8-KMaterial AgreementsExhibits & Filings

FEDEX CORP 8-K Report, Material Agreement (Jun 1, 2006)

Filed June 1, 2006For Securities:FDX

Summary

This 8-K filing from FedEx Corporation, dated June 1, 2006, primarily details the establishment of executive compensation plans for fiscal year 2007 and beyond, as well as new salary adjustments and stock grants. The Compensation Committee of the Board of Directors approved annual incentive cash bonus plans for FY2007, with targets and maximum payouts structured based on corporate and individual performance metrics, including consolidated pre-tax income and revenue growth. Furthermore, the filing outlines a new long-term incentive plan for FY2007-FY2009 focused on achieving an aggregate earnings-per-share goal, with estimated potential payouts for named executive officers. Significant stock option and restricted stock awards were also granted to key executives on June 1, 2006. Additionally, the report discloses new base salaries for several named executive officers and details a consulting agreement for Daniel J. Sullivan upon his retirement from FedEx Ground.

Key Highlights

  • 1FedEx established FY2007 annual incentive cash bonus plans for executive officers, with bonus targets and maximum payouts tied to corporate financial performance (consolidated pre-tax income) and relative performance metrics.
  • 2A long-term performance bonus plan for FY2007-FY2009 was introduced, contingent on achieving an aggregate earnings-per-share goal over the three-year period, with significant potential payouts outlined for key executives.
  • 3Named executive officers received grants of stock options and restricted stock on June 1, 2006, with vesting occurring over four years.
  • 4New, adjusted base salaries for named executive officers (Frederick W. Smith, T. Michael Glenn, and Alan B. Graf, Jr.) were approved effective June 1, 2006.
  • 5Daniel J. Sullivan, President and CEO of FedEx Ground, will retire on January 5, 2007, and has entered into a consulting agreement with FedEx Ground through December 31, 2008, to assist with independent contractor model lawsuits.
  • 6The compensation structure for executives aims to place total annual salary and bonus at the 75th percentile of relevant compensation surveys.
  • 7The filing includes various exhibits related to incentive stock plans and stock agreements.

Frequently Asked Questions

This 8-K filing primarily announces the establishment of executive compensation plans for FedEx Corporation for the upcoming fiscal year (FY2007) and a long-term incentive plan through FY2009. It also details stock awards, salary adjustments, and a consulting agreement for a retiring executive.

Annual bonuses are primarily determined by achieving consolidated pre-tax income targets for FY2007. For the CEO, the Compensation Committee may also adjust the bonus based on factors like stock performance relative to indices, competitor performance, cash flow, ROIC, market share, and leadership quality. For other executives, a portion is based on individual objectives, with the remainder tied to consolidated pre-tax income or subsidiary operating income.

The long-term incentive plan, covering FY2007 through FY2009, is a performance bonus plan designed for upper management, including executive officers. Payouts are contingent on FedEx achieving an aggregate earnings-per-share goal over this three-fiscal-year period. No amounts can be earned or determined until after the conclusion of FY2009, which is May 31, 2009.

Daniel J. Sullivan, President and CEO of FedEx Ground, is retiring on January 5, 2007. He has entered into a consulting agreement with FedEx Ground until December 31, 2008, specifically to provide services related to the ongoing class-action lawsuits concerning FedEx Ground's independent contractor model. He will also advise on other matters as requested, with limited monthly hours, and will receive a significant portion of his current base salary as annual consideration for these services, along with other benefits.