Teamsters Call for Independent Board Chair at FedEx; Urge Investor Support
01 September 2009 - 1:34AM
PR Newswire (US)
Teamsters Cite FedEx's Poor Performance, Oversight Failures
WASHINGTON, Aug. 31 /PRNewswire-USNewswire/ -- The International
Brotherhood of Teamsters today asked shareholders of FedEx
Corporation (NYSE: FDX) to support the union's proposal for an
independent board chairman at FedEx's upcoming annual meeting. In a
letter to shareholders, Teamsters General Secretary-Treasurer C.
Thomas Keegel said that Frederick W. Smith's dual role as chairman
and chief executive of FedEx has resulted in a CEO-dominated board
incapable of providing the rigorous, independent oversight of
management that investors require. FedEx's annual meeting will be
September 28 in Memphis, Tennessee. "FedEx's lack of independent
board leadership, compromised board independence and effectiveness,
chronic poor performance, excessive executive pay, and questionable
business strategies underscore the urgent need for an independent
chairman to lead FedEx's board in holding management accountable
and providing strategic oversight and guidance," Keegel said. FedEx
has significantly underperformed in the trucking and shipping
industries, the S&P 500 Index, and compared to direct
competitor United Parcel Service Inc. on a one-year, three-year,
and five-year total shareholder returns basis, according to data
from The Corporate Library (TCL), a leading provider of independent
corporate governance research and analysis. Meanwhile, Smith has
raked in exorbitant pay, accruing more than $84 million over the
past three fiscal years while shareholder value has fallen by 50.2
percent. Profits made on the exercise of stock option grants with
no performance hurdles make up the bulk of Smith's pay. The letter
also raised concerns that Smith's controlling influence on a board
that includes potentially conflicted and over-extended directors
has led the board to rubber stamp an unlawful and unsustainable
business model at the company's second-highest revenue generating
business segment, FedEx Ground, which has exposed the company to
staggering legal and financial risks. The FedEx Ground business
model, which relies on the misclassification of employee drivers as
"independent contractors," has allowed FedEx to evade expenses like
payroll taxes, overtime pay and benefits. Numerous state courts and
government agencies have found that FedEx Ground's contractor model
is a sham and are looking to collect the money owed to workers and
states. According to an August 2008 Bloomberg article, the pre-tax
liability from unpaid payroll taxes alone could reach as high as
$2.5 billion. "Many FedEx shareholders have already joined our call
for independent board leadership, with 34 percent of the vote by
shareholders supporting the Teamsters' independent board chairman
proposal in 2008," Keegel said. "We believe that now, more than
ever, an independent chairman is necessary for the company to
successfully navigate the extraordinary legal, regulatory,
reputation- and recession-related challenges facing FedEx." Founded
in 1903, the International Brotherhood of Teamsters represents 1.4
million hardworking men and women in the United States, Canada and
Puerto Rico. DATASOURCE: International Brotherhood of Teamsters
CONTACT: Galen Munroe of the International Brotherhood of
Teamsters, +1-202-624-6911, Web Site: http://www.teamster.org/
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