Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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
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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
2014 Annual Meeting
of
Stockholders
Monday, September 29,
2014
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 2014 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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14 |
Proposal 2: Advisory vote to approve named
executive officer compensation |
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For |
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52 |
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 8: 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
09/28/2014 |
By Phone 1-800-652-VOTE
(8683) through 09/28/2014 |
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 18,
2014.
2014 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,
2014, which includes FedExs fiscal 2014 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 2014 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 13 members a combined Chairman and Chief Executive Officer, the
Lead Independent Director and 11 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 the 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
Majority Voting for Directors |
Yes |
Annual Election of All Directors |
Yes |
Diverse Board |
Yes |
Annual Board and Committee
Self-Evaluations |
Yes |
Separate Chairman &
CEO |
No |
Lead Independent Director |
Yes |
Independent Directors Meet
Regularly Without Management Present |
Yes |
Annual Independent Director Evaluation of
Chairman and CEO |
Yes |
Code of Business Conduct
and Ethics Applicable to Directors |
Yes |
Nominating & Governance Committee
Composed of Independent Directors |
Yes |
Stock Ownership Goal for
Directors and Senior Officers |
Yes |
Size of Board* |
13 |
Number of Independent
Directors* |
12 |
Average Age of Directors* |
59 |
Average Director Tenure (in years)* |
10 |
* As of August 18, 2014
2014 Proxy
Statement iii
Table of Contents
Voting Matters
and Board Recommendations
Proposal 1
Election of Directors (see page 14)
You are being asked to elect the 12
nominees named in this proxy statement as directors for a term of one year.
Other than Steven R. Loranger, each of our current directors is standing for
reelection.
Our Board
recommends that you vote FOR the election of each of the twelve
nominees.
Director Nominees
(see page 15)
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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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ITOC |
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CC |
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NGC |
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Frederick W.
Smith |
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70 |
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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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71 |
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1999 |
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ü |
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Chairman and President |
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Time Warner Inc. |
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C |
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ü |
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of Barksdale Management |
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Corporation |
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John A.
Edwardson |
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65 |
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2003 |
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ü |
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Former Chairman
and Chief |
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ACE
Limited, |
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C |
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Executive Officer
of CDW |
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Rockwell
Collins, Inc. |
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Corporation |
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Marvin R. Ellison |
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49 |
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2014 |
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ü |
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Executive Vice President
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H&R Block, Inc. |
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ü |
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(1) |
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U.S. Stores of The Home Depot,
Inc. |
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Kimberly A.
Jabal |
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45 |
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2013 |
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ü |
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Chief Financial
Officer of |
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(2) |
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ü |
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Path,
Inc. |
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Shirley Ann Jackson |
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68 |
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1999 |
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ü |
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President of Rensselaer |
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International Business
Machines |
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ü |
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ü |
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Polytechnic Institute |
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Corporation, Marathon
Oil |
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Corporation, Medtronic, Inc.
and Public Service Enterprise Group Incorporated |
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Gary W.
Loveman |
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54 |
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2007 |
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ü |
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Chairman,
President and |
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Caesars
Entertainment |
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ü |
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(1) |
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Chief Executive
Officer of Caesars Entertainment Corporation |
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Corporation,
Coach, Inc. |
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R. Brad Martin |
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62 |
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2011 |
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ü |
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Chairman of RBM Venture |
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Chesapeake Energy |
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ü |
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ü |
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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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45 |
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2011 |
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ü |
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Vice Chairman of
Kissinger |
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Starbucks
Corporation |
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ü |
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ü |
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Ramo |
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Associates,
Inc. |
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Susan C. Schwab |
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59 |
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2009 |
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ü |
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Professor at the University
of |
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The Boeing Company,
Caterpillar |
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ü |
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ü |
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Maryland School of
Public Policy, Former U.S. Trade Representative |
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Inc. |
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David P.
Steiner |
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54 |
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2009 |
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ü |
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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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59 |
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1996 |
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ü |
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Chairman of
Compass |
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Avanti
Communications Group |
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ü(3) |
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ü(3) |
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Group PLC |
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plc (Chairman), Compass Group PLC (Chairman), RM2
International S.A., Ontex Group NV, Unilever PLC |
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(1) |
If elected, Messrs. Ellison and Loveman will become members of the
Nominating & Governance Committee. |
(2) |
If elected, Ms. Jabal will become a member of the Audit
Committee. |
(3) |
If elected, Mr. Walsh will replace Mr. Loranger as the Compensation
Committee Chairman and will no longer be a member of the Nominating &
Governance Committee. |
iv 2014 Proxy Statement
Table of Contents
Director Experience,
Qualifications, Attributes and Skills (see page 14)
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
52)
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. We believe that 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 20
through 51. 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 that they are compensated in such a manner
as to sustain and enhance long-term shareowner value.
In the 2013 advisory vote,
95.4% of the voted shares supported the compensation of our named executive
officers.
Our Board 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 2015.
Ernst & Young has been our independent registered public accounting firm
since 2002.
Fees paid to Ernst & Young for fiscal 2014 and 2013 are detailed on
page 56.
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.
Our Board recommends that you vote FOR
this proposal.
Proposals 4 8:
Five Stockholder Proposals, if properly presented (see pages 58 -
71)
Five stockholder proposals are expected
to be presented for a vote at the annual meeting.
Our Board
recommends that you vote AGAINST each of these proposals.
2014 Proxy
Statement v
Table of Contents
|
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Notice of
Annual Meeting of Stockholders To Be
Held September 29, 2014 |
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To Our Stockholders:
We cordially invite you to attend the 2014 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 29, 2014, 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. |
|
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 2015; |
4. |
|
Act upon five 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 4, 2014, 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 18, 2014
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON SEPTEMBER 29, 2014: 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 29, 2014;
- The proxy statement; and
- FedExs Annual Report to Stockholders for the
fiscal year ended May 31, 2014.
Your vote is
very important. Please vote whether or not you plan to attend the
meeting.
Table of Contents
2014 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 also 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/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.
2014 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.
- 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 the implementation and effectiveness of the
companys compliance and ethics programs, including the Code of Business
Conduct and Ethics and the employee hotline program.
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 2014 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,
Steven R. Loranger, 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.
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 most recently completed fiscal years exceeded one percent
(or $250,000, whichever is greater) of such organizations consolidated gross
revenues for such year.
2014 Proxy
Statement 3
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CORPORATE GOVERNANCE
MATTERS
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).
- In the ordinary course of business, FedEx makes
purchases from Waste Management, Inc., an entity for which Mr. Steiner serves
as Chief Executive Officer. The amount of the payments made by FedEx to Waste
Management has not within any of its three most recently completed fiscal
years exceeded one percent (or $1 million, whichever is greater) of its
consolidated gross revenues for such year.
- 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.
- Mr. Martin and a FedEx executive officer serve on
the board of trustees of the same Memphis-based
school.
- FedEx makes payments and charitable contributions
to the University of Memphis, a non-profit entity for which Mr. Martin served
as Interim President from July 2013 until May 2014. Mr. Martin did not receive
any compensation for his service as Interim President. The amount of the
payments and contributions made by FedEx to the University of Memphis
represented between one and two percent of the universitys gross revenues in
its most recently completed fiscal year for which information is publicly
available and less than one percent in each of the two prior fiscal years. The
Board determined that Mr. Martin is still an independent director under the
Boards independence standards as he does not have a direct or indirect
material relationship with either FedEx or the University of Memphis, other
than as the former Interim President, and does not derive any financial
benefit from these transactions.
- 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 two most recently completed fiscal years represented
less than one percent of Boeings consolidated gross revenues for the year,
but the payments made by FedEx to Boeing in its 2011 fiscal year represented
between one and two percent 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 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 72.
4 2014 Proxy Statement
Table of Contents
CORPORATE GOVERNANCE
MATTERS
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 4, 2014, each director who had
been a Board member for over four years (and Mr. Martin) and each executive
officer owned sufficient shares to comply with this goal.
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 2015 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
2014 Proxy
Statement 5
Table of Contents
CORPORATE GOVERNANCE
MATTERS
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.
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.
6 2014 Proxy Statement
Table of Contents
CORPORATE GOVERNANCE
MATTERS
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, Alan B. Graf, Jr., FedExs Executive Vice
President and Chief Financial Officer, and David J. Bronzcek, the President
and Chief Executive Officer of FedEx Express, paid FedEx $305,252, $154,498
and $191,068, respectively, during fiscal 2014 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
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 total annual compensation of each of Mr. Smiths
son and Mr. Logues brother and brother-in-law for fiscal 2014 (including any
incentive compensation, all sales commissions and the Black-Scholes value of
any stock option award) did not exceed $260,000.
2014 Proxy
Statement 7
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 4, 2014. 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 |
|
19,593,448 |
(3) |
|
1,578,757 |
|
7.41% |
|
|
James L. Barksdale |
|
53,800 |
|
|
50,030 |
|
* |
|
|
John A.
Edwardson |
|
18,119 |
|
|
50,030 |
|
* |
|
|
Marvin R. Ellison |
|
|
|
|
|
|
* |
|
|
Kimberly A.
Jabal |
|
|
|
|
|
|
* |
|
|
Shirley Ann Jackson |
|
8,111 |
|
|
3,700 |
|
* |
|
|
Steven R.
Loranger |
|
7,800 |
(4) |
|
38,630 |
|
* |
|
|
Gary W. Loveman |
|
16,854 |
|
|
27,790 |
|
* |
|
|
R. Brad Martin |
|
56,500 |
(5) |
|
14,390 |
|
* |
|
|
Joshua Cooper Ramo |
|
|
|
|
14,390 |
|
* |
|
|
Susan C. Schwab |
|
3,185 |
|
|
29,830 |
|
* |
|
|
David P. Steiner |
|
5,000 |
|
|
25,430 |
|
* |
|
|
Paul S. Walsh |
|
8,500 |
|
|
44,030 |
|
* |
|
|
David J. Bronczek |
|
67,824 |
(6) |
|
255,987 |
|
* |
|
|
Robert B. Carter |
|
45,558 |
|
|
176,980 |
|
* |
|
|
T. Michael Glenn |
|
216,639 |
(7) |
|
196,897 |
|
* |
|
|
Alan B. Graf,
Jr. |
|
198,820 |
(8) |
|
209,397 |
|
* |
|
|
All
directors and executive officers as a group (20 persons) |
|
20,438,590 |
(9) |
|
3,032,725 |
|
8.18% |
|
* |
Less than 1% of FedExs
outstanding common stock. |
(1) |
Reflects the number of shares that can be acquired at
August 4, 2014, 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 283,957,730 shares outstanding on August 4,
2014. |
(3) |
Includes 15,449,071 shares owned by Mr. Smith (4,000,000
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 (117,000 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 2,361 shares held in FedExs
retirement savings plan. Mr. Smiths business address is 942 South Shady
Grove Road, Memphis, Tennessee 38120. |
(4) |
Owned by a family trust. |
(5) |
Includes 7,250 shares owned by R. Brad Martin Family
Foundation and 1,500 shares owned by Mr. Martins spouse. |
(6) |
Includes 686 shares held in FedExs retirement savings
plan. |
(7) |
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 563 shares
held in FedExs retirement savings plan. |
(8) |
Includes 47,400 shares owned by family trusts and 440
shares held in FedExs retirement savings plan. |
(9) |
Includes 4,050 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. |
8 2014 Proxy Statement
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, 2014.
|
Amount and Nature
of Beneficial Ownership |
|
|
Percent of
Class |
|
Dodge & Cox |
15,160,662 |
(1) |
|
5.14% |
|
555 California Street, 40th
Floor |
|
|
|
|
|
San Francisco, California
94104 |
|
|
|
|
|
PRIMECAP
Management Company |
18,864,296 |
(2) |
|
6.39% |
|
225 South Lake Avenue, Suite
400 |
|
|
|
|
|
Pasadena, California 91101 |
|
|
|
|
|
The Vanguard Group, Inc. |
15,884,453 |
(3) |
|
5.38% |
|
100 Vanguard Boulevard |
|
|
|
|
|
Malvern, Pennsylvania 19355 |
|
|
|
|
|
(1) |
Dodge & Cox, a registered investment advisor, had sole voting
power over 14,252,522 shares and sole investment power over all 15,160,662
shares. |
(2) |
PRIMECAP Management Company, a registered investment advisor, had
sole voting power over 1,578,739 shares and sole investment power over all
18,864,296 shares. |
(3) |
The Vanguard Group, Inc., a registered investment advisor, had sole
voting power over 471,386 shares, sole investment power over 15,454,880
shares and shared investment power over 429,573
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 Securities and Exchange Commission (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, 2014.
2014 Proxy
Statement 9
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 FedEx 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 |
|
|
- 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; (iii) the
performance of the internal auditors; and (iv) FedExs compliance with
legal and regulatory requirements;
- preapproves all audit and
allowable non-audit services to be provided by FedExs independent
registered public accounting firm; and
- 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.
|
|
John A. Edwardson
(Chairman) Gary
W. Loveman R. Brad Martin Joshua Cooper Ramo
FY14 meetings
held: 9 |
|
|
Compensation
Committee |
|
|
|
|
Committee
functions: |
|
Committee members |
|
|
- 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.
|
|
Steven R. Loranger
(Chairman) Marvin R.
Ellison Shirley
Ann Jackson Susan C. Schwab Paul S. Walsh
FY14 meetings
held: 6 |
|
|
Information Technology Oversight
Committee |
|
|
|
|
Committee
functions: |
|
Committee members |
|
|
- 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.
|
|
James L. Barksdale
(Chairman) Kimberly A.
Jabal R. Brad
Martin Joshua Cooper
Ramo Susan C.
Schwab
FY14 meetings held: 6 |
|
10 2014 Proxy Statement
Table of Contents
COMMITTEES AND MEETINGS OF THE BOARD
OF DIRECTORS
|
Nominating & Governance
Committee |
|
|
|
|
Committee
functions: |
|
Committee members |
|
|
- 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, compliance
and ethics programs.
|
|
David P. Steiner
(Chairman) James L.
Barksdale Shirley Ann
Jackson Paul S.
Walsh
FY14 meetings held: 6 |
|
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.
The Board of Directors has approved
reconstituting the committees so that, immediately following the annual meeting,
if all of the director nominees are elected, committee memberships will be as
follows:
Audit Committee |
|
Information Technology Oversight
Committee |
John A. Edwardson
(Chairman) |
|
James L. Barksdale
(Chairman) |
Kimberly A. Jabal |
|
Kimberly A. Jabal |
Gary W. Loveman |
|
R. Brad
Martin |
R. Brad Martin |
|
Joshua Cooper Ramo |
Joshua Cooper Ramo |
|
Susan C. Schwab |
|
|
|
|
Compensation Committee |
|
Nominating & Governance Committee |
Paul S. Walsh
(Chairman) |
|
David P. Steiner
(Chairman) |
Marvin R. Ellison |
|
James L. Barksdale |
Shirley Ann
Jackson |
|
Marvin R.
Ellison |
Susan C. Schwab |
|
Shirley Ann Jackson |
|
|
Gary W. Loveman |
Board Meetings
and Meeting Attendance
During fiscal 2014, the Board of
Directors held six regular meetings and one special meeting. The average
attendance of all directors at Board and committee meetings was 99%. Each
director attended at least 94% of the aggregate meetings of the Board and any
committees on which he or she served.
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 2013 annual meeting of stockholders.
2014 Proxy
Statement 11
Table of Contents
DIRECTORS
COMPENSATION
Outside Directors
Compensation
During the first two quarters of fiscal 2014, non-management (outside)
directors were paid:
- a quarterly retainer of $20,000;
- $2,000 for each in-person Board meeting attended;
and
- $2,000 for each in-person committee meeting
attended.
Outside directors who attended a Board or committee meeting
telephonically were paid 75% of the applicable in-person meeting fee.
In September 2013, the Board of Directors and the Compensation Committee
conducted their annual review of outside director compensation and approved the
replacement of the quarterly retainer with an annual retainer and the removal of
meeting fees, both effective December 1, 2013, but no change to committee
chairperson fees (discussed below). As a result, outside directors are currently
paid an annual retainer of $111,000. Outside directors elected at the 2013
annual meeting of stockholders received a $55,500 retainer payment in December
2013; thereafter, the full annual retainer will be paid following each annual
meeting of stockholders, beginning with the 2014 annual meeting. Each outside
director who was elected at the 2013 annual meeting received a stock
option for 3,700 shares of common stock. Outside
directors who were elected to the Board after the 2013 annual meeting received
the applicable pro rata portion of the annual retainer and stock option grant in
connection with his or her election.
For fiscal 2014, 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.
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 $70
billion. Before making a recommendation regarding director compensation to the
Board, the Compensation Committee considers that the directors independence may
be compromised if compensation exceeds appropriate levels or if FedEx enters
into other arrangements beneficial to the directors.
Retirement Plan for Outside
Directors
In July 1997, the Board of Directors of FedEx Express (FedExs
predecessor) voted to freeze the Retirement Plan for Outside Directors (that is,
no further benefits would be earned under this plan). Concurrent with the
freeze, the Board amended the plan to accelerate the vesting of the benefits for
each outside director who was not yet vested under the plan. This plan is
unfunded and any benefits under the plan are general, unsecured obligations of
FedEx. Once all benefits are paid from the plan, it will be
terminated.
The plan benefit payable to the one individual who served on the Board
during fiscal 2014 who has not yet received any plan benefits will be paid as a
single lump sum distribution. The lump sum distribution is payable on or before the fifteenth business day of
the month immediately following the later of the date of the directors
retirement and the date he attains age 60. In the event of the outside
directors death, his surviving spouse shall be entitled to receive the lump sum
payment. The following table sets forth for the one director entitled to receive
future benefits under the plan who served on the Board during fiscal 2014, the
amount payable to him assuming a hypothetical retirement date of June 1,
2014.
Name |
Lump Sum Payment
Amount ($) |
|
P.S. Walsh |
65,802 |
(1) |
|
(1) |
Discounted from the age 60 normal retirement date
provided for in the plan. |
12 2014 Proxy Statement
Table of Contents
DIRECTORS
COMPENSATION
Fiscal 2014
Director Compensation
The following table sets forth
information regarding the compensation of FedExs non-employee (outside)
directors for the fiscal year ended May 31, 2014:
Name |
Fees Earned or Paid
in Cash ($) (1) |
Option Awards ($) (2)(3) |
All
Other Compensation ($) |
Total ($) |
J.L. Barksdale |
127,000 |
150,175 |
0 |
277,175 |
J.A. Edwardson |
131,500 |
150,175 |
0 |
281,675 |
M.R. Ellison |
62,160 |
87,435 |
0 |
149,595 |
K.A. Jabal |
89,910 |
125,298 |
0 |
215,208 |
S.A. Jackson |
113,500 |
150,175 |
0 |
263,675 |
S.R. Loranger |
127,000 |
150,175 |
0 |
277,175 |
G.W. Loveman |
114,500 |
150,175 |
0 |
264,675 |
R.B. Martin |
108,000 |
150,175 |
0 |
258,175 |
J.C. Ramo |
108,000 |
150,175 |
0 |
258,175 |
S.C. Schwab |
108,000 |
150,175 |
0 |
258,175 |
J.I. Smith
(4) |
36,555 |
0 |
356,987 |
393,542 |
D.P. Steiner |
122,500 |
150,175 |
0 |
272,675 |
P.S. Walsh |
108,000 |
150,175 |
0 |
258,175 |
(1) |
Includes meeting fees, retainer
payments and committee chairperson fees (as applicable). See Outside
Directors Compensation above. |
(2) |
On September 23, 2013, each
outside director elected at the 2013 annual meeting received a stock
option for 3,700 shares of common stock. Ms. Jabal received a stock option
for 2,482 shares upon her election to the Board on December 9, 2013, and
Mr. Ellison received a stock option for 1,753 shares upon his election to
the Board on March 10, 2014. 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, 2014, included in our Annual Report on Form
10-K for fiscal 2014. 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
outside director listed in the above table as of May 31,
2014: |
|
Name |
Options Outstanding |
|
J.L. Barksdale |
50,030 |
|
J.A.
Edwardson |
50,030 |
|
M.R. Ellison |
1,753 |
|
K.A.
Jabal |
2,482 |
|
S.A. Jackson |
3,700 |
|
S.R.
Loranger |
38,630 |
|
G.W. Loveman |
27,790 |
|
R.B.
Martin |
14,390 |
|
J.C. Ramo |
14,390 |
|
|
|
|
S.C.
Schwab |
29,830 |
|
D.P. Steiner |
25,430 |
|
P.S. Walsh |
44,030 |
(4) |
Joshua I. Smith retired as a
director immediately before the 2013 annual meeting. The amount of the
All Other Compensation column for Mr. Smith includes his $313,811 lump
sum distribution under the Retirement Plan for Outside Directors, $24,546
for a retirement gift and a $18,630 tax reimbursement payment relating to
his retirement gift. |
2014 Proxy
Statement 13
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 thirteen members. Steven
R. Loranger is retiring as a director immediately before this annual meeting and
is not standing for reelection. The Board proposes that each of the other
current directors be reelected to the Board. Ms. Jabal and Mr. Ellison were
initially elected as directors by the Board in December 2013 and March 2014,
respectively. Frederick W. Smith, FedExs Chairman, President and Chief
Executive Officer, and the members of the Nominating & Governance Committee
had recommended Ms. Jabal and Mr. Ellison as nominees.
Effective upon the retirement of Mr.
Loranger, the size of the Board will be decreased to twelve members. Each of the
nominees elected at this annual meeting will hold office until the annual
meeting of stockholders to be held in 2015 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.
14 2014 Proxy Statement
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
Nominees for Election to the
Board
|
Frederick W. Smith |
|
|
|
|
|
|
|
Age: 70 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: 71 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: 65 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.
|
|
2014 Proxy
Statement 15
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
|
Marvin R. Ellison |
|
|
|
|
|
|
|
Age: 49 Director since: 2014 Committees: Compensation Other public directorships: H&R Block, Inc. |
|
|
|
|
|
|
|
Mr. Ellison has been Executive
Vice President U.S. Stores of The Home Depot, Inc., a home improvement
specialty retailer, since August 2008. 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. |
|
|
|
|
|
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.
|
|
|
Kimberly A. Jabal |
|
|
|
|
|
|
|
Age: 45 Director since: 2013 Committees: Information Technology Oversight Other public directorships:
None |
|
|
|
|
|
|
|
Ms. Jabal currently is the Chief
Financial Officer and oversees the legal and human resources functions at
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:
68 Director since: 1999 Committees: Compensation, Nominating & Governance Other public directorships:
International Business Machines
Corporation, Marathon Oil 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 has been a member
of the Presidents Council of Advisors on Science and Technology (PCAST)
since 2009 and is a trustee of M.I.T. (member of the M.I.T. Corporation).
She is a member of the International Security Advisory Board to the U.S.
Secretary of State (since July 2011). She was previously a director of
NYSE Euronext and U.S. Steel Corporation. |
|
|
|
|
|
Skills and Qualifications:
- Financial: Has numerous
years of public company audit committee experience, including as a
chair.
- 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).
- Energy/Government: Former Chairman and Commissioner of the
U.S. Nuclear Regulatory Commission.
|
|
16 2014 Proxy Statement
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
Gary W.
Loveman |
|
|
|
Age: 54 Director since: 2007 Committees: Audit Other public
directorships:
Caesars Entertainment Corporation and Coach, Inc.
|
|
Mr. Loveman is Chairman of the
Board, Chief Executive Officer and President of Caesars Entertainment
Corporation (formerly Harrahs Entertainment, Inc.), a provider of branded
gaming entertainment; he has held the position of President since 2001,
Chief Executive Officer since 2003 and Chairman of the Board since 2005.
He held various other executive positions at Caesars Entertainment
Corporation from 1998 to 2001. He 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:
62 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 (formerly Harrahs
Entertainment, Inc.), Dillards, Inc., Gaylord Entertainment Company,
lululemon athletica inc. and Ruby Tuesday, Inc.
Skills and Qualifications:
- 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 board of Chesapeake Energy Corporation and Pilot Travel
Centers LLC.
- Government: Former Tennessee state
representative.
|
Joshua Cooper Ramo |
|
|
|
Age:
45 Director since: 2011 Committees: Audit,
Information Technology Oversight Other public
directorships:
Starbucks Corporation
|
|
Mr. Ramo is Vice Chairman of
Kissinger Associates, Inc., a strategic advisory firm, a position he has
held since 2011. 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 of Kissinger
Associates.
|
2014 Proxy
Statement 17
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
Susan C.
Schwab |
|
|
|
Age:
59 Director since: 2009 Committees: Compensation, Information Technology
Oversight Other public
directorships:
The Boeing Company and Caterpillar 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:
54 Director since: 2009 Committees: Nominating
& Governance (Chairman) Other public
directorships:
TE Connectivity Ltd. (formerly Tyco Electronics 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:
59 Director since: 1996 Committees: Compensation, Nominating & Governance Other public
directorships:
Avanti Communications Group plc (Chairman), Compass Group PLC (Chairman),
RM2 International S.A., Ontex Group NV and Unilever
PLC
|
|
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. 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. 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 and Centrica 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.
|
18 2014 Proxy Statement
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
2014 Proxy
Statement 19
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,
2014.
Compensation Committee
Members
Steven R. Loranger Chairman
Marvin R.
Ellison
Shirley Ann Jackson
Susan C. Schwab
Paul S. Walsh
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, 2014. For additional information regarding compensation of the named executive
officers, see Summary Compensation Table and other compensation-related
tables and disclosure below.
In fiscal 2014, we experienced improved
performance by all our transportation segments despite the significant negative
net impact of fuel and unusually severe winter weather. Although our financial
performance improved during 2014, results were below our aggressive business
plan goals. 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.
Consistent with our pay-for-performance
philosophy and reflecting FedExs below-plan financial performance during fiscal
2014, the payouts under our annual incentive compensation (AIC) program were
below target. Above-target payouts were earned in fiscal 2014 by all
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 2012 through fiscal 2014 for the FY2012-FY2014
LTI plan). We exceeded the earnings per share (EPS) goal required for a target
payout, as the companys performance in fiscal 2012 and 2014 more than offset
weaker than expected results in fiscal 2013.
The following table details key
compensation highlights of the last five fiscal years.
20 2014 Proxy Statement
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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.
2013 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 2013 advisory vote, 95.4% 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. |
2014 Proxy
Statement 21
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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 2014 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
(134 companies for fiscal 2014) 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 group the elements into two
categories:
- Annual base salary plus target AIC
payout (i.e., assuming achievement of all objectives), the
sum of which we call total cash compensation (TCC).
- TCC plus target LTI cash award plus
long-term equity incentive grants (stock options and restricted stock) plus
tax reimbursement payments on restricted stock awards, the sum of which we
call total direct compensation (TDC). Long-term components of target TDC are valued
consistent with the valuation
methodology used in the referenced surveys.
The TDC formula is illustrated below:
SHORT-TERM COMPENSATION |
|
|
|
LONG-TERM COMPENSATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary |
+ |
AIC |
= |
TCC |
+ |
LTI |
+ |
Stock |
+ |
Restricted |
= |
TDC |
|
|
|
|
|
|
Cash |
|
Options |
|
Stock* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Objectives |
|
|
|
3-Year |
|
|
|
|
|
|
|
|
+ |
|
|
|
Aggregate |
|
Annual |
|
Annual |
|
|
|
|
Individual
Objectives |
|
|
|
EPS Goal |
|
Grant |
|
Grant |
|
|
* Includes related tax reimbursement
payments. |
Other elements of compensation of the named executive officers (such as
perquisites and retirement benefits) are not included in our TDC formula,
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 the TDC formula. 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
22 2014 Proxy Statement
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EXECUTIVE
COMPENSATION
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 (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 2014 AIC payouts were tied to
meeting aggressive business plan goals for consolidated operating income, as
well as individual performance objectives for all named executive officers
other than the Chairman of the Board, President and Chief Executive Officer.
Consolidated operating income fell below the target objective for annual
financial performance for fiscal 2014. 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. EPS growth in fiscal 2012
and 2014 resulted in above-target payouts under the LTI program.
- 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 2014 target TDC between
base salary and incentive and equity-oriented compensation elements (the
restricted stock value includes the related tax reimbursement
payment):
Fiscal 2014 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.
2014 Proxy
Statement 23
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EXECUTIVE
COMPENSATION
The following chart illustrates for each named executive officer the
allocation of fiscal 2014 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 2014 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 the TCC
and TDC formula, 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,
although fiscal 2014 AIC payouts were below
target levels, the actual fiscal 2014 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
at or above target levels because we exceeded our pre-established EPS goal for a
maximum payout under the FY2011-FY2013 LTI plan. Similarly, in fiscal 2012, the
actual TDC of our named executive officers was above target levels because we
substantially exceeded our pre-established EPS goal for a maximum payout under
the FY2010-FY2012 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 and tax reimbursement payments related to restricted stock
awards. |
24 2014 Proxy Statement
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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
2014:
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 4, 2014, 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
also sets 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 also prohibits
margin accounts and pledges; provided, however, that our Lead Independent
Director and General Counsel, acting together, 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.
2014 Proxy
Statement 25
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EXECUTIVE
COMPENSATION
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 4, 2014, 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 21% of his total share ownership.
The number of shares pledged by Mr. Smith
has decreased by 626,000 during the last year and by 1,186,000 over the last two years. Based on the fiscal year-end stock price ($144.16), the value of his pledged
shares was approximately $594 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 4, 2014, it would take
two 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 2014 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 2014 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 2014):
26 2014 Proxy Statement
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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.
2014 Proxy
Statement 27
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EXECUTIVE
COMPENSATION
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 2014. In
connection with this engagement, the consultant reports directly and exclusively
to the Committee. The consultant participates in Committee meetings, reviews
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 2014; and
no adviser of the consultant directly owns, or directly owned during fiscal 2014, 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 2014
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 did not
receive base salary increases for fiscal 2015, fiscal 2014 or fiscal 2013. As a
result, the annual base salaries of our named executive officers remain as
follows:
Name |
Annual Base
Salary ($) |
F.W. Smith |
1,266,960 |
A.B. Graf,
Jr. |
902,784 |
D.J. Bronczek |
942,096 |
T.M.
Glenn |
833,364 |
R.B. Carter |
762,960 |
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.
28 2014 Proxy Statement
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EXECUTIVE COMPENSATION
For fiscal 2014, the company financial
performance measure was consolidated operating income (the company financial
performance measure in fiscal 2013 was consolidated pre-tax income). Operating
income was chosen as the company financial performance metric to incentivize
management to improve the companys core business and to find ways to improve
efficiency and rationalize capacity. Additionally, in prior years, a portion of
the annual AIC payout for the non-CEO named executive officers was based on the
achievement of individual performance objectives. For fiscal 2014, however, in
order to simplify the structure of the AIC program and to further motivate these
officers to achieve the companys financial goals, the entire AIC payout for the
non-CEO named executive officers was based on company financial performance,
subject to downward adjustment by Mr. Smith based on the officers achievement
of individual performance objectives established at the beginning of the fiscal
year.
Target AIC payouts are established as a
percentage of the executive officers base salary (as of the end of the plan
year). The fiscal 2014 AIC payout opportunity for each named executive officer
ranged, on a sliding scale, from a minimum amount if the AIC programs
pre-established consolidated operating income threshold was achieved up to a
maximum amount if such financial performance goal was substantially exceeded.
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 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.
Ordinarily, the companys business plan
objective for the financial measure consolidated operating income for fiscal
2014 becomes the target objective for company performance under our AIC
program. For the fiscal 2014 AIC program, however, in an effort to further
motivate management to improve the companys performance, the AIC programs
operating income target objective for company financial performance was higher
than the business plan objective for operating income. Accordingly, above-plan
performance was required to achieve target payouts under the fiscal 2014 AIC
program.
The fiscal 2014 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 following table illustrates for our
named executive officers the fiscal 2014 AIC payout opportunities (as a
percentage of the target payout described above). The payout opportunity for
each non-CEO named executive officer was subject to downward adjustment based on
the officers achievement level of his fiscal 2014 individual performance
objectives, as determined by Mr. Smith.
|
|
Payout Opportunity (as a
percentage of target payout) |
|
|
Target |
|
Maximum |
FedEx Corporation CEO |
|
100% |
|
300% |
FedEx
Corporation EVPs |
|
100% |
|
240% |
FedEx Express CEO |
|
100% |
|
240% |
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.
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)
relative to competitors;
2014 Proxy Statement
29
Table of Contents
EXECUTIVE
COMPENSATION
- FedExs free cash flow (excluding business
acquisitions), return on invested capital
(excluding certain unusual items) 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.
The fiscal 2014 AIC payouts for the other
named executive officers were tied to the achievement of corporate objectives
for company financial performance for the fiscal year. The minimum AIC payout 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.
For fiscal 2014, the entire AIC payout
for the non-CEO named executive officers was based on company financial
performance, provided that Mr. Smith had the discretion to adjust each officers
award amount downward based on the officers achievement of individual
performance objectives established at the beginning of the fiscal year.
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 2014 AIC Performance and
Payouts. As noted above, the operating income
target objective for the company performance factor under the fiscal 2014 AIC
program was higher than the fiscal 2014 business plan objective for operating
income. As a result, above-plan performance was required in order to achieve
target payouts under the fiscal 2014 AIC program. Expressed in terms of
year-over-year improvement from a base amount (our fiscal 2013 adjusted
consolidated operating income), the consolidated operating income threshold,
target and maximum under our fiscal 2014 AIC program were as follows:
Base Year Amount Fiscal
2013 Adjusted Consolidated Operating Income * |
Threshold |
|
Target |
|
Maximum |
$3.211 billion |
2.4% |
|
21.4% |
|
40.8% |
* |
Excludes $560 million of business realignment program costs and a
$100 million noncash aircraft impairment
charge. |
The following table presents the
operating income threshold, target and maximum for the company performance
factor under our fiscal 2014 AIC program and our actual consolidated operating
income for fiscal 2014 (in millions):
|
Company Performance Measure |
|
Threshold |
|
Target |
|
Maximum |
|
Actual |
|
|
Consolidated Operating Income |
|
$3,288 |
|
$3,903 |
|
$4,520 |
|
$3,446 |
|
Based upon below-target company
performance and, in the case of each non-CEO named executive officer, any
downward adjustment resulting from Mr. Smiths evaluation of that executives
achievement level for his individual performance objectives, payouts to the
named executive officers under the fiscal 2014 AIC program were as follows
(compared to the target payout opportunities):
Name |
Target AIC Payout ($) |
|
Actual AIC Payout ($) |
F.W. Smith |
1,647,048 |
|
362,713 |
A.B. Graf, Jr. |
812,506 |
|
186,795 |
D.J.
Bronczek |
942,096 |
|
205,188 |
T.M. Glenn |
750,028 |
|
152,466 |
R.B. Carter |
686,664 |
|
152,879 |
30 2014 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
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
2014 AIC payout from $398,586, the formulaic amount resulting solely from the
achievement of company financial performance objectives under the fiscal 2014
AIC program, to $362,713. This decision was based upon below-business-plan
achievement for fiscal 2014 consolidated operating income.
Fiscal 2015 AIC Plan Design.
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, several changes have been made to the fiscal 2015 AIC
program.
As in prior years, Mr. Smiths fiscal
2015 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. The fiscal 2015 AIC payout opportunity for Mr. Bronczek, the president
and chief executive officer of FedEx Express, will be based on the same company
financial performance measures, subject to adjustment by Mr. Smith based on Mr.
Bronczeks achievement of individual performance objectives established at the
beginning of the fiscal year. Mr. Smith will determine the achievement level of
Mr. Bronczeks individual performance objectives at the conclusion of fiscal
2015.
Mr. Smiths and Mr. Bronczeks fiscal
2015 AIC payout will be based on the following company financial performance
measures (subject to adjustment as described above):
- FedEx Express Segment Operating Income: If
the FedEx Express segment operating income
target objective under the fiscal 2015 AIC
program is met or exceeded, a payout of 50% of
their respective target bonus will be earned. The FedEx Express segment operating income target objective under the fiscal 2015 AIC program is higher than the
fiscal 2015 business plan objective for FedEx
Express segment operating income.
- Consolidated Operating Income: If the FedEx
Express segment operating income target
objective under the fiscal 2015 AIC program is
achieved, the balance of Mr. Smiths and Mr.
Bronczeks AIC payout opportunity will be tied
to the achievement of corporate objectives for consolidated operating income, subject to the maximum payout opportunity. The consolidated operating income target objective under the fiscal 2015 AIC program is
higher than the fiscal 2015 business plan
objective for consolidated operating
income.
With respect to Messrs. Graf, Glenn and
Carter, 50% of their target AIC payout will be based on the achievement of
individual performance objectives established at the beginning of the fiscal
year for each executive. Mr. Smith will determine the achievement level of each
executives individual objectives at the conclusion of fiscal 2015. The payout
opportunity relating to individual objectives will not be contingent upon
achievement of any company financial performance objectives.
The balance of Messrs. Grafs, Glenns
and Carters AIC payout is contingent upon achievement of the FedEx Express
segment operating income target objective under the fiscal 2015 AIC program. If
such target objective is achieved, the balance of their AIC payout opportunity
will be based on the achievement of corporate objectives for consolidated
operating income (as described above), subject to the maximum payout
opportunity.
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:
2014 Proxy
Statement 31
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 Fiscal 2014 EPS for LTI Plan Purposes. During fiscal 2014, the company repurchased 36.8 million
shares as part of our stock repurchase program. The reduction in outstanding
shares resulting from the stock repurchase program increased fiscal 2014 EPS.
Because this positive impact 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 EPS for purposes of the LTI plans. As a result,
adjusted fiscal 2014 EPS of $6.68 will be used for purposes of the
FY2012-FY2014, FY2013-FY2015 and FY2014-FY2016 LTI plans, rather than reported
fiscal 2014 EPS of $6.75. This resulted in a 3% reduction in the FY2012-FY2014
LTI plan payout.
Fiscal 2014 LTI Performance and
Payouts. For the FY2012-FY2014 LTI plan, we
used final fiscal 2011 EPS ($4.57) as the base-year number. The following table
presents the aggregate EPS threshold (minimum), target and maximum under our
FY2012-FY2014 LTI plan, which was established by the Board of Directors in 2011,
and our adjusted aggregate EPS under the plan for the three-year period ended
May 31, 2014:
Performance Measure |
|
Threshold |
|
Target |
|
Maximum |
|
Actual |
FY2012-FY2014 Aggregate EPS |
|
$15.13 |
|
$17.43 |
|
$18.25 |
|
$18.00 * |
* |
Excludes $0.07 impact of the stock repurchase program on fiscal
2014 EPS, as described above. |
Based upon this above-target
performance, LTI participants, including the named executive officers, earned
above-target payouts under the FY2012-FY2014 LTI plan as illustrated by the
following table (compared to the threshold, target and maximum payout
opportunities):
Name |
|
Threshold LTI Payout ($) |
|
Target LTI Payout ($) |
|
Maximum LTI Payout ($) |
|
Actual LTI Payout ($) |
F.W. Smith |
|
1,000,000 |
|
4,000,000 |
|
6,000,000 |
|
5,392,000 |
A.B. Graf, Jr. |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
1,617,600 |
D.J. Bronczek |
|
375,000 |
|
1,500,000 |
|
2,250,000 |
|
2,022,000 |
T.M. Glenn |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
1,617,600 |
R.B. Carter |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
1,617,600 |
32 2014 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
LTI Payout Opportunities. The Board of Directors has established LTI plans for the
three-fiscal-year periods 2013 through 2015 and 2014 through 2016, providing
cash payment opportunities upon the conclusion of fiscal 2015 and 2016,
respectively, if certain EPS goals are achieved with respect to those periods.
The FY2013-FY2015 LTI plan uses final fiscal 2012 EPS ($6.41) as the base-year
number, and the FY2014-FY2016 plan uses final fiscal 2013 EPS ($4.91) as the
base-year number. As described above, adjusted fiscal 2014 EPS of $6.68 will be
used for purposes of these LTI plans, rather than reported fiscal 2014 EPS of
$6.75. Fiscal 2015 and 2016 EPS will be adjusted following the end of those
fiscal years using a similar methodology to exclude the impact of the stock
repurchase program for purposes of the FY2013-FY2015 and FY2014-FY2016 LTI
plans. The following table presents the aggregate EPS thresholds, targets and
maximums under the FY2013-FY2015 and FY2014-FY2016 LTI plans and our progress
toward these goals as of May 31, 2014 (actual results exclude the $0.07 benefit
of the stock repurchase program on fiscal 2014 EPS):
Performance Period |
|
Aggregate
EPS Threshold |
|
Aggregate
EPS Target |
|
Aggregate
EPS Maximum |
|
Actual Aggregate EPS as of May
31, 2014 |
FY2013-FY2015 |
|
$21.22 |
|
$24.45 |
|
$25.60 |
|
$11.59 (with one
year remaining) |
FY2014-FY2016 |
|
$16.25 |
|
$18.72 |
|
$19.61 |
|
$6.68 (with two years
remaining) |
The following table sets forth the potential threshold, target and
maximum payouts for the named executive officers under these two
plans:
|
|
|
|
Potential Future
Payouts |
Name |
|
Performance Period |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
F.W.
Smith |
|
FY2013-FY2015 |
|
1,000,000 |
|
4,000,000 |
|
6,000,000 |
|
|
FY2014-FY2016 |
|
1,000,000 |
|
4,000,000 |
|
6,000,000 |
A.B. Graf,
Jr. |
|
FY2013-FY2015 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
FY2014-FY2016 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
D.J.
Bronczek |
|
FY2013-FY2015 |
|
375,000 |
|
1,500,000 |
|
2,250,000 |
|
|
FY2014-FY2016 |
|
375,000 |
|
1,500,000 |
|
2,250,000 |
T.M.
Glenn |
|
FY2013-FY2015 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
FY2014-FY2016 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
R.B.
Carter |
|
FY2013-FY2015 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
|
|
FY2014-FY2016 |
|
300,000 |
|
1,200,000 |
|
1,800,000 |
Modified Base-Year EPS for FY2015-FY2017 LTI Plan.
Traditionally, 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 will be $7.12, not reported fiscal 2014
EPS of $6.75. 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 adjustments of EPS in future years unnecessary
for purposes of the FY2015-FY2017 LTI plan. Otherwise, the FY2015-FY2017 LTI
plan (including the three-year average annual EPS growth rate goals described
above and the threshold, target and maximum payouts) for the named executive
officers is consistent with the terms of the LTI program as described
above.
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.
2014 Proxy
Statement 33
Table of Contents
EXECUTIVE
COMPENSATION
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 2014 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 4, 2014, the total number of shares underlying options and shares of
restricted stock outstanding or available for future grant under our equity
compensation plans represented 10% 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.
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 2014
Awards. On June 3, 2013, 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 |
|
203,780 |
|
0 |
A.B. Graf,
Jr. |
|
24,620 |
|
5,720 |
D.J. Bronczek |
|
32,640 |
|
7,370 |
T.M.
Glenn |
|
24,620 |
|
5,720 |
R.B. Carter |
|
24,620 |
|
5,720 |
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 2014 to each named
executive officer remained substantially the same compared to the fiscal 2013
target value (although the valuation methodology of stock options for accounting
purposes and reporting in the Summary Compensation Table may yield a higher
value).
34 2014 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
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 variable universal 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.
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.
2014 Proxy Statement
35
Table of Contents
EXECUTIVE
COMPENSATION
Risks Arising from Compensation
Policies and Practices |
Management has
conducted an in-depth risk assessment of FedExs compensation policies and
practices and concluded that that 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 2014, we incurred approximately
$5.4 million of additional tax expense as a result of the Section 162(m)
deductibility limit for compensation paid to the Chief Executive Officer and the
three other highest-paid executive officers (other than Mr. Graf).
36 2014 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
Summary Compensation
Table
In this section we
provide certain tabular and narrative information regarding the compensation of
our principal executive and financial officers and our three other most highly
compensated executive officers for the fiscal year ended May 31, 2014, and for
each of the previous two fiscal years.
Name and Principal
Position |
Year |
Salary ($) |
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 |
2014 |
1,266,960 |
0 |
0 |
6,710,435 |
5,754,713 |
|
419,869 |
14,151,977 |
Chairman, President
and |
2013 |
1,266,960 |
0 |
0 |
5,610,542 |
5,250,000 |
|
465,746 |
12,593,248 |
Chief Executive
Officer |
2012 |
1,263,098 |
0 |
0 |
5,371,684 |
6,575,215 |
|
470,971 |
13,680,968 |
(Principal Executive
Officer) |
|
|
|
|
|
|
|
|
|
Alan B. Graf,
Jr. |
2014 |
902,784 |
0 |
554,068 |
810,732 |
1,804,395 |
265,189 |
514,486 |
4,851,654 |
Executive Vice
President |
2013 |
902,784 |
0 |
621,083 |
684,392 |
1,995,001 |
711,553 |
499,157 |
5,413,970 |
and Chief Financial
Officer |
2012 |
900,240 |
0 |
623,735 |
655,217 |
2,546,693 |
1,154,269 |
489,091 |
6,369,245 |
(Principal Financial
Officer) |
|
|
|
|
|
|
|
|
|
David J.
Bronczek |
2014 |
942,096 |
0 |
713,895 |
1,074,829 |
2,227,188 |
969,457 |
581,432 |
6,508,897 |
President and Chief
Executive |
2013 |
942,096 |
0 |
799,692 |
906,498 |
2,490,234 |
792,786 |
491,077 |
6,422,383 |
Officer FedEx
Express |
2012 |
939,441 |
0 |
802,836 |
867,827 |
3,014,794 |
1,490,346 |
544,541 |
7,659,785 |
T. Michael
Glenn |
2014 |
833,364 |
0 |
554,068 |
810,732 |
1,770,066 |
738,829 |
532,819 |
5,239,878 |
Executive Vice
President, |
2013 |
833,364 |
0 |
621,083 |
684,392 |
1,980,007 |
522,945 |
438,002 |
5,079,793 |
Market Development
and |
2012 |
831,016 |
0 |
623,735 |
655,217 |
2,394,698 |
1,247,159 |
481,706 |
6,233,531 |
Corporate
Communications |
|
|
|
|
|
|
|
|
|
Robert B.
Carter |
2014 |
762,960 |
0 |
554,068 |
810,732 |
1,770,479 |
477,874 |
558,190 |
4,934,303 |
Executive Vice
President, |
2013 |
762,960 |
0 |
621,083 |
684,392 |
1,989,519 |
282,935 |
409,256 |
4,750,145 |
FedEx Information
Services |
2012 |
760,810 |
0 |
623,735 |
655,217 |
2,425,551 |
877,959 |
430,844 |
5,774,116 |
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, 2014,
included in our Annual Report on Form 10-K for fiscal 2014. |
|
See the Grants of Plan-Based
Awards During Fiscal 2014 table for information regarding restricted
stock and option awards to the named executive officers during fiscal
2014. |
2014 Proxy Statement 37
Table of Contents
EXECUTIVE
COMPENSATION
(2) |
Reflects cash payouts, if any,
under FedExs fiscal 2014, 2013 and 2012 annual incentive compensation
plans and FY12-FY14, FY11-FY13 and FY10-FY12 long-term incentive plans, as
follows (for further discussion of the fiscal 2014 annual incentive
compensation plan and the FY12-FY14 long-term incentive plan, see
Compensation Discussion and Analysis Compensation Elements and Fiscal
2014 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 |
|
2014 |
|
362,713 |
|
5,392,000 |
|
5,754,713 |
|
|
2013 |
|
0 |
|
5,250,000 |
|
5,250,000 |
|
|
2012 |
|
1,325,215 |
|
5,250,000 |
|
6,575,215 |
A.B. Graf,
Jr. |
|
2014 |
|
186,795 |
|
1,617,600 |
|
1,804,395 |
|
|
2013 |
|
195,001 |
|
1,800,000 |
|
1,995,001 |
|
|
2012 |
|
746,693 |
|
1,800,000 |
|
2,546,693 |
D.J.
Bronczek |
|
2014 |
|
205,188 |
|
2,022,000 |
|
2,227,188 |
|
|
2013 |
|
240,234 |
|
2,250,000 |
|
2,490,234 |
|
|
2012 |
|
764,794 |
|
2,250,000 |
|
3,014,794 |
T.M.
Glenn |
|
2014 |
|
152,466 |
|
1,617,600 |
|
1,770,066 |
|
|
2013 |
|
180,007 |
|
1,800,000 |
|
1,980,007 |
|
|
2012 |
|
594,698 |
|
1,800,000 |
|
2,394,698 |
R.B.
Carter |
|
2014 |
|
152,879 |
|
1,617,600 |
|
1,770,479 |
|
|
2013 |
|
189,519 |
|
1,800,000 |
|
1,989,519 |
|
|
2012 |
|
625,551 |
|
1,800,000 |
|
2,425,551 |
(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 2014 Pension Benefits Overview of Pension Plans). The present
value of the benefits under the Pension Plan and the Parity Plan for
Mr. Smith decreased as follows: (a) between fiscal 2013 and 2014
$343,627; (b) between fiscal 2012 and 2013 $238,617; and (c) between
fiscal 2011 and 2012 $222,885. The amounts in the table and this
footnote were determined using assumptions (e.g., for interest rates and
mortality rates) consistent with those used in the audited consolidated
financial statements included in our annual report on Form 10-K for the
fiscal year ended May 31, 2014. See Fiscal 2014 Pension Benefits
below. |
(4) |
Includes: |
|
- the aggregate incremental cost
to FedEx of providing perquisites and other personal benefits;
- group term life insurance
premiums paid by FedEx;
- company-matching contributions
under FedExs tax-qualified, defined contribution 401(k) retirement
savings plan called the FedEx Corporation Retirement Savings Plan (the
401(k) Plan); and
- tax reimbursement payments
relating to restricted stock awards and certain business-related use of
corporate aircraft. FedEx pays the taxes resulting from a restricted
stock award on behalf of the recipient to prevent the need for the
officer to sell a portion of a stock award to pay the corresponding tax
obligation. While SEC disclosure rules require that these payments be
included with tax reimbursement payments and reported as other
compensation in the Summary Compensation Table, we do not believe these
payments are tax gross-ups in the traditional sense, since their value
is fully reflected in the number of shares ultimately delivered to
recipients. See Compensation Discussion and Analysis Compensation
Objectives and Design-Related Features Restricted Stock Program
above.
|
38 2014 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
The following
table shows the amounts included for each such item:
Name |
Year |
|
Perquisites and
Other Personal Benefits ($) * |
|
Life Insurance Premiums ($) |
|
Company Contributions Under
401(k) Plan ($) |
|
Tax Reimbursement Payments ($) * |
|
Total ($) |
F.W.
Smith |
2014 |
|
410,075 |
|
1,836 |
|
7,958 |
|
0 |
|
419,869 |
|
2013 |
|
454,690 |
|
2,131 |
|
8,925 |
|
0 |
|
465,746 |
|
2012 |
|
460,141 |
|
2,255 |
|
8,575 |
|
0 |
|
470,971 |
A.B. Graf,
Jr. |
2014 |
|
81,955 |
|
3,060 |
|
8,925 |
|
420,546 |
|
514,486 |
|
2013 |
|
133,409 |
|
2,934 |
|
6,583 |
|
356,231 |
|
499,157 |
|
2012 |
|
119,740 |
|
2,844 |
|
8,755 |
|
357,752 |
|
489,091 |
D.J.
Bronczek |
2014 |
|
27,590 |
|
3,060 |
|
8,925 |
|
541,857 |
|
581,432 |
|
2013 |
|
22,877 |
|
2,934 |
|
6,591 |
|
458,675 |
|
491,077 |
|
2012 |
|
65,878 |
|
2,844 |
|
8,752 |
|
467,067 |
|
544,541 |
T.M.
Glenn |
2014 |
|
87,763 |
|
3,060 |
|
8,925 |
|
433,071 |
|
532,819 |
|
2013 |
|
66,900 |
|
2,934 |
|
8,924 |
|
359,244 |
|
438,002 |
|
2012 |
|
104,940 |
|
2,844 |
|
8,802 |
|
365,120 |
|
481,706 |
R.B.
Carter |
2014 |
|
112,249 |
|
3,060 |
|
8,925 |
|
433,956 |
|
558,190 |
|
2013 |
|
35,288 |
|
2,934 |
|
6,525 |
|
364,509 |
|
409,256 |
|
2012 |
|
56,039 |
|
2,844 |
|
8,750 |
|
363,211 |
|
430,844 |
* See the following two tables for additional details
regarding the amounts included in each item.
During
fiscal 2014, 2013 and 2012, 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 $53,077, $70,948 and $52,817 for fiscal 2014,
2013 and 2012, 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 and other benefit costs). For Mr. Smith, these amounts totaled
$267,351, $269,289 and $283,434 for fiscal 2014, 2013 and 2012, respectively.
For additional information regarding executive security services provided to
Mr. Smith, see Compensation Discussion and Analysis Compensation Elements
and Fiscal 2014 Amounts Perquisites, Tax Reimbursement Payments and Other
Annual Compensation above.
2014
Proxy Statement 39
Table of Contents
EXECUTIVE
COMPENSATION
- Tax return preparation
services: FedEx requires officers to have their income tax
returns prepared by a qualified third party (other than our independent
registered public accounting firm) and pays all reasonable and customary costs
for such services.
- Financial counseling
services: FedEx reimburses officers for certain financial
counseling services, subject to various caps.
- Umbrella insurance premiums: FedEx pays umbrella insurance premiums on behalf of
officers.
- Physical
examinations: FedEx pays for officers to have comprehensive
annual physical examinations.
- Travel Privileges:
FedEx provides certain executive officers and their spouses with
travel privileges on certain airline partners. There is a small per-trip
ticketing fee incurred by FedEx in connection with these privileges.
- Supplemental Disability
Benefits: FedEx provides executive officers with salary
continuation benefits for short-term disability (100% of base salary for 28
weeks) and supplemental long-term disability benefits. Both benefit programs
are self-funded (i.e., no premiums are paid to a third-party insurer) and thus
there is no incremental cost to FedEx to provide these benefit
programs.
The following
table shows the amounts included in the table (the aggregate incremental cost to
FedEx) for each such item:
Name |
|
Year |
|
Personal Use
of Corporate Aircraft ($) (a) |
|
Security Services
and Equipment ($) |
|
Tax
Return Preparation Services ($) |
|
Financial Counseling Services ($) |
|
Umbrella Insurance Premiums ($) |
|
Other ($)
(b) |
|
Total ($) |
F.W.
Smith |
|
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 |
|
|
2012 |
|
3,260 |
|
336,251 |
|
70,325 |
|
48,120 |
|
2,185 |
|
0 |
|
460,141 |
A.B. Graf,
Jr. |
|
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 |
|
|
2012 |
|
98,842 |
|
11,115 |
|
4,733 |
|
1,946 |
|
2,185 |
|
919 |
|
119,740 |
D.J.
Bronczek |
|
2014 |
|
0 |
|
4,415 |
|
0 |
|
20,449 |
|
2,294 |
|
432 |
|
27,590 |
|
|
2013 |
|
0 |
|
13,291 |
|
7,100 |
|
0 |
|
2,294 |
|
192 |
|
22,877 |
|
|
2012 |
|
14,724 |
|
7,269 |
|
14,200 |
|
27,500 |
|
2,185 |
|
0 |
|
65,878 |
T.M.
Glenn |
|
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 |
|
|
2012 |
|
31,187 |
|
40,069 |
|
29,150 |
|
1,500 |
|
2,185 |
|
849 |
|
104,940 |
R.B.
Carter |
|
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 |
|
|
2012 |
|
29,220 |
|
17,134 |
|
0 |
|
7,500 |
|
2,185 |
|
0 |
|
56,039 |
(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: (i)
fiscal 2013: Mr. Graf $72,711; and (ii) fiscal 2012: Mr. Graf $93,323;
and Mr. Bronczek $7,056. The entire amounts shown for Messrs. Carter and
Glenn for fiscal 2014, 2013 and 2012, and Mr. Graf for fiscal 2014,
represent use of corporate aircraft to attend board or stockholder
meetings of outside companies or organizations for which the officers
serve as directors. |
(b) |
For fiscal 2014 and 2013, includes physical examinations
and/or ticketing fees for airline travel privileges. For fiscal 2012,
includes physical examinations. |
40 2014 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
The following table shows the tax
reimbursement payments relating to the items listed, which are included in the
table:
Name |
|
Year |
Restricted Stock ($) |
Business- Related Use
of Corporate Aircraft ($) |
Total ($) |
F.W. Smith |
|
2014 |
0 |
0 |
0 |
|
|
2013 |
0 |
0 |
0 |
|
|
2012 |
0 |
0 |
0 |
A.B. Graf, Jr. |
|
2014 |
420,546 |
0 |
420,546 |
|
|
2013 |
356,231 |
0 |
356,231 |
|
|
2012 |
357,752 |
0 |
357,752 |
D.J. Bronczek |
|
2014 |
541,857 |
0 |
541,857 |
|
|
2013 |
458,675 |
0 |
458,675 |
|
|
2012 |
460,478 |
6,589 |
467,067 |
T.M. Glenn |
|
2014 |
420,546 |
12,525 |
433,071 |
|
|
2013 |
356,231 |
3,013 |
359,244 |
|
|
2012 |
357,752 |
7,368 |
365,120 |
R.B. Carter |
|
2014 |
420,546 |
13,410 |
433,956 |
|
|
2013 |
356,231 |
8,278 |
364,509 |
|
|
2012 |
357,752 |
5,459 |
363,211 |
Grants of
Plan-Based Awards During Fiscal 2014
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, 2014:
|
|
|
|
Estimated
Future |
|
All Other |
|
|
Grant |
|
|
|
|
Payouts
Under |
All-Other |
Option
Awards: |
Exercise |
|
Date
Fair |
|
|
|
|
Non-Equity
Incentive |
Stock
Awards: |
Number of |
or Base |
Closing |
Value
of |
|
|
|
|
Plan Awards |
Number of |
Securities |
Price of |
Price
on |
Stock
and |
|
|
|
|
|
|
|
Shares of |
Underlying |
Option |
Grant |
Option |
|
Type of |
Grant |
Approval |
Threshold |
Target |
Maximum |
Stock or
Units |
Options |
Awards |
Date |
Awards |
Name |
Plan/Award |
Date |
Date |
($) |
($) |
($) |
(#) |
(#) |
($/Sh) (1) |
($/Sh) |
($) (2) |
F.W. Smith |
Stock Option
(3) |
06/03/2013 |
06/02/2013 |
|
|
|
|
203,780 |
96.865 |
97.70 |
6,710,435 |
|
FY14 AIC (4) |
|
|
0 |
1,647,048 |
4,941,144 |
|
|
|
|
|
|
FY14-FY16 LTI (5) |
|
|
1,000,000 |
4,000,000 |
6,000,000 |
|
|
|
|
|
A.B. Graf, Jr. |
Restricted Stock (6) |
06/03/2013 |
06/02/2013 |
|
|
|
5,720 |
|
|
|
554,068 |
|
Stock Option
(3) |
06/03/2013 |
06/02/2013 |
|
|
|
|
24,620 |
96.865 |
97.70 |
810,732 |
|
FY14 AIC (4) |
|
|
0 |
812,506 |
1,950,014 |
|
|
|
|
|
|
FY14-FY16 LTI (5) |
|
|
300,000 |
1,200,000 |
1,800,000 |
|
|
|
|
|
D.J. Bronczek |
Restricted Stock (6) |
06/03/2013 |
06/02/2013 |
|
|
|
7,370 |
|
|
|
713,895 |
|
Stock Option
(3) |
06/03/2013 |
06/02/2013 |
|
|
|
|
32,640 |
96.865 |
97.70 |
1,074,829 |
|
FY14 AIC (4) |
|
|
0 |
942,096 |
2,261,030 |
|
|
|
|
|
|
FY14-FY16 LTI (5) |
|
|
375,000 |
1,500,000 |
2,250,000 |
|
|
|
|
|
T.M. Glenn |
Restricted Stock (6) |
06/03/2013 |
06/02/2013 |
|
|
|
5,720 |
|
|
|
554,068 |
|
Stock Option
(3) |
06/03/2013 |
06/02/2013 |
|
|
|
|
24,620 |
96.865 |
97.70 |
810,732 |
|
FY14 AIC (4) |
|
|
0 |
750,028 |
1,800,067 |
|
|
|
|
|
|
FY14-FY16 LTI (5) |
|
|
300,000 |
1,200,000 |
1,800,000 |
|
|
|
|
|
R.B. Carter |
Restricted Stock (6) |
06/03/2013 |
06/02/2013 |
|
|
|
5,720 |
|
|
|
554,068 |
|
Stock Option
(3) |
06/03/2013 |
06/02/2013 |
|
|
|
|
24,620 |
96.865 |
97.70 |
810,732 |
|
FY14 AIC (4) |
|
|
0 |
686,664 |
1,647,994 |
|
|
|
|
|
|
FY14-FY16 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. |
2014 Proxy
Statement 41
Table of Contents
EXECUTIVE
COMPENSATION
(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 2014 Amounts
Long-Term Equity Incentives Stock Options and Restricted Stock above
for further discussion of stock option awards. |
(4) |
In July 2013, 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 2014. Payment amounts were
based upon the achievement of company financial performance goals for
fiscal 2014 and the achievement of individual objectives established at
the beginning of fiscal 2014 for each officer other than Mr. Smith. See
Compensation Discussion and Analysis Compensation Elements and Fiscal
2014 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 2013. The plan provides a long-term cash payment opportunity to
the named executive officers at the conclusion of fiscal 2016 if FedEx
achieves an aggregate earnings-per-share goal established by the Board
with respect to the three-fiscal-year period 2014 through 2016. No amounts
can be earned under the plan until 2016 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
2014 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
2014 Amounts Long-Term Equity Incentives Stock Options and Restricted
Stock above for further discussion of restricted stock
awards. |
42 2014 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
Outstanding Equity
Awards at End of Fiscal 2014
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, 2014:
|
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 |
250,000 |
|
|
89.7000 |
06/01/2015 |
|
|
|
|
|
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 |
|
|
|
|
|
146,625 |
48,875 |
(1) |
78.1900 |
06/07/2020 |
|
|
|
|
|
88,050 |
88,050 |
(2) |
89.1050 |
06/06/2021 |
|
|
|
|
|
49,668 |
149,007 |
(3) |
85.2550 |
06/04/2022 |
|
|
|
|
|
|
203,780 |
(4) |
96.8650 |
06/03/2023 |
|
|
|
|
A.B. Graf,
Jr. |
34,425 |
|
|
89.7000 |
06/01/2015 |
|
|
|
|
|
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 |
|
|
|
|
|
17,325 |
5,775 |
(5) |
78.1900 |
06/07/2020 |
|
|
|
|
|
10,740 |
10,740 |
(6) |
89.1050 |
06/06/2021 |
|
|
|
|
|
6,058 |
18,177 |
(7) |
85.2550 |
06/04/2022 |
|
|
|
|
|
|
24,620 |
(8) |
96.8650 |
06/03/2023 |
|
|
|
|
|
|
|
|
|
|
|
16,684 |
(9) |
2,405,165 |
D.J. Bronczek |
45,900 |
|
|
89.7000 |
06/01/2015 |
|
|
|
|
|
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 |
|
|
|
|
|
23,081 |
7,694 |
(10) |
78.1900 |
06/07/2020 |
|
|
|
|
|
14,225 |
14,225 |
(11) |
89.1050 |
06/06/2021 |
|
|
|
|
|
8,025 |
24,075 |
(12) |
85.2550 |
06/04/2022 |
|
|
|
|
|
|
32,640 |
(13) |
96.8650 |
06/03/2023 |
|
|
|
|
|
|
|
|
|
|
|
21,482 |
(14) |
3,096,845 |
T.M. Glenn |
34,425 |
|
|
89.7000 |
06/01/2015 |
|
|
|
|
|
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 |
|
|
|
|
|
17,325 |
5,775 |
(15) |
78.1900 |
06/07/2020 |
|
|
|
|
|
10,740 |
10,740 |
(16) |
89.1050 |
06/06/2021 |
|
|
|
|
|
6,058 |
18,177 |
(17) |
85.2550 |
06/04/2022 |
|
|
|
|
|
|
24,620 |
(18) |
96.8650 |
06/03/2023 |
|
|
|
|
|
|
|
|
|
|
|
16,684 |
(19) |
2,405,165 |
R.B.
Carter |
14,508 |
|
|
89.7000 |
06/01/2015 |
|
|
|
|
|
20,655 |
|
|
110.0600 |
06/01/2016 |
|
|
|
|
|
20,655 |
|
|
114.7400 |
07/09/2017 |
|
|
|
|
|
5,000 |
|
|
103.3500 |
09/24/2017 |
|
|
|
|
2014 Proxy
Statement 43
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 |
24,100 |
|
|
90.8100 |
06/02/2018 |
|
|
|
|
|
34,580 |
|
|
56.3100 |
06/08/2019 |
|
|
|
|
|
17,325 |
5,775 |
(20) |
78.1900 |
06/07/2020 |
|
|
|
|
|
10,740 |
10,740 |
(21) |
89.1050 |
06/06/2021 |
|
|
|
|
|
6,058 |
18,177 |
(22) |
85.2550 |
06/04/2022 |
|
|
|
|
|
|
24,620 |
(23) |
96.8650 |
06/03/2023 |
|
|
|
|
|
|
|
|
|
|
|
16,684 |
(24) |
2,405,165 |
(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) |
06/07/2014 |
48,875 |
|
A.B. Graf, Jr. |
(5) |
06/07/2014 |
5,775 |
|
|
(2) |
06/06/2014 |
44,025 |
|
|
(6) |
06/06/2014 |
5,370 |
|
|
|
06/06/2015 |
44,025 |
|
|
|
06/06/2015 |
5,370 |
|
|
(3) |
06/04/2014 |
49,669 |
|
|
(7) |
06/04/2014 |
6,059 |
|
|
|
06/04/2015 |
49,669 |
|
|
|
06/04/2015 |
6,059 |
|
|
|
06/04/2016 |
49,669 |
|
|
|
06/04/2016 |
6,059 |
|
|
(4) |
06/03/2014 |
50,945 |
|
|
(8) |
06/03/2014 |
6,155 |
|
|
|
06/03/2015 |
50,945 |
|
|
|
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 |
|
|
|
|
|
|
|
(9) |
06/03/2014 |
1,430 |
|
|
|
|
|
|
|
|
06/04/2014 |
1,821 |
|
|
|
|
|
|
|
|
06/06/2014 |
1,750 |
|
|
|
|
|
|
|
|
06/07/2014 |
2,000 |
|
|
|
|
|
|
|
|
06/03/2015 |
1,430 |
|
|
|
|
|
|
|
|
06/04/2015 |
1,821 |
|
|
|
|
|
|
|
|
06/06/2015 |
1,750 |
|
|
|
|
|
|
|
|
06/03/2016 |
1,430 |
|
|
|
|
|
|
|
|
06/04/2016 |
1,822 |
|
|
|
|
|
|
|
|
06/03/2017 |
1,430 |
|
D.J. Bronczek |
(10) |
06/07/2014 |
7,694 |
|
T. M. Glenn |
(15) |
06/07/2014 |
5,775 |
|
|
(11) |
06/06/2014 |
7,112 |
|
|
(16) |
06/06/2014 |
5,370 |
|
|
|
06/06/2015 |
7,113 |
|
|
|
06/06/2015 |
5,370 |
|
|
(12) |
06/04/2014 |
8,025 |
|
|
(17) |
06/04/2014 |
6,059 |
|
|
|
06/04/2015 |
8,025 |
|
|
|
06/04/2015 |
6,059 |
|
|
|
06/04/2016 |
8,025 |
|
|
|
06/04/2016 |
6,059 |
|
|
(13) |
06/03/2014 |
8,160 |
|
|
(18) |
06/03/2014 |
6,155 |
|
|
|
06/03/2015 |
8,160 |
|
|
|
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 |
|
|
(14) |
06/03/2014 |
1,842 |
|
|
(19) |
06/03/2014 |
1,430 |
|
|
|
06/04/2014 |
2,345 |
|
|
|
06/04/2014 |
1,821 |
|
|
|
06/06/2014 |
2,252 |
|
|
|
06/06/2014 |
1,750 |
|
|
|
06/07/2014 |
2,572 |
|
|
|
06/07/2014 |
2,000 |
|
|
|
06/03/2015 |
1,843 |
|
|
|
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 |
|
|
|
06/03/2016 |
1,842 |
|
|
|
06/03/2016 |
1,430 |
|
|
|
06/04/2016 |
2,345 |
|
|
|
06/04/2016 |
1,822 |
|
|
|
06/03/2017 |
1,843 |
|
|
|
06/03/2017 |
1,430 |
44 2014 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
|
|
|
Date |
Number |
|
R.B. Carter |
(20) |
06/07/2014 |
5,775 |
|
|
(21) |
06/06/2014 |
5,370 |
|
|
|
06/06/2015 |
5,370 |
|
|
(22) |
06/04/2014 |
6,059 |
|
|
|
06/04/2015 |
6,059 |
|
|
|
06/04/2016 |
6,059 |
|
|
(23) |
06/03/2014 |
6,155 |
|
|
|
06/03/2015 |
6,155 |
|
|
|
06/03/2016 |
6,155 |
|
|
|
06/03/2017 |
6,155 |
|
|
(24) |
06/03/2014 |
1,430 |
|
|
|
06/04/2014 |
1,821 |
|
|
|
06/06/2014 |
1,750 |
|
|
|
06/07/2014 |
2,000 |
|
|
|
06/03/2015 |
1,430 |
|
|
|
06/04/2015 |
1,821 |
|
|
|
06/06/2015 |
1,750 |
|
|
|
06/03/2016 |
1,430 |
|
|
|
06/04/2016 |
1,822 |
|
|
|
06/03/2017 |
1,430 |
(b) |
Computed by
multiplying the closing market price of FedExs common stock on May 30,
2014 (which was $144.16) by the number of
shares. |
Option
Exercises and Stock Vested During Fiscal 2014
The following table sets forth for each
named executive officer certain information about stock options that were
exercised and restricted stock that vested during the fiscal year ended May 31,
2014:
|
Option Awards |
|
|
Stock Awards |
|
|
Number of |
|
|
|
Number of |
|
|
|
Shares |
Value |
|
|
Shares |
Value |
|
|
Acquired |
Realized |
|
|
Acquired |
Realized |
|
|
on Exercise |
on
Exercise |
|
|
on
Vesting |
on
Vesting |
|
Name |
(#) |
($)
(1) |
|
|
(#) |
($)
(2) |
|
F.W.
Smith |
325,000 |
20,621,542 |
|
|
0 |
0 |
|
A.B. Graf, Jr. |
38,250 |
2,515,037 |
|
|
8,905 |
874,135 |
|
D.J.
Bronczek |
49,628 |
1,826,633 |
|
|
11,453 |
1,124,247 |
|
T.M. Glenn |
38,250 |
2,545,687 |
|
|
8,905 |
874,135 |
|
R.B. Carter |
16,986 |
822,918 |
|
|
8,905 |
874,135 |
|
(1) |
If the shares were sold immediately upon exercise, the
value realized on exercise of the option is the difference between the
actual sales price and the exercise price of the option. Otherwise, the
value realized is the difference between the fair market value of FedExs
common stock (the average of the high and low prices of the stock on the
New York Stock Exchange) on the date of exercise and the exercise
price of the option. |
(2) |
Represents the fair market value of
the shares on the vesting date. |
2014 Proxy
Statement 45
Table of Contents
EXECUTIVE
COMPENSATION
Fiscal 2014
Pension Benefits
The following table sets forth for each
named executive officer the present value of accumulated benefits at May 31,
2014, under FedExs defined benefit pension plans. For information regarding
benefits triggered by retirement under our stock option and restricted stock
plans, see Potential Payments Upon Termination or Change of Control
below.
|
|
Number |
Present |
Payments |
|
|
of Years |
Value of |
During |
|
|
Credited |
Accumulated |
Fiscal |
|
|
Service |
Benefit |
2014 |
Name |
Plan Name |
(#) |
($) (1) |
($) |
F.W. Smith |
FedEx Corporation
Employees Pension Plan |
42 |
1,429,059 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
42 |
23,566,141 |
0 |
A.B. Graf, Jr. |
FedEx Corporation
Employees Pension Plan |
34 |
1,636,769 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
34 |
11,889,907 |
0 |
D.J. Bronczek |
FedEx Corporation
Employees Pension Plan |
38 |
1,778,267 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
38 |
15,242,168 |
0 |
T.M. Glenn |
FedEx Corporation
Employees Pension Plan |
33 |
1,577,154 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
33 |
10,339,905 |
0 |
R.B. Carter |
FedEx Corporation
Employees Pension Plan |
21 |
888,943 |
0 |
|
FedEx Corporation Retirement Parity Pension
Plan |
21 |
5,071,039 |
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, 2014. 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, 2014, if the officer is past normal retirement age,
converted based on an interest rate of 4.596% and the RP2000 Combined No
Collar Mortality Table projected to 2029 and discounted to May 31, 2014,
using an interest rate of 4.596%. The present value of the Parity Plan (as
defined below) traditional pension benefit is equal to the single life
annuity payable at the normal retirement age, or June 1, 2014, if the
officer is past normal retirement age, converted based on an interest rate
of 5% and the 1994 Group Annuity Reserving Table and discounted to May 31,
2014, using an interest rate of 4.596%. The present value of the Portable
Pension Account (discussed below) is equal to the officers account
balance at May 31, 2014, projected to the normal retirement date, if
applicable, based on an interest rate of 4% (compounded quarterly) and
discounted to May 31, 2014, using an interest rate of
4.596%. |
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 2014, the maximum compensation limit under
a tax-qualified pension plan was $255,000. 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 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.
46 2014 Proxy Statement
Table of Contents
EXECUTIVE
COMPENSATION
The named executive officers also
participate in the 401(k) Plan. Beginning January 1, 2008, the annual matching
company contribution under the 401(k) Plan is a maximum of 3.5% of eligible
earnings. Effective February 1, 2009, however, 401(k) company-matching
contributions were suspended for all participants, including the named executive
officers. We reinstated these contributions at 50% of previous levels (a maximum
of 1.75% of eligible earnings) effective January 1, 2010, and fully restored
these contributions effective January 1, 2011.
In order to provide 100% of the
benefits that would otherwise be limited due to certain limitations imposed by
United States tax laws, effective June 1, 2008, Parity Plan participants,
including the named executive officers, received additional Portable Pension
Account compensation credits equal to 3.5% of any
eligible earnings above the maximum compensation limit for tax-qualified plans.
Effective June 1, 2009, however, the additional compensation credit under the
Parity Plan was suspended for all participants, including the named executive
officers. We reinstated 50% of the additional Portable Pension Account
compensation credit benefit effective June 1, 2010, and fully reinstated the
benefit effective June 1, 2011 (such full credit was made as of May 31, 2012).
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, 2013, the sum of age plus
years of service for the named executive officers was as follows: Mr. Smith
109; Mr. Graf 92; Mr. Bronczek 95; Mr. Glenn 89; and Mr. Carter 73.
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.
|
2014 Proxy
Statement 47
Table of Contents
EXECUTIVE
COMPENSATION
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 rate, which is equal to the greater
of (a) 1/4 of the one-year Treasury constant maturities rate for April of the
preceding plan year plus 0.25% and (b) 1% (1/4 of 4%). The quarterly interest
crediting rate, 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 rate 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
rate for the plan year ended May 31, 2013, was 1%. The quarterly
interest-crediting rate for the plan year ended May 31, 2014, 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.
48 2014 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
For information regarding retirement
benefits under our pension plans, see Fiscal 2014 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,
2014):
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 |
|
26,486,909 |
|
26,486,909 |
|
|
A.B. Graf,
Jr. |
|
2,405,165 |
|
3,207,387 |
|
5,612,552 |
|
|
D.J. Bronczek |
|
3,096,845 |
|
4,252,577 |
|
7,349,422 |
|
|
T.M.
Glenn |
|
2,405,165 |
|
3,207,387 |
|
5,612,552 |
|
|
R.B. Carter |
|
2,405,165 |
|
3,207,387 |
|
5,612,552 |
|
(1) |
Computed by multiplying the closing market price per share of
FedExs common stock on May 30, 2014 (which was $144.16) by the number of
unvested shares of restricted stock held by the officer as of May 31,
2014. |
(2) |
Represents the difference between the closing market price per
share of FedExs common stock on May 30, 2014 (which was $144.16) and the
exercise price of each unvested option held by the officer as of May 31,
2014. |
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.
2014 Proxy
Statement 49
Table of Contents
EXECUTIVE
COMPENSATION
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, 2014, 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 30, 2014, which was
$144.16):
Benefits Triggered by Change of
Control (1) |
Name |
|
Value
of Unvested Restricted Shares ($) (2) |
|
Value of Unvested Stock
Options ($) (3) |
|
Total ($) |
F.W. Smith |
|
0 |
|
26,486,909 |
|
26,486,909 |
A.B. Graf,
Jr. |
|
2,405,165 |
|
3,207,387 |
|
5,612,552 |
D.J. Bronczek |
|
3,096,845 |
|
4,252,577 |
|
7,349,422 |
T.M.
Glenn |
|
2,405,165 |
|
3,207,387 |
|
5,612,552 |
R.B. Carter |
|
2,405,165 |
|
3,207,387 |
|
5,612,552 |
(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 30, 2014 (which was $144.16) by the number of
unvested shares of restricted stock held by the officer as of May 31,
2014. |
(3) |
Represents the difference between the closing market price per
share of FedExs common stock on May 30, 2014 (which was $144.16) and the
exercise price of each unvested option held by the officer as of May 31,
2014. |
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
50 2014 Proxy Statement
Table of Contents
EXECUTIVE COMPENSATION
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 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, 2014, 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 30, 2014, which was $144.16):
Payments and Benefits Triggered
by Qualifying Termination after Change of
Control |
Name |
|
Lump Sum Cash Payment – 2x
Base Salary and 2x Target Annual Bonus ($) |
|
Health Benefits ($) |
|
Total ($) |
F.W. Smith |
|
5,828,016 |
|
48,703 |
|
5,876,719 |
A.B. Graf,
Jr. |
|
3,430,580 |
|
34,173 |
|
3,464,753 |
D.J. Bronczek |
|
3,768,384 |
|
32,819 |
|
3,801,203 |
T.M.
Glenn |
|
3,166,784 |
|
30,780 |
|
3,197,564 |
R.B. Carter |
|
2,899,248 |
|
26,636 |
|
2,925,884 |
2014 Proxy
Statement 51
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 20:
- 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 2014, 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, 57%-59% of their
fiscal 2014 target total direct compensation
consisted of variable, at-risk
components.
- Annual bonus payments for fiscal 2014 were tied to
meeting aggressive business plan goals for
consolidated operating income. Because the
corporate objectives for consolidated operating
income for fiscal 2014 were not achieved (even though consolidated operating income increased by 35% year-over-year), the named executive officers
received below-target annual bonus payouts for
fiscal 2014.
- Long-term incentive payouts are tied to meeting
aggregate earnings-per-share goals over a
three-fiscal-year period. Based upon
above-target earnings-per-share performance over the last three fiscal years, there were above-target long-term incentive payouts for fiscal 2014.
- FedExs stock price increased by 49.6% during
fiscal 2014, which significantly exceeds the
year-over-year increase in the Chairman,
President and Chief Executive Officers fiscal 2014 compensation (as set forth in the Summary Compensation Table on page 37).
- 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 4, 2014, 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 37 through 51, 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.
52 2014 Proxy Statement
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.
2014 Proxy
Statement 53
Table of Contents
EQUITY COMPENSATION
PLANS
Equity Compensation
Plans Approved by Stockholders
Stockholders approved FedExs 1995,
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
1995, 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
FedExs 2001 Restricted Stock Plan, as
amended, was approved by the Board of Directors, but was not approved by the
stockholders. The 2001 Restricted Stock Plan was terminated in September 2010,
and no further grants may be made under this plan, although, as of May 31, 2014,
there were still unvested restricted share awards outstanding under the plan
(all such shares have subsequently vested). Under the terms of this plan, key
employees received restricted shares of common stock as determined by the
Compensation Committee. Only treasury shares were issued under this plan.
Holders of restricted shares were entitled to vote such shares and to receive
any dividends paid on FedEx common stock.
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, 2014, 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 |
|
15,634,856 |
(1) |
|
|
$91.71 |
|
15,540,209 |
(2) |
|
|
Equity
compensation plans not approved by stockholders |
|
1,561 |
(3) |
|
|
N/A |
|
|
|
|
|
Total |
|
15,636,417 |
|
|
|
$91.71 |
|
15,540,209 |
|
|
(1) |
Represents shares of common stock issuable upon exercise of
outstanding options granted under FedExs stock option plans. This number
does not include: (a) 2,160 shares of common stock issuable under a
retirement plan assumed by FedEx for former non-employee directors of
Caliber System, Inc.; and (b) 123 shares of common stock issuable under
stock credit plans assumed by FedEx in the Caliber
acquisition. |
|
FedEx cannot make any additional awards under these assumed plans,
but additional FedEx common stock equivalent units may be issued to
current participants under the assumed stock credit plans pursuant to
dividend equivalent rights. |
(2) |
Shares available for equity grants under FedExs 2010 Omnibus Stock
Incentive Plan, as amended (no more than 2,431,336 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. |
54 2014 Proxy Statement
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,
2014, 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, 2014.
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, 2014, 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, 2014, with respect to the consolidated
financial statements of FedEx as of and for the fiscal year ended May 31, 2014,
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, 2014,
for filing with the Securities and Exchange Commission.
Audit Committee
Members
John A. Edwardson Chairman
Gary W.
Loveman
R. Brad Martin
Joshua Cooper Ramo
2014 Proxy
Statement 55
Table of Contents
AUDIT AND NON-AUDIT
FEES
The following table sets forth fees for
services Ernst & Young LLP provided to FedEx during fiscal 2014 and 2013,
which were preapproved by FedExs Audit Committee in accordance with the Policy
on Engagement of Independent Auditor (discussed on the following
page):
|
|
2014 |
|
2013 |
Audit
fees |
|
|
$14,253,000 |
|
|
$13,633,000 |
Audit-related fees |
|
|
824,000 |
|
|
1,034,000 |
Tax
fees |
|
|
377,000 |
|
|
571,000 |
All other fees |
|
|
817,000 |
|
|
1,090,000 |
Total |
|
|
$16,271,000 |
|
|
$16,328,000 |
- 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 2014 and
fiscal 2013 were for benefit plan audits,
international accounting and reporting compliance, and 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 $149,000 and $192,000
in fiscal 2014 and 2013, respectively.
- All Other Fees. Represents fees for products and services provided to FedEx not otherwise included in the categories above. The fees for fiscal 2014 were for online
technical resources and advisory services
related to acquisition integration planning and
information technology risk management. The
fees for fiscal 2013 were primarily for information technology risk assessments, risk advisory services and training services and settlement system
security assessments.
FedExs Audit Committee has determined
that the provision of non-audit services by Ernst & Young is compatible
with maintaining Ernst & Youngs independence.
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, 2014, and FedExs
internal control over financial reporting as of May 31, 2014. The Audit
Committee has appointed Ernst & Young to be FedExs independent registered
public accounting firm for the fiscal year ending May 31, 2015.
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.
56 2014 Proxy Statement
Table of Contents
PROPOSAL 3 RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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 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 2015. 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.
2014 Proxy
Statement 57
Table of
Contents
PROPOSAL 4
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 Myra K. Young, 9295 Yorkship Court, Elk
Grove, California 95758, the beneficial owner of 50 shares of FedEx common
stock, intends to present the following proposal for consideration at the annual
meeting:
Proposal 4 Proxy Access for Shareholders
WHEREAS, FedEx Board is too comfortable and stretched:
- Same combined CEO/Chairman 40
years
- Six directors on three to five
boards,
- Six over 60 years old
- Five served 10 or more years
- Between 2 and 9% of shares voted
against six in 2013
PwCs 2013 Survey found 35% of directors (half who served less than one
year) believe at least one member of their board should be replaced (compared to
31% in 2012 and less than 25% who served more than 10 years). Top three
reasons:
- Diminished performance because of
aging,
- Lack of expertise, and
- Poor meeting
preparation.
Other issues specific to FedEx include related party transactions, use of
corporate jet and settlements regarding:
- Improper deliveries and delivery
charges, and
- Discrimination.
RESOLVED, Shareowners ask our board, to the fullest extent permitted by
law, to amend our governing documents to allow shareowners to make board
nominations as follows:
1. The Company proxy statement, form of proxy, and voting instruction
forms shall include, listed with the boards nominees, alphabetically by last
name, nominees of:
a. Any party of one or more shareowners that has collectively held,
continuously for three years, at least three percent of the Companys securities
eligible to vote for the election of directors, and/or
b. Any party of shareowners of whom 25 or more have each held
continuously for three years a number of shares of the Companys stock that, at
some point within the preceding 60 days, was worth at least $2,000 and
collectively at least three percent of the Companys securities eligible to vote
for the election of directors.
2. For any board election, no shareowner may be a member of more than one
such nominating party. Board members and officers of the Company may not be
members of any such nominating party of shareowners.
3. Parties nominating under 1(a) may collectively, and parties nominating
under 1(b) may collectively, make nominations numbering up to 24% of the
companys board of directors. If either group should exceed its 24% limit,
opportunities to nominate shall be distributed among parties in that group as
evenly as possible.
4. If necessary, preference among 1(a) nominators will be shown to those
holding the greatest number of the Companys shares for at least two years, and
preference among 1(b) nominators will be shown to those with the greatest number
who have each held continuously for one year a number of shares of the Companys
stock that, at some point within the preceding 60 days, was worth at least
$2,000.
5. Nominees may include in the proxy statement a 500 word supporting
statement.
6. Each proxy statement or special meeting notice to elect board members
shall include instructions for nominating under these provisions, fully
explaining all legal requirements for nominators and nominees under federal law,
state law and the companys governing documents.
Vote to enhance shareholder value:
Proxy Access for Shareholders Proposal 4
58
2014 Proxy Statement
Table of
Contents
PROPOSAL 4 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 achieve the optimal balance of directors that best serve
FedEx and 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 protections 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 for presentation at
an annual meeting and for inclusion in FedExs proxy statement for that annual
meeting, subject to certain conditions and the rules and regulations of the
Securities and Exchange Commission; and
- Submit proposals, including
nominations of director candidates, directly at an annual meeting, subject to
certain conditions as set forth in 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.
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.
2014 Proxy Statement
59
Table of Contents
PROPOSAL 4 STOCKHOLDER PROPOSAL:
PROXY ACCESS FOR SHAREHOLDERS
- Enhancing the Ability of Special
Interest Groups to Elect Directors. Proxy
access would facilitate the nomination and election of special interest
directors who further the particular agendas of the stockholders who nominated
them, rather than the interests of all stockholders and FedExs long-term
business goals.
- Balkanizing the Board of
Directors. The election of
stockholder-nominated directors could create factions on the Board, leading to
dissension and delay and thereby precluding 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.
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 threshold of 3% ownership for three years is
too low. 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 a special
interest 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.
60 2014 Proxy Statement
Table of Contents
PROPOSAL 5 STOCKHOLDER
PROPOSAL:
SIMPLE MAJORITY
VOTE-COUNTING
FedEx is not responsible for the content of this stockholder
proposal or supporting statement.
FedEx has been notified that Investor Voice, SPC, 10033 12th
Avenue NW, Seattle, Washington 98177, as representative of the Equality Network
Foundation, the beneficial owner of 30 shares of FedEx common stock, intends to
present the following proposal for consideration at the annual
meeting:
RESOLVED: Shareholders of FedEx Corporation (FedEx or Company)
hereby request the Board of Directors to take or initiate the steps necessary to
amend the Companys governing documents to provide that all matters presented to
shareholders, other than the election of directors, shall be decided by a simple
majority of the shares voted FOR and AGAINST an item. This policy shall apply to
all such matters unless shareholders have approved higher thresholds, or
applicable laws or stock exchange regulations dictate otherwise.
SUPPORTING
STATEMENT:
Vote
Calculation Methodologies a report prepared for CalPERS by GMI Ratings,
studied companies in the S&P 500 and Russell 1000, and found that 48% employ
the simple majority vote-counting standard requested by this Proposal. See
http://www.calpers-governance.org/docs-sof/provyvoting/calpers-russell-1000-vote-calculation-methodology-final-v2.pdf
Cardinal Health, Inc., an
Ohio corporation and the 19th largest company in America, adopted and
implemented this Proposal. Plum Creek Timber Company, Inc., a Delaware
corporation and the largest private landowner in the nation, has adopted and
implemented this Proposal.
FedEx is regulated by the
Securities and Exchange Commission (SEC). An SEC Rule dictates a specific
vote-counting formula for the purpose of establishing eligibility for
resubmission of shareholder-sponsored proposals. This formula which for the
purpose of this proposal will be called the Simple Majority Vote is the votes
cast FOR, divided by two categories of vote, the:
FedEx does not
uniformly follow the Simple Majority
Vote. Its proxy states (for
shareholder-sponsored proposals) that abstentions will have the same practical
effect as votes against the proposal.
This means that results are
determined by the votes cast FOR a proposal, divided by not two, but
three different categories of vote:
- FOR votes,
- AGAINST votes, plus
- ABSTAIN votes.
We note, for
Management-sponsored Proposal 1 (in uncontested director elections), that FedEx
embraces the Simple Majority Vote
and excludes abstentions, saying they will have
no effect.
However, the Company then
applies a more restrictive vote-counting formula to all shareholder-sponsored
items and other management-sponsored ones, using a formula that includes
abstentions.
The outcome is that these
practices advantage managements uncontested slate of director nominees by
boosting the appearance of support on Management-sponsored Proposal 1, relative
to other items, while they depress the calculated level of support for all other
items including every shareholder-sponsored proposal by subjecting them to a
higher threshold.
As well, in regard to
shareholder-sponsored items, abstaining voters have not followed the Boards
recommendation to cast their vote AGAINST. Despite this, FedEx counts all
abstentions as if every abstaining voter, without exception, has chosen to
follow the Boards recommendation to vote AGAINST.
In our view FedExs use of
these two different vote-counting formulas is internally inconsistent, is
confusing, does not fully honor voter intent, and harms shareholder
best-interest.
Therefore, please
vote FOR this widely accepted and common-sense governance
Proposal that calls for a fair and
consistent Simple Majority Vote
across-the-board (while allowing flexibility for
different thresholds where required).
2014 Proxy
Statement 61
Table of Contents
PROPOSAL 5 STOCKHOLDER PROPOSAL: SIMPLE MAJORITY
VOTE-COUNTING
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.
FedExs stockholder approval standard and vote counting
methodology of including abstentions adheres to Delaware law and is the standard
used by a majority of Delaware companies. FedEx is incorporated in the State of Delaware and, therefore, Delaware
law governs the voting standards for action by FedExs stockholders.
The required vote for action by FedExs stockholders follows the default
approval standard for stockholder action under Delaware law. Under FedExs
Bylaws, when a quorum is present, the vote of the holders of the majority of the
shares present, in person or by proxy, and entitled to vote is required to
approve any matter brought before a stockholder meeting, other than the election
of directors. We believe the majority of Delaware corporations adhere to the
same default voting standard.
Delaware law governs the way abstentions are counted, and under such law,
abstention votes are considered shares entitled to vote. In the vote
tabulation for matters that require the affirmative vote of the majority of the
shares present and entitled to vote, abstentions are included in the denominator
as shares entitled to vote and have the same practical effect as a vote
against a proposal.
FedExs vote counting methodology of including abstentions
applies identically to management-sponsored proposals and stockholder
proposals. In its supporting statement,
the proponent focuses on the effect that counting abstentions as against votes has on
stockholder proposals. However, abstentions are also counted as against
management-sponsored proposals, other than the election of directors. At the
annual meeting, our stockholders are being asked to adopt an advisory resolution
to approve named executive officer compensation and to ratify the appointment of
FedExs independent registered public accounting firm both of which the Board
recommends that stockholders support. Abstention votes for each of these
management-sponsored proposals have the same practical effect as a vote against
them, as with stockholder proposals. Our vote count standard does not favor
these management-sponsored proposals over the stockholder proposals. Both are
treated equally.
The Board of Directors believes that since stockholders are
made aware of the treatment and effect of abstentions, counting abstention votes
effectively honors the intent of our stockholders. Stockholders typically have three voting choices for a
particular proposal: for, against and abstain. In the proxy statement for the
annual meeting, we disclose the vote required to approve each proposal. We also
describe how abstentions will be counted in the
vote tabulation and the effect of abstentions on the outcome of a matter, on a
proposal-by-proposal basis. Our stockholders are, therefore, informed that if
they vote abstain on a proposal other than the election of directors, their
vote will have the same practical effect as an against vote.
The Board of
Directors believes that counting abstention votes effectively honors the intent
of our stockholders. If a stockholder elects to abstain on a matter, the Board
believes that the stockholder recognizes the impact of the vote and expects it
to be included in the vote count.
The Board of Directors believes that lowering the approval
standard for proposals would be poor corporate governance. Except with respect to the election of directors and matters
that require, statutorily or otherwise, a different vote, the Board of Directors
believes that a proposal whether management-sponsored or stockholder-sponsored
should receive more for votes than the sum of against and abstain votes
in order to constitute approval by our stockholders.
The proponent requests that abstentions be ignored for all matters
presented to FedEx stockholders. Ignoring abstention votes would lower the
approval standard (that is, make approval easier). We believe the proponent of a
proposal, whether management or a stockholder, should be able to persuade a
majority of stockholders to affirmatively vote for an item to consider it
approved. An abstention indicates that stockholders are not in favor of the
proposal. The Board of Directors does not believe that this would be in our
stockholders best interest or effective corporate governance to disregard these
views.
The SEC does not have a standard to determine whether a
proposal has been approved by stockholders. The proponents argument of using the SEC vote-counting formula of
excluding abstentions in vote tabulations is misguided. The SEC does not have a
standard governing whether a proposal has been approved, because this is a
matter of state law (in our case, Delaware state law). Because the SEC regulates
proxy statements, the so-called vote-counting rules are simply for determining
whether a proponent may resubmit a proposal for inclusion in a companys proxy
statement.
In sum, the Board believes that FedExs current vote counting methodology
of including abstentions on matters other than the election of directors best
reflects and honors the intent of our stockholders who vote to abstain on a
proposal. This standard applies to both management-sponsored proposals and
stockholder proposals and ensures that a matter has the requisite affirmative
support to constitute approval by our stockholders. Accordingly, we recommend
that you vote against this proposal.
62 2014 Proxy Statement
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of Contents
PROPOSAL 5 STOCKHOLDER PROPOSAL:
SIMPLE MAJORITY VOTE-COUNTING
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.
2014 Proxy
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PROPOSAL 6 STOCKHOLDER
PROPOSAL:
HEDGING AND PLEDGING
POLICY
FedEx is not responsible for the content of this stockholder
proposal or supporting statement.
FedEx has been notified that Amalgamated Banks LongView LargeCap 500
Index Fund, 275 Seventh Avenue, New York, New York 10001, the beneficial owner
of 44,227 shares of FedEx common stock, intends to present the following
proposal for consideration at the annual meeting:
RESOLVED: The
shareholders of FedEx Corporation urge the board of directors to adopt a policy
(the Policy) that equity-based compensation plans should prohibit directors
and senior executives who are compensated under such plans from engaging in
hedging or pledging transactions involving FedEx shares issued pursuant to those
plans. Hedging or pledging transactions include trading in puts, calls or
other derivative products whose underlying asset is FedExs stock; engaging in
hedging or monetization transactions such as prepaid forward contracts; holding
shares in a margin account; or pledging shares as collateral for a loan. The
board may, in its discretion, supplement the definition of hedging or pledging
transactions to include other transactions involving FedEx shares that, in the
boards judgment, undermine a directors or senior executives alignment of
interest with the shareholders interest and the incentive effects of
equity-based compensation.
The Policy should operate prospectively to equity-based compensation
plans adopted after the date on which the board adopts the Policy (as well as to
future amendments of existing plans) and should be applied so as not to violate
any contractual obligations of FedEx.
SUPPORTING STATEMENT
As shareholders,
we support executive compensation policies that reward long-term performance and
align the interests of senior executives and directors with those of
shareholders. We are concerned that this may not be happening at
FedEx.
A FedEx company manual
generally bars hedging and pledging transactions, but allows FedExs general
counsel to grant exceptions. The general counsel has done so for Chair and CEO
Fred W. Smith, who (according to last years proxy) has pledged 24% of his
holdings to collateralize loans that fund his outside business ventures (about
which FedEx does not disclose information regarding the identity, financial
health, risks, or potential conflicts of interest). A 2012 Wall Street Journal survey
noted that the value of Smiths pledged shares was the largest amount disclosed
among the companies reporting that their executives had pledged
shares.
We support a prohibition
covering directors and senior executives that appears not simply in an internal
manual, but in the text of equity-compensation plans that are presented to and
approved by shareholders. A similar proposal received a nearly 30% yes vote
last year; we believe that the need for a strong policy remains.
We believe that making this
requirement a condition of being compensated under such plans could more closely
align the interest of directors and senior executives with the interests of
shareholders. For example, if a senior executives pledged shares are subject to
a margin call, a significant number of shares may be suddenly dumped on the
market, which can depress a stock price that is already declining. Similarly, if
holdings in company shares are hedged, senior executives and directors may be
better protected against price drops than other shareholders.
Proxy advisor Institutional
Shareholder Services considers hedging and pledging a failure of risk oversight
sufficient to warrant possible votes against directors, a committee or the
entire board.
We urge shareholders to vote
for this proposal.
64 2014 Proxy Statement
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PROPOSAL 6 STOCKHOLDER PROPOSAL:
HEDGING AND PLEDGING POLICY
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.
FedEx prohibits its officers and
directors from engaging in hedging or similar transactions involving FedEx
shares. We already satisfy an essential
element of the proposal by prohibiting our directors and officers from engaging
in transactions that signal a lack of confidence in FedExs prospects or that
shift or hedge any economic risk associated with owning FedEx shares, including
the following:
- Publicly traded (or
exchange-traded) options, such as puts, calls and
other derivative securities;
- Short sales, including sales
against the box; and
- Hedging or monetization
transactions, such as zero-cost collars and forward
sales contracts.
We recognize that these transactions
could weaken the incentives created by our executive compensation program and
result in a disconnect between the interests of our officers and directors and
the interests of our stockholders. Therefore, in 2013 we amended our policy to
prohibit hedging and monetization transactions in all circumstances.
FedExs current pledging policy
is reasonable and effectively balances the interests of management and our
stockholders. An officers and directors
ability to manage his or her financial affairs must be appropriately balanced
against the potential adverse impact to stockholders and the company that could
result from the pledging of a significant number of company shares by executives
and directors. FedExs current policy on margin accounts and pledges of FedEx
shares strikes this balance.
FedEx generally prohibits our officers
and directors from holding FedEx shares in a margin account or pledging FedEx
shares as collateral for a loan. In the past, our General Counsel was permitted
to grant an exception to this policy on a case-by-case basis for an officer or
director who clearly demonstrated the financial capacity to repay the loan
without resorting to the pledged shares. In an effort to more effectively
balance the interests of management and our stockholders, we recently amended
our policy to provide that our General Counsel, together with our Lead
Independent Director, may grant such exceptions for any FedEx director or the
Chairman, President and Chief Executive Officer. The General Counsel is still
permitted to grant case-by-case exceptions for other FedEx officers.
We believe that our pledging policy
effectively mitigates the risk that forced sales of pledged shares could prompt
a broader sell-off or further depress a declining stock price, while providing
our officers and directors with reasonable flexibility to use their FedEx shares
as collateral for loans for needed liquidity and encouraging them to retain
substantial ownership of their shares.
A complete prohibition of all
pledging transactions could discourage our Board members and senior officers
from holding significant amounts of FedEx stock. As discussed above under Corporate Governance Matters Stock Ownership
Goal for Directors and Senior Officers, the Board of Directors has established
a stock ownership goal for directors and senior officers. This goal has been
highly effective in promoting meaningful and significant stock ownership by our
executives and Board members and aligning their interests with the interests of
our stockholders. Academic research has shown a direct correlation between
executive stock ownership and favorable stockholder returns. A complete ban on
pledging, however, could discourage our executives and directors from owning
significant levels of FedEx stock, which we believe would negatively affect
stockholders.
Reasonable amounts of share pledging,
when used as an alternative to selling the shares outright, do not raise the
same concerns as hedging transactions designed to protect against drops in stock
price. Pledging in this context is simply a way for the executive to achieve
liquidity without sacrificing stock ownership. It is not used to shift or hedge
any economic risk or as a bet against FedEx shares and, therefore, does not
create any misalignment of management and stockholder interests.
FedEx shares may constitute a
significant portion of an executives or directors personal assets. As a
result, situations may arise in which using FedEx
shares as collateral for his or her financial obligations or held in margin
accounts is an attractive means to obtain liquidity rather than achieving it
through decreased share ownership. Absent the ability to pledge FedEx shares in
this manner, an officer or director may be forced to sell shares.
An absolute prohibition on pledging
could create a disincentive for our officers and directors to hold substantial
amounts of FedEx shares for long periods. We believe stockholders are interested
in requiring executives to hold significant levels of company shares as a form
of good governance.
Only one FedEx executive officer
or director has any pledged FedEx shares, and this particular situation does not
present any meaningful risk to the company or our stockholders. Our policy as applied demonstrates that it has been
implemented reasonably. Only Frederick W. Smith, FedExs founder and Chairman of
the Board, President and Chief Executive Officer, has pledged shares. None of
the shares pledged by Mr. Smith were acquired through a FedEx equity
compensation plan. His pledged shares are not used to shift or hedge any
economic risk in owning FedEx stock, but to collateralize loans used to fund
outside personal business ventures and prior purchases of FedEx shares. In
accordance with our policy, Mr. Smith has established his financial capacity to
repay the loan without resorting to the pledged shares.
2014 Proxy
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PROPOSAL 6 STOCKHOLDER PROPOSAL:
HEDGING AND PLEDGING POLICY
The Board of Directors does not believe
that this transaction presents any meaningful risk to FedEx or our stockholders.
No other FedEx executive officer or Board member currently holds FedEx shares
that are pledged pursuant to a margin account, loan or otherwise.
Including the pledging and
hedging prohibition in an equity compensation plan is unnecessary and would not
benefit our stockholders. We have adopted
comprehensive and detailed policies the FedEx Securities Manual that
regulate trading in FedEx stock by our employees, including our executive
officers, and Board members. The Securities Manual also includes our policy on
hedging and pledging transactions. A violation of the Securities Manual could
result in termination of employment.
The proponent asserts that including
the hedging and pledging prohibition in an equity compensation plan could more
closely align the interest of directors and senior executives with stockholder interests. We disagree. All FedEx officers
and directors are required to comply with the policies set forth in the
Securities Manual, and our General Counsel oversees compliance with and
enforcement of these policies. The inclusion of our policy on pledging and
hedging in the Securities Manual is arguably stronger than the placement of the
policy in an equity compensation plan, since violations of the Securities Manual
could lead to termination of employment while violating a provision of the
equity compensation plan would only affect the terms of equity compensation
granted under the plan. The proposals request, therefore, in no way enhances
the efficacy of the policy or provides any discernible benefit to 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.
66 2014 Proxy Statement
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PROPOSAL 7
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
owned 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 2014 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 31,235 shares of restricted stock on June
4, 2012. To alleviate the officers from the tax burden on these awards, FedEx
paid $1,527,368 on their behalf. Similar tax payments were higher in the two
previous years. In 2012, FedEx paid $1,533,734 on behalf of officers in receipt
of restricted stock awards and in 2011, it paid $1,537,579.
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 officers can choose to pay the
taxes out of pocket or sell shares in an amount equal to the tax
obligation.
The Securities and Exchange Commission
required FedEx to include the taxes paid on behalf of officers in the Summary
Compensation Table of its 2013 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 is the same as it would be if the company
did not provide 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 of 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
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PROPOSAL 7 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 2014
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 2014):
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.
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.
68 2014 Proxy Statement
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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, 1 Centre Street, New York, New York
10007-2341, as custodian and a trustee of the New York City Employees
Retirement System, the New York City Fire Department Pension Fund, the New York
City Teachers Retirement System, and the New York City Police Pension Fund, and
custodian of the New York City Board of Education Retirement System, the
beneficial owner of 669,548 shares of FedEx common stock, intends to present the
following proposal for consideration at the annual meeting:
Resolved, that the shareholders
of FedEx (Company) hereby request that the Company provide a report, updated
semiannually, disclosing the Companys:
(a) Policies and procedures for making
political contributions and expenditures (both direct and indirect) with
corporate funds, including the boards role (if any) in that process,
and
(b) Monetary and non-monetary political
contributions or expenditures that could not be deducted as an ordinary and
necessary business expense under section 162(e) of the Internal Revenue Code;
this would include (but not be limited to) contributions to or expenditures on
behalf of political candidates, political parties, political committees and
other entities organized and operating under sections 501(c)(4) of the Internal
Revenue Code, as well as the portion of any dues or payments that are made to
any tax-exempt organization (such as a trade association) and that are used for
an expenditure or contribution that, if made directly by the Company, would not
be deductible under section 162(e) of the Internal Revenue Code.
The report shall identify all recipients
and the amount paid to each recipient from Company funds.
Stockholder Supporting
Statement
As long-term shareholders of FedEx, we
support transparency and accountability in corporate spending on political
activities. Disclosure is in the best interest of the company and its
shareholders and critical for compliance with federal ethics laws.
We recognize that our Company offers a
brief policy on corporate political spending on its website that states that the
company does not contribute corporate funds directly to candidates or ballot
issue campaigns. This policy leaves significant gaps, however, since it does not
address certain avenues of spending, including:
- A list of trade associations
to which it belongs and how much of the companys payments were used for
political purposes
- Payments to any other
third-party organization, including those organized under the section
501(c)(4) of the Internal Revenue Service codes, used
for political purposes, and
- Independent expenditures that
advocate the election or defeat of a candidate.
Meanwhile, publicly available records
show that FedEx contributed at least $4.2 million in corporate funds since 2003.
(CQ: http://moneyline.cq.com and National Institute on Money in State
Politics: http://www.followthemoney.org) In addition, FedEx scored just
42.9 out of 100 points in the 2013 CPA-Zicklin
Index of Corporate Political Accountability and Disclosure, placing it near the bottom of a ranking of the 196 largest
U.S. companies. This is in comparison with our Companys peer, UPS, which scored
94.3 and placed in the top tier of the group.
The proposal asks the Company to disclose
all of its political spending, including payments to trade associations and
other tax exempt organizations used for political purposes. This would bring our
Company in line with a growing number of leading companies, including UPS, Merck
and Microsoft that support political disclosure and accountability and present
this information on their websites.
The Companys Board and its shareholders
need comprehensive disclosure to be able to fully evaluate the political use of
corporate assets. We urge your support for this critical governance
reform.
2014 Proxy
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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 would not be 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
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 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 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 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 that 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 applicable to all similar parties engaged in
public debate, could
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PROPOSAL 8 STOCKHOLDER PROPOSAL:
POLITICAL DISCLOSURE AND ACCOUNTABILITY
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 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.
2014 Proxy
Statement 71
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INFORMATION
ABOUT THE ANNUAL MEETING
Who is entitled
to vote at the annual meeting?
The record date for the meeting is
August 4, 2014. 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
283,957,730 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 five stockholder proposals (Proposals 4 through 8),
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).
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.
72 2014 Proxy Statement
Table of Contents
INFORMATION ABOUT THE ANNUAL
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 28, 2014. |
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 the FedEx employee stock purchase plan or in any FedEx benefit
plan?
If you own shares of FedEx common stock
through the 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 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 in person, however, you will need to bring the admission
ticket attached to the proxy 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 24, 2014. 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.
2014 Proxy
Statement 73
Table of Contents
INFORMATION ABOUT THE ANNUAL
MEETING
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.
74 2014 Proxy Statement
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 take the steps necessary to drop or distance ties with the NFL
Washington Redskins team, logos and/or stadium sponsorship until the franchise
changes the teams 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.
2014 Proxy
Statement 75
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 five stockholder
proposals (Proposals 4 through 8). 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 29, 2014, 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.
76 2014 Proxy Statement
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 2014 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 2014 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 2014 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.
2014 Proxy
Statement 77
Table of Contents
STOCKHOLDER
PROPOSALS FOR
2015 ANNUAL
MEETING
Stockholder proposals intended to be
presented at FedExs 2015 annual meeting must be received by FedEx no later than
April 20, 2015, 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 2015 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 2015
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
June 1, 2015, but no later than July 1, 2015. 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
78 2014 Proxy Statement
Table of Contents
APPENDIX A |
|
COMPANIES IN EXECUTIVE
COMPENSATION |
|
|
COMPARISON SURVEY
GROUP |
3M Company |
Ericsson Television |
7-Eleven, Inc. |
Express Scripts, Inc. |
Abbott Laboratories |
Fiat Industrial S.p.A. |
Accenture plc |
Fluor Corporation |
Adecco S.A. |
Fox Networks Group, Inc. |
Alcoa Inc. |
Freeport-McMoRan Copper & Gold
Inc. |
Alcon Laboratories, Inc. |
General Dynamics Corporation |
Amazon.com, Inc. |
GlaxoSmithKline plc |
American Broadcasting Company |
The Goodyear Tire & Rubber
Company |
Arrow Electronics, Inc. |
Google Inc. |
Ascension Health |
HCA Holdings, Inc. |
AstraZeneca PLC |
Healthcare Services Group, Inc. |
BAE Systems plc |
Hess Corporation |
Bayer AG |
Hoffman-La Roche Inc. |
Bayer Business & Technology
Services |
Home Box Office, Inc. |
Bayer CropScience |
Honeywell International Inc. |
Bayer HealthCare |
Hyundai Motor America |
Bayer MaterialScience |
Iberdrola Renewables, LLC |
Bechtel Systems & Infrastructure,
Inc. |
IKEA International A/S |
Best Buy Co., Inc. |
Intel Corporation |
BG US Services, Inc. |
International Paper Company |
The Boeing Company |
Johnson & Johnson |
Bristol-Myers Squibb Company |
Johnson Controls, Inc. |
Bunge Limited |
Kaiser Foundation Health Plan,
Inc. |
C & S Wholesale Grocers |
KDDI Corporation |
Caterpillar Inc. |
Kimberly-Clark Corporation |
Chrysler Group LLC |
KPMG LLP |
CHS Inc. |
Kraft Foods Group, Inc. |
Cisco Systems, Inc. |
Lenovo Group Limited |
The Coca-Cola Company |
Lockheed Martin Corporation |
Comcast Corporation |
Loreal |
Compass Group PLC |
LSG Sky Chefs |
ConocoPhillips |
LyondellBasell |
Continental Automotive Systems US,
Inc. |
Macys, Inc. |
Deere & Company |
Magna International Inc. |
Delhaize America, LLC |
ManpowerGroup Inc. |
Dell Inc. |
Mars, Incorporated |
Delta Air Lines, Inc. |
McDonalds Corporation |
The DIRECTV Group, Inc. |
Merck & Co., Inc. |
The Dow Chemical Company |
Microsoft Corporation |
E. I. du Pont de Nemours and
Company |
Murphy Oil Corporation |
Eli Lilly and Company |
News Corporation |
EMC Corporation |
NIKE, Inc. |
Emerson Electric Co. |
Nokia Corporation |
Enterprise Products Partners L.P. |
Northrop Grumman
Corporation |
2014 Proxy
Statement A-1
Table of Contents
Appendix A Companies in Executive
Compensation Comparison Survey Group
|
|
Novartis Consumer Health, Inc. |
SUPERVALU INC. |
Occidental Petroleum Corporation |
Sysco Corporation |
Orange Business Services |
Target Corporation |
PepsiCo, Inc. |
Tech Data Corporation |
Pfizer Inc. |
Telvent |
Philip Morris International Inc. |
Tesoro Corporation |
Philips International B.V. |
Time Inc. |
Publix Super Markets, Inc. |
Time Warner Inc. |
Raytheon Company |
The TJX Companies, Inc. |
Ricoh Americas Corporation |
T-Mobile US, Inc. |
Rio Tinto plc |
Turner Broadcasting System,
Inc. |
Rite Aid Corporation |
Twentieth Century Fox Film
Corporation |
Roche Diagnostics Corporation |
Tyson Foods, Inc. |
Safeway Inc. |
Unilever United States, Inc. |
Sandoz |
United Continental Holdings,
Inc. |
Sanofi |
United Parcel Service, Inc. |
Schlumberger Limited |
U.S. Foodservice, Inc. |
Siemens Corporation |
United Technologies Corporation |
Sodexo |
The Walt Disney Company |
Sprint Nextel Corporation |
Warner Bros. Entertainment Inc. |
Staples, Inc. |
Wm. Wrigley Jr. Company |
Sunoco, Inc. |
Xerox
Corporation |
A-2 2014 Proxy Statement
Table of Contents
|
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 28, 2014. |
|
|
|
|
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
|
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 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: |
For |
Against |
Abstain |
|
|
|
|
For |
Against |
Abstain |
|
|
|
|
For |
Against |
Abstain |
|
|
01
- James L. Barksdale |
|
o |
o |
o |
|
02 - John A. Edwardson |
|
o |
o |
o |
|
03 - Marvin R. Ellison |
|
o |
o |
o |
|
|
04
- Kimberly A. Jabal |
|
o |
o |
o |
|
05
- Shirley Ann Jackson |
|
o |
o |
o |
|
06 - Gary W. Loveman |
|
o |
o |
o |
|
|
07 - R. Brad Martin |
|
o |
o |
o |
|
08 - Joshua Cooper Ramo |
|
o |
o |
o |
|
09 - Susan C. Schwab |
|
o |
o |
o |
|
|
10 - Frederick W.
Smith |
|
o |
o |
o |
|
11 - David P. Steiner |
|
o |
o |
o |
|
12 - Paul S. Walsh |
|
o |
o |
o |
|
|
|
|
|
|
|
|
|
|
|
|
For |
Against |
Abstain |
|
|
For |
Against |
Abstain |
|
2. |
Advisory vote to approve named executive officer
compensation. |
o |
o |
o |
|
3. |
Ratification of independent registered public accounting
firm. |
o |
o |
o |
|
|
|
|
|
|
|
|
|
|
|
B |
The Board of Directors recommends a vote AGAINST Proposals 4
through 8. |
|
|
|
For |
Against |
Abstain |
|
|
For |
Against |
Abstain |
|
4. |
Stockholder proposal regarding proxy access for
shareholders. |
o |
o |
o |
|
5. |
Stockholder proposal regarding simple majority vote-counting.
|
o |
o |
o |
|
|
|
|
|
|
|
|
|
|
|
6. |
Stockholder proposal regarding hedging and pledging
policy. |
o |
o |
o |
|
7. |
Stockholder proposal regarding tax payments on restricted stock
awards. |
o |
o |
o |
|
|
|
|
|
|
|
|
|
|
|
8. |
Stockholder proposal regarding political disclosure and
accountability. |
o |
o |
o |
|
|
|
|
|
|
Table of Contents
Admission
Ticket
FedEx Corporation
Annual Meeting of
Stockholders
Monday, September 29, 2014
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 29, 2014
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 29, 2014,
at 8:00 a.m. local time, and at any postponements or adjournments thereof, on
Proposals 1 through 8 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 24, 2014. 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 8. The
Board of Directors recommends that you vote FOR each of the director nominees,
FOR Proposals 2 and 3, and AGAINST Proposals 4 through 8. 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.
C |
Non-Voting Items |
|
|
|
|
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. |
|
|
|
|
|
|
|
o |
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D |
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. |
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Signature 1 Please keep signature within the
box. |
|
Signature 2 Please keep signature within the
box. |
/
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