8-KLeadership Changes

FEDEX CORP 8-K Report, Executive Changes (Jul 20, 2017)

Filed July 20, 2017For Securities:FDX

Summary

This 8-K filing from FedEx Corp. (FDX) primarily announces two significant personnel-related events. Firstly, it details a performance-based retention award for its Chief Financial Officer, Alan B. Graf, Jr., tied to achieving a fiscal 2020 Earnings Per Share (EPS) goal. This award aims to incentivize executive commitment and performance through fiscal year 2020, with payouts contingent on reaching specific EPS targets, excluding certain integration and restructuring expenses related to the TNT Express acquisition. Secondly, the report announces the upcoming retirement of Christine P. Richards, Executive Vice President, General Counsel, and Secretary, effective September 30, 2017. This transition includes a separation agreement with a non-compete clause and a one-time payment to Ms. Richards. Investors should note these changes in key leadership positions and the financial incentives designed to ensure executive continuity and performance during a period of integration.

Key Highlights

  • 1Performance-based cash award approved for CFO Alan B. Graf, Jr., with a target value of $574,661.
  • 2CFO award is contingent on achieving a fiscal 2020 EPS goal, excluding specific integration and restructuring costs.
  • 3Full payout of CFO award requires meeting or exceeding the fiscal 2020 EPS goal; partial payout possible between 80% and 100% of the goal.
  • 4CFO must remain in his role through the end of fiscal 2020 to be eligible for the award.
  • 5CFO Alan B. Graf, Jr. also received a restricted stock award of 1,785 shares with a four-year ratable vesting period.
  • 6Executive Vice President, General Counsel and Secretary, Christine P. Richards, will retire effective September 30, 2017.
  • 7Ms. Richards will receive a one-time payment of $753,900 following her retirement, as part of a separation agreement including a one-year non-compete covenant.

Frequently Asked Questions

The performance-based cash award for CFO Alan B. Graf, Jr. is intended to retain his services and incentivize him to achieve a specific Earnings Per Share (EPS) target for fiscal year 2020. This is particularly relevant as FedEx integrates the TNT Express acquisition, and the award excludes certain integration and restructuring expenses to focus on core operational EPS performance.

The cash award will be paid in full if the fiscal 2020 EPS goal is met or exceeded. If the fiscal 2020 EPS is less than 80% of the goal, no award will be paid. If it falls between 80% and 100% of the goal, the Chairman of the Board will determine the payout, not exceeding the target amount. Mr. Graf must also remain employed as CFO through the end of fiscal 2020 to be eligible.

Christine P. Richards' retirement marks a change in a key executive leadership role. As Executive Vice President, General Counsel, and Secretary, her departure necessitates the appointment of a successor. The retirement agreement includes a non-compete clause and a severance payment, which are standard for such transitions and aim to protect the company's interests.

The main financial implication is the potential payout of the CFO's performance award, which is variable based on future EPS performance. The payment to Ms. Richards is a one-time expense related to her retirement. While these are disclosed events, the performance award's ultimate cost is contingent on future results, making its direct impact on current financials minimal but important for future compensation planning and executive retention.