8-KLeadership Changes

FEDEX CORP 8-K Report, Executive Changes (Jun 16, 2017)

Filed June 16, 2017For Securities:FDX

Summary

FedEx Corporation (FDX) announced on June 12, 2017, a decision by its Board of Directors to exclude specific items from fiscal year 2017 earnings calculations for its Annual Incentive Compensation (AIC) and Long-Term Incentive (LTI) plans. This adjustment aims to better reflect the company's core operational performance by removing costs associated with the TNT Express integration and restructuring, settlement of independent contractor litigation for FedEx Ground, and charges related to pending U.S. Customs and Border Protection matters for FedEx Trade Networks. Additionally, the Board approved the exclusion of TNT Express integration and restructuring costs from future fiscal years (2018 and 2019) for certain LTI plans, and also excluded the impact of stock repurchase activity in fiscal years 2016 and 2017 from these incentive plans. The company also detailed the threshold, target, and maximum payout levels for its President and Chief Operating Officer, David J. Bronczek, for the fiscal 2018 and 2019 portions of relevant LTI plans.

Key Highlights

  • 1FedEx will exclude TNT Express integration and restructuring costs from FY17 AIC and LTI plans.
  • 2Specific Q4 FY17 expenses, totaling $21.5 million, related to independent contractor litigation for FedEx Ground will be excluded from incentive calculations.
  • 3Charges of $39.3 million from pending U.S. Customs and Border Protection matters for FedEx Trade Networks will also be excluded from FY17 incentive plans.
  • 4TNT Express integration and restructuring costs will be excluded from FY18 and FY19 LTI plan calculations.
  • 5The impact of FY16 and FY17 stock repurchase activity will be excluded from certain LTI plans.
  • 6Threshold, target, and maximum payout levels for President and COO David J. Bronczek for FY18 and FY19 LTI plans were approved.

Frequently Asked Questions

FedEx is excluding these costs to ensure that incentive plan payouts more accurately reflect the company's core financial performance. Items like integration and restructuring costs, litigation settlements, and customs matters are considered non-recurring or outside of normal operational performance.

For fiscal year 2017, the excluded costs include TNT Express integration and restructuring costs, $21.5 million related to FedEx Ground's independent contractor litigation settlement and expected losses, and $39.3 million in charges for FedEx Trade Networks' pending U.S. Customs and Border Protection matters.

The payout opportunities for David J. Bronczek, President and Chief Operating Officer, under the FY16-FY18 and FY17-FY19 LTI plans for fiscal years 2018 and 2019 will be based on the approved threshold, target, and maximum payout levels. His actual payout will be prorated based on the time he served in the role during those fiscal years, and these calculations will also benefit from the exclusion of specific items.

Yes, the Board approved adjustments to exclude the impact of fiscal year 2016 and 2017 stock repurchase activity from the FY15-FY17, FY16-FY18, and FY17-FY19 LTI plans.