8-KMaterial AgreementsExhibits & Filings

FEDEX CORP 8-K Report, Material Agreement (Jun 2, 2005)

Filed June 2, 2005For Securities:FDX

Summary

This Form 8-K filing by FedEx Corporation on June 2, 2005, primarily details the establishment of compensation plans for the upcoming fiscal year (FY2006) and a long-term incentive plan extending through FY2008. Key elements include the FY2006 annual incentive cash bonus plans for executive officers, with bonus targets and maximum payouts tied to corporate financial performance (consolidated pre-tax income) and, for some, individual objectives. The filing also outlines a long-term performance bonus plan for upper management, contingent on achieving an aggregate earnings-per-share goal over three fiscal years (FY2006-FY2008). Additionally, the report announces FY2006 stock option and restricted stock grants to named executive officers and details a consulting agreement for former Executive Vice President, General Counsel and Secretary, Kenneth R. Masterson, following his retirement. The company also notes the appointment of Christine P. Richards as the new Executive Vice President, General Counsel and Secretary and her entry into a Management Retention Agreement.

Key Highlights

  • 1FedEx established FY2006 annual incentive cash bonus plans for executive officers, with performance metrics including consolidated pre-tax income.
  • 2CEO Frederick W. Smith's FY2006 bonus target is 130% of base salary, with a maximum payout of 300%, considering corporate objectives and relative stock performance.
  • 3Other executive vice presidents have a 90% target bonus for FY2006, with a maximum of 240% of base salary.
  • 4A long-term performance bonus plan (FY2006-FY2008) was established, contingent on achieving an aggregate earnings-per-share goal over the three-year period.
  • 5Named executive officers received stock option and restricted stock grants effective June 1, 2005.
  • 6A two-year consulting agreement was finalized with former Executive Vice President, General Counsel and Secretary, Kenneth R. Masterson, post-retirement.
  • 7Christine P. Richards has been appointed as the new Executive Vice President, General Counsel and Secretary.

Frequently Asked Questions

This 8-K filing primarily serves to inform investors about the establishment of FedEx's FY2006 annual incentive compensation plans for its executive officers, a long-term incentive plan for FY2006-FY2008, and the granting of stock options and restricted stock. It also details a consulting agreement for a retiring executive and a new appointment to a key legal role.

Executive bonuses for FY2006 are determined based on the achievement of corporate objectives, specifically consolidated pre-tax income for FedEx. The Compensation Committee also has discretion to adjust bonuses based on factors like stock price performance relative to market indices, revenue and operating income growth compared to competitors, cash flow, market share, reputation, and leadership quality. For non-CEO executives, a portion is also tied to individual objectives.

The FY2006-FY2008 long-term incentive plan offers cash bonuses to upper management, including executive officers, based on an aggregate earnings-per-share goal for the three-fiscal-year period. For example, CEO Frederick W. Smith has a potential payout ranging from a threshold of $625,000 to a maximum of $3,750,000, with a target of $2,500,000.

Following his retirement as Executive Vice President, General Counsel and Secretary on June 1, 2005, FedEx entered into a two-year consulting agreement with Kenneth R. Masterson. He will serve as 'Senior Advisor' and provide consulting services related to government affairs and security. His compensation includes various benefits such as corporate suite access, security services, computer support, office space, and corporate aircraft availability, along with tax reimbursement.