa
Fe Corporation |
Lockheed Martin
Corporation |
Caterpillar Inc. |
Lowes Companies,
Inc. |
CDNetworks |
LyondellBasell |
Chrysler Group
LLC |
Macys, Inc. |
CHS Inc. |
ManpowerGroup
Inc. |
Cisco Systems,
Inc. |
McDonalds
Corporation |
Comcast
Corporation |
MedImmune,
LLC |
Compass Group
PLC |
Merck & Co.,
Inc. |
ConocoPhillips |
Mondelez International,
Inc. |
Continental Automotive
Systems US, Inc. |
NEC Corporation of
America |
Deere &
Company |
NIKE, Inc. |
Delhaize America,
LLC |
Nokia
Corporation |
Dell Inc. |
Northrop Grumman
Corporation |
Delta Air Lines,
Inc. |
Novartis Consumer Health,
Inc |
Dignity Health |
Occidental Petroleum
Corporation |
E. I. du Pont de Nemours
and Company |
Orange Business
Services |
Eli Lilly and
Company |
PepsiCo, Inc. |
EMC Corporation |
Pfizer Inc. |
Emerson Electric
Co. |
Philip Morris
International Inc. |
Ericsson
Television |
Plains All Americas
Pipeline, L.P. |
Exelon
Corporation |
Raytheon
Company |
Faurecia USA Holdings,
Inc. |
Ricoh Americas
Corporation |
Fox Networks Group,
Inc. |
Roche Diagnostics
Corporation |
Fujitsu Limited |
Saudi Basic Industries
Corporation (SABIC) |
General Dynamics
Corporation |
Safeway
Inc. |
2015 Proxy
Statement A-1
Table of Contents
Appendix A
Companies in Executive Compensation Comparison Survey Group
Saint Gobain S.A. |
Toshiba Medical Research Institute USA,
Inc. |
Sanofi |
Turner Broadcasting System,
Inc. |
Schlumberger Limited |
Twentieth Century Fox Film
Corporation |
Sears Holdings Corporation |
Tyson Foods, Inc. |
Siemens Corporation |
Unilever United States, Inc. |
Sodexo |
Union Pacific Corporation |
Sprint Nextel Corporation |
United Continental Holdings,
Inc. |
Staples, Inc. |
United Parcel Service, Inc. |
Sunovion Pharmaceuticals Inc. |
United Technologies Corporation |
SUPERVALU INC. |
Warner Bros. Entertainment Inc. |
Sysco Corporation |
Xerox Corporation |
Telvent |
|
Tesoro Corporation |
|
Teva Pharmaceutical Industries
Limited |
|
The American Broadcasting Company |
|
The Coca-Cola Company |
|
The DIRECTV Group, Inc. |
|
The Dow Chemical Company |
|
The Goodyear Tire & Rubber
Company |
|
The HollyFrontier Corporation |
|
The TJX Companies, Inc. |
|
The Walt Disney Company |
|
Time Warner Inc. |
|
Time Warner Cable Inc. |
|
A-2 2015 Proxy Statement
Table of Contents
APPENDIX
B |
|
RECONCILIATION OF NON-GAAP MEASURES |
As described in Executive Compensation
Compensation Discussion and Analysis, the Board of Directors, upon the
recommendation of the Compensation Committee, determined that payouts, if any,
under our fiscal 2015 AIC plan and FY2013-FY2015, FY2014-FY2016, FY2015-FY2017
and FY2016-FY2018 LTI plans will more accurately reflect core financial
performance in fiscal 2015 if results were adjusted to exclude: (i) the net
impact of the companys adoption of mark-to-market accounting for its defined
benefit pension and other postretirement plans,
including the impact of lowering the expected return on plan assets (EROA)
assumption from 7.75% to 6.5% in the presentation of segment results for all
prior periods; (ii) aircraft impairment and related charges recorded in the
fourth quarter; and (iii) a charge in the fourth quarter to increase the legal
reserve associated with the settlement of a legal matter at FedEx Ground to the
amount of the settlement. The tables below present a reconciliation of our
presented non-GAAP measures to the most directly comparable GAAP
measures.
Full-Year Fiscal 2015
|
|
|
FedEx Corporation |
|
|
Dollars in millions, except EPS |
|
Operating Income |
|
|
Net Income |
|
|
Diluted Earnings Per Share |
|
|
|
Non-GAAP measures for AIC and LTI
Plans(1) |
|
$4,228 |
|
|
$2,549 |
|
|
$8.87 |
|
|
|
Segment elimination of pension amortization expense and
recast of EROA, net |
|
36 |
|
|
23 |
|
|
0.08 |
|
|
|
Non-GAAP measure |
|
$4,264 |
|
|
$2,572 |
|
|
$8.95 |
|
|
|
Segment reporting
change(2) |
|
266 |
|
|
168 |
|
|
0.58 |
|
|
|
Mark-to-market pension
accounting adjustments(3) |
|
(2,190 |
) |
|
(1,382 |
) |
|
(4.81 |
) |
|
|
Aircraft impairment and related
charges |
|
(276 |
) |
|
(175 |
) |
|
(0.61 |
) |
|
|
Legal reserve |
|
(197 |
) |
|
(133 |
) |
|
(0.46 |
) |
|
|
GAAP measure |
|
$1,867 |
|
|
$1,050 |
|
|
$3.65 |
|
|
(1) |
As described in Executive Compensation Compensation Discussion
and Analysis: (a) adjusted consolidated operating income was used to
determine fiscal 2015 AIC plan achievement; (b) fiscal 2015 adjusted EPS
of $8.24 (adjusted EPS of $8.87 less the $0.63 impact of the stock
repurchase program) was used for purposes of the FY2013-FY2015 LTI plan;
(c) fiscal 2015 adjusted EPS of $8.24 (adjusted EPS of $8.87 less the
$0.63 impact of the stock repurchase program) is being used for purposes
of the FY2014-FY2016 LTI plan; and (d) fiscal 2015 adjusted EPS of $8.87
is being used for purposes of the FY2015-FY2017 LTI plan and as the
base-year EPS for the FY2016-FY2018 LTI plan. |
(2) |
At the segment level, the EROA has been set at 6.5%, which will
equal the companys consolidated EROA assumption in fiscal 2016. In fiscal
years where the consolidated EROA is greater than 6.5% the difference is
reflected as a credit at Corporate. The segment reporting change reflects
this credit. |
(3) |
Mark-to-market pension accounting adjustments reflect the year-end
noncash adjustment to the valuation of the companys defined benefit
retirement plans. |
|
|
|
|
|
FedEx Express
Segment |
|
|
|
Dollars in millions |
|
Operating Income |
|
|
|
Non-GAAP measure for AIC Plan(1) |
|
$1,860 |
|
|
|
Aircraft impairment and related
charges |
|
(276 |
) |
|
|
GAAP measure |
|
$1,584 |
|
|
(1) |
Adjusted FedEx Express segment operating income was used to
determine fiscal 2015 AIC plan achievement as described in Executive
Compensation Compensation Discussion and
Analysis. |
2015 Proxy
Statement B-1
Table of Contents
|
IMPORTANT
ANNUAL MEETING
INFORMATION |
Using
a black ink pen, mark your votes with an X as shown in this example.
Please do not write outside the designated areas. |
|
|
Annual Meeting Admission
Ticket
Electronic
Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of
mailing your proxy, you may choose one of the voting methods outlined below to
vote your proxy.
VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies
submitted by the Internet or telephone must be received by 11:59 p.m. Eastern
time on September 27, 2015.
|
Vote by
Internet |
|
● Go to
www.investorvote.com/FEDX |
|
● Or scan the QR
code with your smartphone |
|
● Follow the
steps outlined on the secure website |
Vote by
telephone |
● Call toll free 1-800-652-VOTE (8683) within the USA, US
territories & Canada on a touch-tone telephone |
● Follow the instructions provided by the recorded
message |
Annual Meeting Proxy
Card/Sign and Date on Reverse
Side
IF YOU HAVE NOT VOTED
VIA THE INTERNET OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A |
The Board of Directors recommends a
vote FOR each of the listed nominees and FOR Proposals
2 and 3. |
1. |
Election of Directors: |
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For |
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Against |
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Abstain |
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For |
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Against |
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Abstain |
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For |
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Against |
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Abstain |
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01 - James L.
Barksdale |
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02 - John A.
Edwardson |
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☐ |
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☐ |
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☐ |
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03 - Marvin R.
Ellison |
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☐ |
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☐ |
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☐ |
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04 - Kimberly A.
Jabal |
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☐ |
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☐ |
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05 - Shirley Ann
Jackson |
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☐ |
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☐ |
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☐ |
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06 - Gary W.
Loveman |
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☐ |
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☐ |
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07 - R. Brad
Martin |
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☐ |
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☐ |
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☐ |
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08 - Joshua
Cooper Ramo |
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☐ |
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☐ |
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☐ |
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09 - Susan C.
Schwab |
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☐ |
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☐ |
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☐ |
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10 - Frederick
W. Smith |
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☐ |
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☐ |
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☐ |
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11 - David P.
Steiner |
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☐ |
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☐ |
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☐ |
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12 - Paul S.
Walsh |
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☐ |
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☐ |
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☐ |
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For |
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Against |
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Abstain |
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For |
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Against |
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Abstain |
2. Advisory vote to approve named
executive officer compensation. |
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3. Ratification of independent
registered public accounting firm. |
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☐ |
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B |
The Board of Directors recommends a
vote AGAINST
Proposals 4 through
10. |
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For |
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Against |
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Abstain |
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For |
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Against |
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Abstain |
4. Stockholder proposal regarding
independent board chairman. |
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☐ |
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☐ |
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☐ |
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5. Stockholder proposal regarding tax
payments on restricted stock awards. |
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☐ |
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☐ |
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☐ |
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6. Stockholder proposal regarding
recovery of unearned management bonuses. |
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☐ |
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☐ |
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☐ |
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7. Stockholder proposal regarding
proxy access for shareholders. |
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☐ |
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☐ |
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☐ |
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8. Stockholder proposal regarding
political disclosure and accountability. |
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☐ |
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☐ |
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9. Stockholder proposal regarding
political lobbying and contributions. |
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☐ |
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☐ |
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☐ |
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10. Stockholder proposal regarding
alignment between corporate values and political contributions. |
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☐ |
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☐ |
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☐ |
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☐ |
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☐ |
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☐ |
Table of Contents
Admission
Ticket
FedEx Corporation
Annual Meeting of Stockholders
Monday, September
28, 2015
8:00 a.m. local time
FedEx Express World Headquarters
Auditorium
3670 Hacks Cross Road, Building
G, Memphis, TN 38125
If you wish to attend the annual
meeting in person, you will need to bring this Admission Ticket with
you.
Please present this Admission Ticket
and a valid government-issued photo identification (such as a drivers license
or a passport) for admission to the meeting.
Security measures will be in place at
the meeting to help ensure the safety of attendees. Metal detectors similar to
those used in airports will be located at the entrance to the meeting room, and
briefcases, handbags and packages will be inspected. No cameras or recording
devices of any kind, or signs, placards, banners or similar materials, may be
brought into the meeting. Anyone who refuses to comply with these requirements
will not be admitted.
This Admission Ticket is not
transferable.
IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy Solicited on Behalf of the
Board of Directors of FedEx Corporation for the Annual Meeting of Stockholders,
September 28, 2015
The undersigned hereby constitutes and
appoints Christine P. Richards and Alan B. Graf, Jr., and each of them, his or
her true and lawful agents and proxies, each with full power of substitution, to
represent the undersigned and to vote all of the shares of FedEx Corporation
common stock of the undersigned at the Annual Meeting of Stockholders of FedEx
to be held in the auditorium at the FedEx Express World Headquarters, 3670 Hacks
Cross Road, Building G, Memphis, Tennessee 38125, on Monday, September 28, 2015,
at 8:00 a.m. local time, and at any postponements or adjournments thereof, on
Proposals 1 through 10 as specified on the reverse side hereof (with
discretionary authority under Proposal 1 to vote for a substitute nominee if any
nominee is unable to stand for election) and on such other matters as may
properly come before said meeting. This card
also constitutes voting instructions for any shares held for the undersigned in
the FedEx employee stock purchase plan or in any benefit plan of FedEx
Corporation or its subsidiaries. If you wish to instruct a record holder or plan
trustee on the voting of shares held in your account, your instructions must be
received by September 23, 2015. If no direction is given, the plan trustee will
vote the shares held in your account in the same proportion as votes received
from other plan participants.
This proxy, when properly signed,
dated and returned, will be voted as specified by you. If no direction is made,
this proxy will be voted (and voting instructions given) FOR each of the
director nominees, FOR Proposals 2 and 3, and AGAINST Proposals 4 through 10.
The Board of Directors recommends that you vote FOR each of the director
nominees, FOR Proposals 2 and 3, and AGAINST Proposals 4 through 10. In their
discretion, the proxy holders are authorized to vote on such other matters as
may properly come before the meeting or any postponements or adjournments
thereof.
You are encouraged to specify your
choices by marking the appropriate boxes on the reverse side, but you need not
mark any boxes if you wish to vote in accordance with the Board of Directors
recommendations. Ms. Richards and Mr. Graf cannot vote your shares unless you
sign, date and return this card or vote on the Internet or by
telephone.
If you vote by the Internet or
telephone, please DO NOT mail back this proxy card. If you wish to attend the
annual meeting in person, however, you will need to bring the Admission Ticket
attached to this proxy card with you.
NOTE: If you vote on the Internet, you may elect to have next
years proxy statement and annual report to stockholders delivered to you
electronically. We strongly encourage you to enroll in electronic delivery. It
is a cost-effective way for us to send you proxy materials and annual
reports.
Change of Address Please print your new address
below. |
|
Comments Please print your comments below. |
|
Mark this box if you would like
your name to be disclosed with your vote and comments, if
any. |
|
☐ |
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D
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Authorized Signatures This section must be
completed for your vote to be counted Date and Sign
Below. |
The signer hereby revokes all proxies
previously given by the signer to vote at said meeting or at any postponements
or adjournments thereof.
NOTE: Please sign
exactly as name appears on this card. Joint owners should each sign. When
signing as attorney, officer, executor, administrator, trustee or guardian,
please give full title as such.
Date
(mm/dd/yyyy) Please print date below. |
|
Signature 1
Please keep signature within the box. |
|
Signature 2
Please keep signature within the box. |
/ / |
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