8-KMaterial Agreements

FEDEX CORP 8-K Report, Material Agreement (Jul 13, 2006)

Filed July 13, 2006For Securities:FDX

Summary

This Form 8-K filing by FedEx Corporation (FDX) on July 13, 2006, primarily details the compensation for its executive officers and non-management directors for the fiscal year ended May 31, 2006 (FY2006) and the new base salaries effective July 2006. It outlines the bonus payouts for the CEO, Frederick W. Smith, and other named executive officers based on corporate and subsidiary performance, as well as individual objectives. Additionally, it reports on the payouts from a long-term incentive plan for FY2004-FY2006, where FedEx significantly exceeded its earnings-per-share goals, resulting in maximum bonuses for eligible participants. The filing also specifies revised compensation structures for non-management directors, including retainers, meeting fees, and stock option grants, reflecting an updated approach to attracting and retaining board talent. For investors, this report provides transparency into how executive compensation is structured and awarded, linking it to company performance and individual contributions. The substantial payouts under both annual and long-term incentive plans, especially the maximum awards for exceeding EPS targets, suggest strong financial performance during the reporting periods. The adjustments in director compensation indicate a commitment to aligning board member incentives with company value and potentially enhancing board engagement and expertise. Investors can use this information to assess management's alignment with shareholder interests and the company's financial health as reflected in its ability to reward its leadership and board.

Key Highlights

  • 1FedEx CEO Frederick W. Smith received an FY2006 annual bonus of $2,679,147, with a target of 130% of base salary and a maximum of 300% of target.
  • 2Non-CEO named executive officers also received FY2006 annual bonuses based on corporate pre-tax income, subsidiary operating income (for FedEx Express and FedEx Ground CEOs), and individual objectives.
  • 3FedEx significantly exceeded its earnings-per-share goal for the FY2004-FY2006 long-term incentive plan, resulting in maximum bonus payouts for all eligible participants, including executive officers.
  • 4Named executive officers received base salary increases ranging from 3.5% (standard) to additional ad hoc increases for some executives, with new base salaries effective July 1, 2006, or July 16, 2006.
  • 5Compensation for non-management directors was updated to include quarterly retainers, fees per meeting (board and committee), and stock option grants for new directors.
  • 6Committee chairpersons for Compensation, Nominating & Governance, Information Technology Oversight, and Audit Committees receive additional annual fees.
  • 7Non-management directors are reimbursed for travel expenses and receive FedEx shipping and Kinko's service discounts.

Frequently Asked Questions

Executive bonuses were primarily determined by FedEx's consolidated pre-tax income for FY2006. For subsidiary presidents/CEOs, subsidiary operating income was also a factor. Individual objectives, leadership quality, and relative stock price performance were also considered by the Compensation Committee, though specific weightings were not provided.

Yes, FedEx's performance substantially exceeded the aggregate earnings-per-share goal established for the FY2004-FY2006 long-term incentive plan. This resulted in the maximum bonus payouts being awarded to all eligible participants under this plan.

Most named executive officers received a standard 3.5% increase in their annual base salaries. Additionally, some executives, including the CEO, received additional 'ad hoc' base salary increases. These new base salaries became effective around July 2006.

The compensation for non-management directors was updated to include a quarterly retainer, fees for attending board and committee meetings (varying for in-person and telephonic attendance), and stock option grants for new directors. Additional annual fees were introduced for committee chairpersons.