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Form DEF 14A FEDEX CORP For: Sep 19

August 8, 2022 4:19 PM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material under §240.14a-12

FedEx Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
  No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11


Table of Contents

2022
PROXY
STATEMENT

Monday | September 19, 2022

8:00 a.m. Central Time

Online at

www.virtualshareholdermeeting.com/FDX2022


Table of Contents

FEDEX. DELIVER TODAY.
INNOVATE FOR TOMORROW.

FedEx was founded to connect people to possibilities. For almost 50 years, our ecosystem of networks and team members across over 220 countries and territories has kept our customers, global trade, and society moving.

* Map reflects both FedEx flights and interline flights. Routes into and out of Russia, Ukraine, and Belarus are currently suspended.
   
Corporate Culture     Workplace Priorities     Climate Change
             
The FedEx culture enables a resilient workforce that can respond to the challenges of today, do the right thing, and create connections across the world. Our team members are united by our passion to deliver on the Purple Promise. This passion begins with our People-Service-Profit (PSP) philosophy and is driven by our Quality Driven Management (QDM) system. FedEx was founded on the full-circle philosophy that taking care of our team members results in outstanding service, which allows us to earn a fair profit and reinvest in our team members.     Our longstanding “Safety Above All” philosophy is the top priority across our enterprise and in our day-to-day work. We are committed to making our workplaces and communities safer for our team members, customers, and the public. As a global company, we see exceptional business and community value in the diversity of perspectives and experiences that our team members bring to work every day. We are committed to embracing diversity, equity, and inclusion (DEI) to make FedEx an inclusive, equitable, and growth-focused workplace where all team members have the opportunity to flourish.     FedEx understands the impacts climate change poses to our business. In March 2021, we announced our ambitious goal to achieve carbon neutral operations by 2040 across our global operations’ Scope 1 and 2 emissions and our Scope 3 contracted transportation greenhouse gas (GHG) emissions. Our path to carbon neutral operations includes focus on vehicle electrification, sustainable fuels, fuel conservation and aircraft modernization, and facilities.
             
     
     

The 2022 ESG Report discusses our environmental, social, and governance (“ESG”) strategies, programs, and progress toward our goals. Explore our goals and progress at fedex.com/en-us/sustainability/reports.html.

*   The information on the 2022 ESG Report webpage, the ESG Report, and any other information on the website that we may refer to herein is not incorporated by reference into, and does not form any part of, this proxy statement. Any targets or goals discussed in our ESG Report and above may be aspirational, and as such, no guarantees or promises are made that these goals will be met. Furthermore, statistics and metrics disclosed in this proxy statement and in the ESG Report are estimates and may be based on assumptions that turn out to be incorrect. We are under no obligation to update such information.


Table of Contents

A MESSAGE FROM OUR EXECUTIVE CHAIRMAN AND LEAD INDEPENDENT DIRECTOR

To our stockholders,

In connection with the FedEx 2022 Annual Meeting of Stockholders to be held on 19 September 2022, we would like to update you on how FedEx continues to deliver the highest standards of ethics, integrity, and reliability through our robust governance framework. FedEx is committed to exemplary corporate governance standards and practices, as evidenced by developments in the following areas:

Welcoming new leadership

As a result of rigorous succession planning, Raj Subramaniam was named in March as the company’s new President and CEO. As also announced in March, the newly established Executive Chairman position will focus on Board governance and important industry matters such as sustainability, public policy, and innovation. These transitions took effect 1 June 2022 — the start of the new fiscal year, one where we will celebrate the momentous 50th anniversary of FedEx.

Strengthening the FedEx Board of Directors and its committees

As part of this transition, the Board appointed R. Brad Martin as the non-executive Vice Chairman of the Board as well as designated successor for the Chairman position.

We have also named three highly qualified new members to the FedEx Board of Directors since last year’s annual meeting, and recommend two additional highly qualified nominees for election at this year’s annual meeting. These independent directors and nominees bring to FedEx a diversity of experience and expertise that will be valuable to the Board’s oversight of our company’s strategic objectives.

Earlier this year, FedEx also made changes to better reflect the committees’ areas of oversight and strengthen their alignment with the company’s priorities and values including a focus on safety strategies and programs as well as human resource management matters and public policy.

Dr. Shirley Ann Jackson will leave the Board following the expiration of her current term in September. Shirley’s counsel has been indispensable over the past 23 years — and her contributions to our Board, diversity initiatives, and learning and development opportunities have positioned FedEx for consistent recognition as one of the world’s most admired companies and best places to work. Simply put, FedEx is a better company because of Dr. Jackson.

Leading through ESG commitments

As detailed in the FedEx 2022 ESG Report released in April, we remain steadfast in our strategic approach to deliver a sustainable future. Our latest ESG Report covers progress and performance on ESG topics. This includes our performance metrics as we drive towards carbon neutral operations by 2040 and our efforts to support a diverse, thriving workforce with high-quality opportunities for growth.

Engaging our stockholders

Finally, following last year’s stockholders’ meeting, we continued thoughtful discussions on a number of topics including executive compensation and our political activities and expenditures. Based on the feedback we received, we made key changes to our executive compensation programs to enhance stockholder value and address stockholder concerns and increased our disclosures around FedEx public policy and advocacy.

We value your continued engagement and deeply appreciate your support as we continue our mission to connect people and possibilities around the world.

Sincerely,

Frederick W. Smith
Founder and Executive Chairman
FedEx Corporation
David P. Steiner
Lead Independent Director
FedEx Corporation

 

2022 Proxy Statement 3

Table of Contents

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Items of Business

Voting Proposal   Board
Recommendation
1 Elect the fifteen nominees named in the proxy statement as FedEx directors for a one-year term      FOR each
director nominee
2 Advisory vote to approve named executive officer compensation   FOR
3 Ratification of the appointment of Ernst & Young LLP as FedEx’s independent registered public accounting firm for fiscal year 2023   FOR
4  Approval of the amendment to the FedEx Corporation 2019 Omnibus Stock Incentive Plan to increase the number of authorized shares   FOR
5-9 Act upon five stockholder proposals, if properly presented at the meeting   AGAINST

Stockholders also will consider any other matters that may properly come before the meeting.

How to Attend the Virtual Annual Meeting

FedEx’s 2022 annual meeting of stockholders will be a virtual meeting, conducted exclusively via live audio webcast at www.virtualshareholdermeeting.com/FDX2022. There will not be a physical location for the annual meeting, and you will not be able to attend the meeting in person.

To attend the annual meeting of stockholders at www.virtualshareholdermeeting.com/FDX2022, you must enter the control number on your proxy card, voting instruction form, or Notice of Internet Availability. Whether or not you plan to attend the virtual annual meeting, we encourage you to vote and submit your proxy in advance of the meeting by one of the methods described to the right. During the meeting, you may ask questions and vote. To vote at the meeting, visit www.virtualshareholdermeeting.com/FDX2022. For more information, please see page 127.

Please Vote Your Shares

Your vote is very important. Please vote your shares whether or not you plan to attend the meeting.

By order of the Board of Directors,

MARK R. ALLEN

Executive Vice President,
General Counsel and Secretary
August 8, 2022

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON SEPTEMBER 19, 2022:

The following materials are available at www.proxyvote.com:

The Notice of Annual Meeting of Stockholders to be held September 19, 2022;
   
The FedEx 2022 Proxy Statement; and
   
The FedEx Annual Report to Stockholders for the fiscal year ended May 31, 2022.

A Notice Regarding the Internet Availability of Proxy Materials or the proxy statement, form of proxy, and accompanying materials are first being sent to stockholders on or about August 8, 2022.

 

LOGISTICS

Date and Time
Monday, September 19, 2022,
at 8:00 a.m. Central Time
   
Location
Online via webcast at www.
virtualshareholdermeeting.
com/FDX2022
   
Who Can Vote
Stockholders of record at the close of business on July 25, 2022, may vote at the meeting or any postponements or adjournments of the meeting.

 

HOW TO CAST YOUR VOTE

If you are a registered stockholder, you can vote by any of the following methods:

Online
www.proxyvote.com up until 11:59 p.m. Eastern Time on 9/18/2022. For shares held in any FedEx or subsidiary employee stock purchase plan or benefit plan, vote by 11:59 p.m. Eastern Time on 9/14/2022.
   
By phone
1-800-690-6903; Dial toll-free 24/7 up until 11:59 p.m. Eastern Time on 9/18/2022. For shares held in any FedEx or subsidiary employee stock purchase plan or benefit plan, vote by 11:59 p.m. Eastern Time on 9/14/2022.
   
Proxy card
Completing, signing, and returning your proxy card
   
At the meeting
You also may vote online during the annual meeting by following the instructions provided on the meeting website during the annual meeting. To vote at the meeting, visit www. virtualshareholdermeeting. com/FDX2022.
   

If you are a beneficial owner and received a voting instruction form, please follow the instructions provided by your bank or broker to vote your shares.


 

4

Table of Contents

TABLE OF CONTENTS

Notice of Annual Meeting of Stockholders 4
Proxy Statement Summary 6
Corporate Governance Matters 12
Proposal 1 — Election of Directors 12
  Process for Selecting Directors 12
  Process for Training and Evaluating Directors 14
  Nominees for Election to the Board 16
  The Board’s Role and Responsibilities 27
  Board Structure 37
  Board Processes and Policies 41
  Directors’ Compensation 43
Executive Compensation 46
Proposal 2 — Advisory Vote to Approve Named Executive Officer Compensation 46
  Report of the Compensation and Human Resources Committee of the Board of Directors 48
  Compensation Discussion and Analysis 48
  Summary Compensation Table 71
  Grants of Plan-Based Awards During Fiscal 2022 76
  Outstanding Equity Awards at End of Fiscal 2022 77
  Option Exercises and Stock Vested During Fiscal 2022 80
  Fiscal 2022 Pension Benefits 80
  Nonqualified Deferred Compensation 83
  Potential Payments Upon Termination or Change of Control 83
  CEO Pay Ratio 88
Equity Compensation Plans 89
  Equity Compensation Plans Approved by Stockholders 89
  Equity Compensation Plans Not Approved by Stockholders 89
  Summary Table 89
Audit Matters 90
Proposal 3 — Ratification of the Appointment of the Independent Registered Public Accounting Firm 90
  Appointment of Independent Registered Public Accounting Firm 90
  Policies Regarding Independent Auditor 90
  Report of the Audit and Finance Committee of the Board of Directors 91
  Audit and Non-Audit Fees 93
Stock Ownership 94
  Directors, Director Nominees, and Executive Officers 94
  Significant Stockholders 95
Amendment to 2019 Omnibus Stock Incentive Plan 96
Proposal 4 — Approval of the Amendment to the 2019 Omnibus Stock Incentive Plan to Increase the Number of Authorized Shares 96
Stockholder Proposals 107
Information About the Annual Meeting 122
Virtual Meeting Information 127
Additional Information 128
  General Information 128
  Proxy Solicitation 128
  Householding 128
Stockholder Proposals and Director Nominations for 2023 Annual Meeting 129
  Stockholder Proposals for 2023 Annual Meeting 129
  Proxy Access Director Nominations 129
  Additional Information 129
Appendix A – Companies in Director Compensation Comparison Survey Group A-1
Appendix B – Companies in Executive Compensation Comparison Survey Group B-1
Appendix C – Reconciliations of Non-GAAP Financial Measures C-1
Appendix D – FedEx Corporation 2019 Omnibus Stock Incentive Plan D-1


 

2022 Proxy Statement 5

Table of Contents

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find additional information in this proxy statement.

Proposal 1
Election of Directors    
 
                 
          DIRECTOR
SINCE
COMMITTEES OTHER PUBLIC
DIRECTORSHIPS
 
  NOMINEE AND POSITION AGE AFC CHRC CyTOC GSPPC  
  FREDERICK W. SMITH
Executive Chairman and Chairman of the Board of FedEx Corporation
77 1971            
  MARVIN R. ELLISON
Chairman, President, and Chief Executive Officer of Lowe’s Companies, Inc.
57 2014     Lowe’s Companies, Inc.  
  STEPHEN E. GORMAN
Former Chief Executive Officer of Air Methods Corporation
67         Peabody Energy Corporation and ArcBest Corporation*  
  SUSAN PATRICIA GRIFFITH
President and Chief Executive Officer of The Progressive Corporation
57 2018     The Progressive Corporation  
  KIMBERLY A. JABAL
Former Chief Financial Officer of Unity Technologies
53 2013        
  AMY B. LANE
Former Managing Director and Group Leader, Retail Banking Group, Merrill Lynch & Co., Inc.
69 2022     NextEra Energy, Inc. and TJX Companies Inc.  
  R. BRAD MARTIN Vice Chairman
Chairman of RBM Venture Company
70 2011       Riverview Acquisition Corp.  
  NANCY A. NORTON
Retired Vice Admiral, U.S. Navy
57            
  FREDERICK P. PERPALL
Chief Executive Officer of The Beck Group
47 2021     Starwood Property Trust, Inc.  
  JOSHUA COOPER RAMO
Chairman and Chief Executive Officer, Sornay, LLC
53 2011     Starbucks Corporation  
  SUSAN C. SCHWAB
Professor Emerita at the University of Maryland School of Public Policy
67 2009     Caterpillar Inc. and Marriott International, Inc.  
  DAVID P. STEINER Lead Independent Director
Former Chief Executive Officer of Waste Management, Inc.
62 2009       Vulcan Materials Company  
  RAJESH SUBRAMANIAM
President and Chief Executive Officer of FedEx Corporation
56 2020         First Horizon National Corporation  
  V. JAMES VENA
Former Chief Operating Officer of Union Pacific Corporation
63 2022        
  PAUL S. WALSH
Executive Chairman of McLaren Group Limited
67 1996       McDonald’s Corporation and Vintage Wine Estates, Inc.  
 

* Mr. Gorman will resign as a director of ArcBest Corporation if elected to the FedEx Board

 
  AFC – Audit and Finance Committee CyTOC – Cyber and Technology Oversight Committee    
Member
   
Independent
 
  CHRC – Compensation and Human Resources Committee GSPPC – Governance, Safety, and Public Policy Committee    
Chair
   
  See page 41 for committee memberships immediately following the annual meeting if all of the director nominees are elected.  
  Your Board of Directors recommends that you vote “FOR” the election of each of the fifteen nominees
See page 12
                       

 

6

Table of Contents

Proxy Statement Summary – Director Nominee Highlights

Director Nominee Highlights*

Diversity of Tenure, Age, Gender, and Background

Independent Director Nominee Tenure**   Age**
 
     
Board Refreshment   Diversity
 

* Statistics assume all director nominees are elected at the annual meeting.

**  As of August 8, 2022

Director Nominee Experience, Qualifications, Attributes, and Skills

The Board believes that it is desirable that the following experience, qualifications, attributes, and skills be possessed by one or more of FedEx’s Board members because of their particular relevance to the company’s business and structure, and these were all considered by the Board in connection with this year’s director nomination process:

Transportation/
Logistics/Supply Chain
International Financial Marketing Retail/
E-commerce
7 Nominees 8 Nominees 8 Nominees 7 Nominees 6 Nominees
         
Technological/Digital/
Cybersecurity
Energy Human Resource
Management
Government Risk Management
4 Nominees 5 Nominees 2  Nominees 4 Nominees 8 Nominees
         
Leadership        
       
15 Nominees        

 

2022 Proxy Statement 7

Table of Contents

Proxy Statement Summary – Corporate Governance Highlights

Corporate Governance Highlights

You can find detailed information about our corporate governance policies and practices in the Corporate Governance Matters section of this proxy statement. You can also access our corporate governance documents under the ESG heading on the Investor Relations page of our website at investors.fedex.com. Information contained on our website is not deemed to be incorporated by reference as part of this proxy statement.

Corporate Governance Facts

  Proxy Access

  Majority Voting for Directors

  Annual Election of All Directors

  Gender and Racially/Ethnically Diverse Board

  Annual Board and Committee Self-Evaluations

  No Supermajority Voting Provisions

  Stockholder Right to Call a Special Meeting

  Separate Chairman of the Board & CEO

  Independent Vice Chairman

  Lead Independent Director

  Independent Directors Meet Regularly Without Management Present

  Annual Independent Director Evaluations of Executive Chairman of the Board and the CEO

  No Director Serves on More Than Three Other Public Company Boards

  No Directors Who are Public Company Executive Officers Serve on More Than One Other Public Company Board

  Code of Conduct Applicable to all Directors

  Lead Independent Director’s Mandatory Service on Governance, Safety, and Public Policy Committee

  Stock Ownership Goal for Directors and Executive Officers

  Policy on Recoupment of Incentive Compensation

  Policy on Limitation of Severance Benefits

  No “poison pill”

 

8

Table of Contents

Proxy Statement Summary – Proposal 2

Proposal 2
Advisory Vote to Approve Named Executive Officer Compensation    
 
      
 

Executive Compensation Design

Our executive compensation program is designed not only to retain and attract highly qualified and effective executives, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of stockholders and reward them for doing so. We believe there should be a strong relationship between pay and corporate performance, and our executive compensation program reflects this belief.

In response to the lower level of support we received in the 2021 advisory vote on named executive officer compensation and the 62% vote in support of the stockholder proposal presented at our 2021 annual meeting regarding certain severance and post-termination payments, beginning in September 2021 and continuing through the end of fiscal 2022, we requested meetings with our largest 15 institutional investors who own, in the aggregate, over 40% of our outstanding common stock and engaged with investors owning, in the aggregate, more than 35% of our common stock, to solicit feedback on our executive compensation program, better understand the reasons behind the 2021 advisory vote on executive compensation outcome and support of the stockholder proposal, and discuss potential changes to our executive compensation program for consideration by the Compensation and Human Resources Committee (“Compensation & HR Committee”).

For additional information on how we responded, please see “Corporate Governance Matters — The Board’s Role and Responsibilities — Stockholder Engagement — Board Responsiveness to 2021 Nonbinding Stockholder Proposals — Stockholder Proposal Regarding Shareholder Ratification of Termination Pay,” “Executive Compensation — Compensation Discussion and Analysis — 2021 Say-on-Pay Advisory Vote Outcome,” and “— Post-Employment Compensation — Limitation on Severance Benefits.”

Elements of Compensation

The elements of target total direct compensation for fiscal 2022 are presented below.

 
             
      ELEMENT AND FISCAL 2022
AVERAGE NEO TARGET PAY MIX(1)
DESCRIPTION AND METRICS  
           
    Base Salary Fixed cash income to retain and attract highly marketable executives in a competitive market for executive talent.  
  Performance-Based AIC Annual cash incentive program designed to motivate our executives to achieve annual financial goals and other business objectives and reward them accordingly. Total amount paid was based on:

   Achievement of adjusted consolidated operating income objective and individual performance goals

 
    Restricted Stock(2)

Annual equity incentive awards designed to further align the interests of our executives with those of our stockholders by facilitating significant ownership of FedEx stock by the officers. The number of options and shares of restricted stock awarded is primarily based on:

   An officer’s position and level of responsibility

 
  Stock Options  
  Performance-Based LTI

Long-term cash incentive program designed to motivate management to build long-term stockholder value and reward them accordingly. For the FY20-FY22 long-term incentive (“LTI”) plan, total payout opportunity was based on:

   Achievement of aggregate earnings-per-share (“EPS”) goals for the preceding three-fiscal-year period

 
      (1)   See page 53 for individual fiscal 2022 target total direct compensation components.  
           
      (2) This average excludes our Chairman of the Board and CEO in fiscal 2022 because restricted stock was not a component of his fiscal 2022 compensation. As a result, the percentages included in this table do not sum to 100%.  
           
Your Board of Directors recommends that you vote “FOR” this proposal.
See page 46

 

2022 Proxy Statement 9

Table of Contents

Proxy Statement Summary – Proposal 3

Fiscal 2022 Compensation Highlights

Under the fiscal 2022 annual incentive compensation (“AIC”) plan, annual bonus payments were tied to achieving aggressive goals for adjusted consolidated operating income. We experienced revenue and operating income growth in fiscal 2022 resulting from yield management actions, including the favorable net impact of fuel. In addition, our results were positively affected by a mix shift to our higher yielding services due to strategic actions to improve revenue quality. However, our business was negatively affected by the coronavirus (“COVID-19”) pandemic, labor market challenges, and inflationary cost pressures. Labor market challenges contributed to global supply chain disruptions and affected the availability and cost of labor, resulting in network inefficiencies, higher purchased transportation costs, and higher wage rates. In addition, global recovery from the impacts of the COVID-19 pandemic slowed with the onset of new variants, which resulted in reduced shipping demand and caused network disruptions, particularly at FedEx Express during fiscal 2022. These challenges resulted in adjusted consolidated operating income that was below the target objective under our fiscal 2022 AIC plan. Accordingly, and consistent with our pay-for-performance philosophy, below-target payouts were earned by participants under the fiscal 2022 AIC plan, including the named executive officers.
LTI plan payouts for fiscal 2022 were tied to meeting pre-established aggregate EPS goals over a three-fiscal-year period. While adjusted EPS growth was strong in fiscal 2021 and 2022, weaker-than-expected adjusted EPS growth in fiscal 2020 prevented us from achieving the three-year EPS goal required for any payout under the FY20–FY22 LTI plan.
Officers realize value from the stock options included in the total direct compensation calculation only if the stock price appreciates after the grant date. The exercise price for the fiscal 2022 stock option grant to executive officers was $294.605. The closing price of FedEx common stock on July 25, 2022 was $228.17.
    
Proposal 3
Ratification of the Appointment of Ernst & Young LLP as
 
  FedEx’s Independent Registered Public Accounting Firm      
    

The Audit and Finance Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm and has specific policies in place to ensure its independence. The Audit and Finance Committee has appointed Ernst & Young LLP (“Ernst & Young”) to serve as FedEx’s independent registered public accounting firm for fiscal 2023. Ernst & Young has been our independent registered public accounting firm since 2002.

Fees paid to Ernst & Young for fiscal 2022 and 2021 are detailed on page 93.

Representatives of Ernst & Young will attend the meeting, will be given the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

    
Your Board of Directors recommends that you vote “FOR” this proposal See page 90

 

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Table of Contents

Proxy Statement Summary – Proposal 4

Proposal 4
Approval of the Amendment to the FedEx Corporation
 
  2019 Omnibus Stock Incentive Plan to Increase the
Number of Authorized Shares
 

FedEx relies on equity awards to retain and attract key employees and non-employee Board members and believes that equity incentives are necessary for FedEx to remain competitive in retaining and attracting highly qualified individuals upon whom, in large measure, the future growth and success of FedEx depend. Our stockholders originally approved FedEx’s 2019 Omnibus Stock Incentive Plan, as amended (the “2019 Plan”), at the 2019 annual meeting of stockholders. The 2019 Plan currently provides that the maximum number of shares of FedEx common stock that may be issued pursuant to awards granted under the 2019 Plan is 17,000,000 shares, of which no more than 1,500,000 shares may be issued as full-value awards (i.e., awards other than stock options or stock appreciation rights). In order to continue the practice of granting equity incentive awards, the Board of Directors is seeking stockholder approval of an amendment to the 2019 Plan to increase the number of shares authorized for issuance under the 2019 Plan. If approved by our stockholders, the amendment would authorize an additional 5,000,000 shares for issuance under the 2019 Plan. However, none of the additional shares will be issuable as full-value awards. The amendment would not make any other changes to the 2019 Plan.

Absent an increase in the number of authorized shares under the 2019 Plan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for fiscal 2025, which begins on June 1, 2024. We believe that increasing the number of shares issuable under the 2019 Plan is necessary in order to allow FedEx to continue to utilize equity awards to retain and attract the services of key individuals essential to FedEx’s long-term growth and financial success and to further align their interests with those of FedEx’s stockholders.

Your Board of Directors recommends that you vote “FOR” this proposal See page 96

Proposals 5-9
Five Stockholder Proposals, if properly presented
    
 
   
Your Board of Directors recommends that you vote “AGAINST” each of these proposals See pages 107 – 121

Forward-Looking Statements

Certain statements in this proxy statement may be considered “forward-looking” statements within the meaning of the applicable securities laws. Forward-looking statements include those preceded by, followed by, or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “forecasts,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends”, or similar expressions. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the factors that can be found in FedEx’s and its subsidiaries’ press releases and FedEx’s filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for fiscal 2022. Any forward-looking statement speaks only as of the date on which it is made. FedEx does not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

2022 Proxy Statement 11

Table of Contents

CORPORATE GOVERNANCE MATTERS

Proposal 1
Election of Directors    
 
   

All of FedEx’s directors are elected at each annual meeting of stockholders and hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. The Board of Directors currently consists of fourteen members. Shirley Ann Jackson is retiring as a director immediately before this year’s annual meeting and will not stand for reelection (for additional information, please see “— Board Processes and Policies — Director Mandatory Retirement”). The Board proposes that each of the current directors, other than Dr. Jackson, be reelected to the Board. In addition, the Board of Directors has nominated Stephen E. Gorman and Nancy A. Norton for election as directors. Frederick P. Perpall was initially elected as a director by the Board in December 2021 upon the recommendation of a Board member and the Governance, Safety, and Public Policy Committee (“GSPP Committee”). Each of Amy B. Lane and V. James Vena was initially elected as a director by the Board in June 2022. Ms. Lane, Mr. Vena, and Mr. Gorman were nominated as directors pursuant to a cooperation agreement with affiliates of the D. E. Shaw group described below. Frederick W. Smith, FedEx’s Executive Chairman and Chairman of the Board, and the GSPP Committee recommended Vice Admiral Norton as a nominee.

Effective upon the retirement of Dr. Jackson immediately before the 2022 annual meeting, the size of the Board will be increased to fifteen members. Each of the nominees elected at this annual meeting will hold office until the annual meeting of stockholders to be held in 2023 and until his or her successor is duly elected and qualified or until his or her earlier disqualification, death, resignation, or removal.

Each nominee has consented to being named in this proxy statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders may vote your shares for the substitute nominee.

Under FedEx’s majority-voting standard, each of the fifteen director nominees must receive more votes cast “for” than “against” his or her election in order to be elected to the Board. For more information, please see “— Process for Selecting Directors — Nomination Process — Majority-Voting Standard for Director Elections.”

Your Board of Directors recommends that you vote “FOR” the election of each of the fifteen nominees.

Process for Selecting Directors

The Board is responsible for recommending director candidates for election by the stockholders and for electing directors to fill vacancies or newly created directorships. The Board has delegated the screening and evaluation process for director candidates to the GSPP Committee, which identifies, evaluates, and recruits highly qualified director candidates and recommends them to the Board.

Experience, Qualifications, Attributes, and Skills

The GSPP Committee seeks director nominees with the skills and experience needed to properly oversee the interests, risks, and businesses of the company. The Committee carefully evaluates each candidate to ensure that he or she possesses the experience, qualifications, attributes, and skills that the Committee has found are necessary for an effective Board member. These crucial qualities include, among others:

  The highest level of personal and professional ethics, integrity, and values;

  Practical wisdom and mature judgment;

  An inquiring and independent mind;

  Expertise that is useful to FedEx and complementary to the background and experience of other Board members; and

  Willingness to represent the best interests of all stockholders and objectively appraise management performance.

In addition to the qualifications that each director nominee must have, the Board believes that one or more of FedEx’s Board members should possess the experience and expertise listed below because of their particular relevance to the company’s business, strategy, and structure. These were all considered by the Board in connection with this year’s director nomination process.

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Corporate Governance Matters – Process for Selecting Directors

TRANSPORTATION/LOGISTICS/SUPPLY CHAIN MANAGEMENT EXPERIENCE   ENERGY EXPERTISE  

Diversity:

The Board is committed to having a membership that reflects a diversity of gender, race, ethnicity, age, and background. This commitment is demonstrated by the fact that the Board currently* includes five female directors and four directors who are racially or ethnically diverse.

*As of August 8, 2022, and including Shirley Ann Jackson, who will retire from the Board immediately before the 2022 annual meeting.

INTERNATIONAL EXPERIENCE   HUMAN RESOURCE MANAGEMENT EXPERTISE  
FINANCIAL EXPERTISE   GOVERNMENT EXPERIENCE  
MARKETING EXPERTISE   RISK MANAGEMENT EXPERTISE  
RETAIL/E-COMMERCE EXPERTISE   LEADERSHIP EXPERIENCE  
TECHNOLOGICAL/DIGITAL/CYBERSECURITY EXPERTISE        

Nomination Process

Nomination of Director Candidates

The GSPP Committee identifies, evaluates, and recruits director candidates, considers the advisability of adding new directors to the current composition of the Board, and evaluates and recommends existing director nominees to the Board as follows:

               
                   
The GSPP Committee considers potential new candidates that may be proposed by current directors, management, professional search firms, stockholders, or other persons. The Committee may engage a third-party executive search firm to assist in identifying potential director candidates. The Committee considers and evaluates a director candidate recommended by a stockholder in the same manner as a nominee recommended by a Board member, management, search firm, or other sources.     The GSPP Committee evaluates a potential new director candidate thoroughly in considering whether the candidate meets the criteria that the Board seeks in all of its directors and how that candidate’s skills and experience would positively contribute to the Board. The process may include reviewing the candidate’s qualifications, interviewing the candidate, engaging an outside firm to gather additional information about the candidate, and making inquiries of persons with knowledge of the candidate.     In its evaluation of all director candidates, including the members of the Board eligible for reelection, the GSPP Committee considers the appropriate size, composition, skills, and contributions of current members and the needs of the Board of Directors and each of its committees.     AS A RESULT OF THIS PROCESS, IF ALL DIRECTOR NOMINEES ARE ELECTED AT THE ANNUAL MEETING, SIX NEW, INDEPENDENT, HIGHLY QUALIFIED DIRECTORS WILL HAVE JOINED THE FEDEX BOARD IN THE PAST FIVE YEARS.

On June 13, 2022, FedEx entered into a cooperation agreement (the “Cooperation Agreement”) with D. E. Shaw Oculus Portfolios, LLC and D. E. Shaw Valence Portfolios, LLC (collectively, “D. E. Shaw”). Pursuant to the Cooperation Agreement, the Board initially elected Ms. Lane and Mr. Vena as members of the Board effective June 14, 2022. Also pursuant to the Cooperation Agreement, each of these new directors, together with Mr. Gorman, were nominated for election at the 2022 annual meeting of stockholders, with terms expiring at the 2023 annual meeting of stockholders.

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Under the terms of the Cooperation Agreement, D. E. Shaw has agreed to abide by customary standstill restrictions (subject to certain exceptions relating to private communications to FedEx) from the date of the Cooperation Agreement until the date that is 30 calendar days prior to the notice deadline under FedEx’s Bylaws for the nomination of non-proxy-access director candidates for election to the Board at the 2023 annual meeting of stockholders (the “Cooperation Period”). The Cooperation Agreement provides that the standstill restrictions will terminate automatically upon certain events, including, among other things, FedEx’s material breach of the Cooperation Agreement.

Under the Cooperation Agreement, D. E. Shaw has agreed to appear in person or by proxy at any annual or special meeting of FedEx’s stockholders held during the Cooperation Period and to vote its shares of FedEx’s common stock (i) in favor of the slate of directors nominated by the Board for election, and in accordance with the recommendations of the Board on all other proposals, and (ii) against the removal of any incumbent directors or the election of any director nominees not recommended by the Board; provided that D. E. Shaw may vote in its sole discretion on any proposal with respect to an extraordinary transaction; provided, further, that if both Institutional Shareholder Services and Glass, Lewis & Co. recommend otherwise with respect to any of the company’s proposals at any such meeting (other than proposals relating to the election or removal of directors, the size of the Board, or filling vacancies on the Board), D. E. Shaw is permitted to vote in accordance with the ISS and Glass Lewis recommendation.

Stockholder Recommendations

The GSPP Committee will consider director nominees recommended by stockholders. To recommend a prospective director candidate for the GSPP Committee’s consideration, stockholders may submit the candidate’s name, qualifications, including whether the candidate satisfies the requirements set forth in our Corporate Governance Guidelines and discussed in “— Process for Selecting Directors — Experience, Qualifications, Attributes, and Skills,” and other relevant biographical information in writing to: FedEx Corporation Governance, Safety, and Public Policy Committee, c/o Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120. FedEx’s Bylaws require stockholders to give advance notice of stockholder proposals, including nominations of director candidates. For more information, please see “Stockholder Proposals and Director Nominations for 2023 Annual Meeting.”

Majority-Voting Standard For Director Elections

FedEx’s Bylaws require that we use a majority-voting standard in uncontested director elections and a resignation requirement for directors who fail to receive the required majority vote. The Bylaws also prohibit the Board from reverting to a plurality-voting standard without the affirmative vote of the holders of at least a majority of the voting power of all the shares of FedEx stock entitled to vote generally in the election of directors, voting together as a single class. Under the majority-voting standard, a director nominee must receive more votes cast “for” than “against” his or her election in order to be elected to the Board. In accordance with the majority-voting standard and resignation requirement, each director who is standing for reelection at the annual meeting has tendered an irrevocable resignation from the Board of Directors that will take effect if (i) the director does not receive more votes cast “for” than “against” his or her election at the annual meeting, and (ii) the Board accepts the resignation. FedEx’s Bylaws require the Board of Directors, within 90 days after certification of the election results, to accept the director’s resignation unless there is a compelling reason not to do so and to promptly disclose its decision (including, if applicable, the reasons for rejecting the resignation) in a filing with the SEC.

Process for Training and Evaluating Directors

New Director Orientation

FedEx has a New Director Orientation Program that enables new members of the Board to quickly become active and effective Board members. The program includes, among other things, an overview of fiduciary duties and responsibilities of directors, individual meetings with key members of the Board and executive management, facility tours, and attendance at committee meetings regardless of whether the new director is a member of those committees, in order to gain a better understanding of committee functions. The process is tailored to take into account the individual needs of each new director.

The GSPP Committee is responsible for overseeing the New Director Orientation Program and the Executive Vice President, General Counsel and Secretary is responsible for administering the program and reporting to the GSPP Committee the status of the orientation process with respect to each new director. The orientation process is designed to provide new directors with comprehensive information about the company’s business, strategy, capital structure, financial performance, risk oversight, evaluation of management, and executive compensation practices, as well as the policies, procedures, and responsibilities of the Board and its committees.

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Corporate Governance Matters – Process for Training and Evaluating Directors

Continuing Director Education

FedEx provides continuing director education through individual speakers at Board meetings, generally four times per year. The company receives feedback from the directors on potential topics that would be useful for these discussions. In addition to facilitating these customized in-house programs, FedEx monitors pertinent developments in director education and recommends valuable outside programs for Board committee chairpersons to attend. The GSPP Committee reviews the company’s director education process on an annual basis to ensure the continuing education provided serves to further directors’ knowledge in their oversight responsibilities.

Board and Committee Evaluations

The GSPP Committee oversees an annual performance evaluation of each committee of the Board and the Board as a whole. Each Board member also completes an individual self-assessment, and those responses are provided to the Chairman of the Board and the chairperson of the GSPP Committee, who is our Lead Independent Director. The responses to the performance evaluations and individual self-assessments are compiled annually by a third party who distributes the results to the applicable recipients.

The GSPP Committee reviews and discusses the evaluation results for each committee and the Board as a whole. Each committee discusses its annual evaluation results and identifies any opportunities for improvement. The chairperson of the GSPP Committee reports the results to the Board of Directors, including any action plans. The chairperson also reports to the Board the results of the full Board assessment. The Chairman of the Board and chairperson of the GSPP Committee discuss any notable results from the individual director self-assessments with the relevant directors.

As part of the evaluation, our directors consider the Board’s processes to ensure, among other things, that its leadership structure remains effective, that Board and committee meetings are conducted in a manner that promotes candid and constructive dialogue, sufficient time has been allocated for such meetings, agenda items reflect key matters of importance to the company, and that the materials provided to the Board and the reports received from management are useful, comprehensive, and timely.

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Corporate Governance Matters – Nominees for Election to the Board

Nominees for Election to the Board

Below you will find each nominee’s biography along with other pertinent information, including a selection of each Board nominee’s skills and qualifications. Following the biographies, we have included a chart that exhibits the collective experience, qualifications, attributes, and skills of our Board nominees.

FREDERICK W. SMITH

 

 

Age: 77

Director Since: 1971

Committees: None

Other Public Company Directorships: None

    

Mr. Smith is the company’s founder and has been Executive Chairman of FedEx since June 1, 2022, and Chairman of the Board since 1998. Mr. Smith was Chief Executive Officer of FedEx from 1998 through May 2022 and President of FedEx from 1998 through January 2017. He was Chairman, President, and Chief Executive Officer of FedEx Express from 1983 to 1998, Chief Executive Officer of FedEx Express from 1977 to 1998, and President of FedEx Express from 1971 to 1975.

SKILLS AND QUALIFICATIONS

Transportation/Logistics/Supply Chain Management; Leadership

Founder and former CEO of our company and the pioneer of the express transportation industry.


Energy

Chairman Emeritus of the Energy Security Leadership Council.


 

International

Founder and former CEO of our multinational company and has served on the board of the Council on Foreign Relations and as chairman of the U.S.-China Business Council and the French-American Business Council.


 

MARVIN R. ELLISON INDEPENDENT

 

 

Age: 57

Director Since: 2014

Committees: Audit and Finance

Governance, Safety, and Public Policy

Other Public Company Directorships: Lowe’s Companies, Inc.

    

Mr. Ellison serves as Chairman of the Board, President, and Chief Executive Officer of Lowe’s Companies, Inc., a home improvement retailer, serving as Chairman since June 2021 and President and Chief Executive Officer since July 2018. Mr. Ellison served as Chairman of J. C. Penney Company, Inc., an apparel and home furnishings retailer, from August 2016 until May 2018, and Chief Executive Officer from August 2015 through May 2018 (J. C. Penney filed for reorganization in federal bankruptcy court on May 15, 2020). He served as President and CEO-Designee of J. C. Penney from November 2014 through July 2015. From August 2008 through October 2014, Mr. Ellison served as Executive Vice President – U.S. Stores of The Home Depot, Inc., a home improvement specialty retailer. From June 2002 to August 2008, he served in a variety of operational roles at The Home Depot, including as President – Northern Division and as Senior Vice President – Global Logistics. Prior to joining The Home Depot, Mr. Ellison spent 15 years at Target Corporation in a variety of operational roles. He is a former director of J. C. Penney Company, Inc. and H&R Block, Inc.

SKILLS AND QUALIFICATIONS

Marketing; Retail/E-Commerce

Marketing expert with significant retail and e-commerce expertise through his executive experience at Lowe’s, The Home Depot, and J. C. Penney.


Leadership

Significant executive leadership experience gained from executive positions held at Lowe’s, J. C. Penney, and The Home Depot.


Transportation/Logistics/Supply Chain Management

Served in a variety of logistics roles during his career, including as Senior Vice President – Global Logistics at The Home Depot.


 

 

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STEPHEN E. GORMAN INDEPENDENT

 

 

Age: 67

Director Since:

Committees: None

Other Public Company Directorships: Peabody Energy Corporation

ArcBest Corporation

(Mr. Gorman will resign as a director of ArcBest Corporation if elected to the FedEx Board)

    

Mr. Gorman is the former Chief Executive Officer of Air Methods Corporation, a leading domestic provider in the air medical market, a position he held from August 2018 until his retirement in January 2020. Prior to that, he served as the President and Chief Executive Officer of Borden Dairy Company, a fresh milk and value-added dairy processor and distributor, from 2014 until July 2017. Prior to joining Borden Dairy, he served as Executive Vice President and Chief Operating Officer of Delta Air Lines, Inc. from 2008 to 2014 and Executive Vice President – Operations of Delta Airlines from 2007 to 2008. Prior to that, Mr. Gorman served as the President and Chief Executive Officer of Greyhound Lines, Inc. from 2003 to 2007; the Executive Vice President, Operations Support and President, North America for Krispy Kreme Doughnuts, Inc. from 2001 to 2003; and Executive Vice President – Flight Operations & Technical Operations for Northwest Airlines Corp. in 2001. He previously served as a director of Greyhound Lines, Inc., Rohn Industries, Inc., Timco Aviation Services, Inc., and Pinnacle Airlines Corporation.

SKILLS AND QUALIFICATIONS

Transportation/Logistics/Supply Chain Management

Extensive experience in the transportation industry as CEO and COO of public companies in the aviation and transportation industries.


Financial

As a public company CEO, had oversight of financial statements and strategic financial decisions, and led mergers and acquisitions and strategic restructuring activities.


Risk Management

Extensive risk management expertise as CEO and COO of public companies in the aviation and transportation industries.


International

Has extensive experience as an executive officer of large companies with global operations.


Leadership

Extensive leadership in CEO and other executive officer leadership positions for several large public and private corporations and experience as a public company director, including service as Lead Independent Director (ArcBest Corporation).


 

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SUSAN PATRICIA GRIFFITH INDEPENDENT

 

 

Age: 57

Director Since: 2018

Committees: Compensation and Human Resources

Governance, Safety, and Public Policy

Other Public Company Directorships: The Progressive Corporation

    

Ms. Griffith currently serves as President and Chief Executive Officer of The Progressive Corporation, a leading property and casualty insurance company, positions she has held since July 2016. Prior to being named President and Chief Executive Officer, Ms. Griffith served as Progressive’s Personal Lines Chief Operating Officer from April 2015 through June 2016 and Vice President from May 2015 through June 2016. She joined Progressive as a claims representative in 1988 and has served in many key leadership positions during her tenure. Ms. Griffith held several managerial positions in the Claims division before being named Chief Human Resources Officer in 2002. In 2008, she returned to the Claims division as the group president, and prior to being named Personal Lines Chief Operating Officer, she was President of Customer Operations from April 2014 to March 2015. Ms. Griffith was named one of FORTUNE magazine’s “Most Powerful Women in Business” in 2016 and 2017. She is a former director of The Children’s Place, Inc.

SKILLS AND QUALIFICATIONS

b

Marketing; Retail/E-Commerce

Extensive executive and managerial experience in an industry that emphasizes distinctive advertising and marketing campaigns.


Leadership

Has held a series of executive leadership positions at The Progressive Corporation, including her role as President and CEO.


Technological/Digital/Cybersecurity

Executive and managerial experience at a company that relies heavily on its ability to adapt to change, innovate, develop, and implement new applications and other technologies.


Risk Management; Human Resource Management

Extensive risk management expertise as President and CEO at The Progressive Corporation; has held several other managerial positions, including Chief Human Resources Officer, at The Progressive Corporation.


 

KIMBERLY A. JABAL INDEPENDENT

 

 

Age: 53

Director Since: 2013

Committees: Audit and Finance

Cyber and Technology Oversight

Other Public Company Directorships: None

    

Ms. Jabal is the former Chief Financial Officer of Unity Technologies, a creator of real-time 3D development platforms, a position she held from March 2019 through May 2021. Prior to joining Unity Technologies in March 2019, Ms. Jabal was the Chief Financial Officer of Weebly, a small business software company, from November 2015 through December 2018. Prior to joining Weebly in November 2015, she served as Chief Financial Officer of Path, Inc. and as Vice President of Finance at Lytro, Inc., both early-stage technology companies. She served in various capacities at Google from 2003 to 2011, including as director of engineering finance, director of investor relations, and director of online sales finance. Prior to Google, Ms. Jabal spent two years at Goldman Sachs in technology investment banking and eight years with Accenture working in information technology. She is a former director of SVB Financial Group.

SKILLS AND QUALIFICATIONS

Financial

Former CFO of one public and two private software companies, sixteen years of experience in finance at software and internet companies, and two years of experience in technology investment banking. Earned an MBA from Harvard Business School.


Technological/Digital/Cybersecurity

Has extensive information technology experience, having spent eight years serving in various capacities with Google and eight years with Accenture designing and building technical infrastructure for major information technology systems implementations at global companies. Ms. Jabal also holds a B.S. in engineering from the University of Illinois at Urbana-Champaign.


 

 

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AMY B. LANE INDEPENDENT

 

 

Age: 69

Director Since: 2022

Committees: Audit and Finance

Compensation and Human Resources

Other Public Company Directorships: NextEra Energy, Inc. and TJX Companies Inc.

    

Ms. Lane is the former Managing Director and Group Leader of the Global Retailing Investment Banking Group at Merrill Lynch & Co., Inc., an investment banking firm, a position she held from 1997 until her retirement in 2002. Ms. Lane previously served as Managing Director at Salomon Brothers, Inc., an investment banking firm, where she founded and led the retail industry investment banking unit, having joined Salomon Brothers in 1989. Ms. Lane also previously served as a director of GNC Holdings, Inc. and as a member of the Board of Trustees of Urban Edge Properties.

SKILLS AND QUALIFICATIONS

Financial

Earned an MBA in Finance from The Wharton School, University of Pennsylvania. Has numerous years of experience in financial services, capital markets, finance, and accounting, and public company audit and finance committee experience, including as a chair.


Retail/E-Commerce

Founded and led the retail industry investment banking units at Salomon Brothers and Merrill Lynch and is a member of the Board of TJX Companies Inc., a leading global off-price retailer.


Energy

Member of the Board of NextEra Energy, Inc., a leading clean energy company.


Leadership

Significant executive leadership, management, and strategy expertise as the former leader of two investment banking practices covering the global retailing industry and service as a director on numerous public company boards.


 

R. BRAD MARTIN INDEPENDENT — VICE CHAIRMAN

 

 

Age: 70

Director Since: 2011

Committees: Audit and Finance (Chairman)

Other Public Company Directorships: Riverview Acquisition Corp.

    

Mr. Martin is Chairman of RBM Venture Company, a private investment company, a position he has held since 2007. He also currently serves as Chairman and Chief Executive Officer of Riverview Acquisition Corp., an investment company, a position he has held since April 2021. Mr. Martin was formerly the Chairman of the Board of Chesapeake Energy Corporation, a producer of oil, natural gas, and natural gas liquids, a position he held from October 2015 to February 2021. He was Chairman and Chief Executive Officer of Saks Incorporated from 1989 to 2006 and remained Chairman until his retirement in 2007. He is the former Interim President of the University of Memphis, a position he held from July 2013 until May 2014. He was previously a director of Chesapeake Energy Corporation, First Horizon National Corporation, Caesars Entertainment Corporation, Dillard’s, Inc., Gaylord Entertainment Company, lululemon athletica inc., and Ruby Tuesday, Inc.

SKILLS AND QUALIFICATIONS

Financial; Risk Management

Earned an MBA from Vanderbilt University. As a former CEO of a public company, he actively supervised the CFO, and has significant public company audit committee experience, including as a chair. An audit committee financial expert, as determined by the Board. Former chair of the First Horizon National Corporation Executive and Risk Committee.


Marketing; Retail/E-Commerce

Gained valuable retail marketing experience and successfully applied his marketing expertise as the former CEO of Saks, a leading department store retailer.


Energy; Transportation/Logistics/Supply Chain Management

Member of the board of Pilot Travel Centers LLC and former Chairman of the Board of Chesapeake Energy Corporation.


i

Government

Former Tennessee state representative.


 

 

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NANCY A. NORTON INDEPENDENT

 

 

Age: 57

Director Since:

Committees: None

Other Public Company Directorships: None

    

Vice Admiral Norton is the retired Director of the Defense Information Systems Agency (DISA), a U.S. Department of Defense combat support agency, and commander, Joint Force Headquarters Department of Defense Information Network, positions she held from February 2018 through February 2021 after serving as Vice Director of DISA from August 2017 through February 2018. Vice Admiral Norton served over 34 years of active duty service as an officer in the U.S. Navy. She served as the director, Command, Control, Communications and Cyber Directorate, U.S. Pacific Command; director of Warfare Integration for Information Warfare; and held commands and posts in multiple international locations. She is the recipient of numerous personal and campaign awards, including the National Security Agency’s Frank B. Rowlett Award for individual achievement in information security.

SKILLS AND QUALIFICATIONS

Technological/Digital/Cybersecurity

Served as Director of DISA, where her focus was providing information and cyber security tools and support for the U.S. Department of Defense; held numerous other communications and information security senior leadership positions while serving in the U.S. Navy.


Human Resource Management

Led global teams as a Vice Admiral in the U.S. Navy and Director of DISA.


International

Has extensive experience conducting technology and cyberspace operations as a U.S. Naval officer, including numerous international leadership positions.


Government

Served for 34 years as an officer in the U.S. Navy; provided leadership and oversight of global team at DISA.


 

FREDERICK P. PERPALL INDEPENDENT

 

 

Age: 47

Director Since: 2021

Committees: Audit and Finance

Governance, Safety, and Public Policy

Other Public Company Directorships: Starwood Property Trust, Inc.

    

Mr. Perpall currently serves as Chief Executive Officer of The Beck Group, one of the world’s largest integrated design-build firms, a position he has held since 2013. Mr. Perpall leads the firm’s domestic and international design, planning, and construction business. He also serves on the Board of Councilors for The Carter Center and is President-Elect of the United States Golf Association Executive Committee. Mr. Perpall has a bachelor’s and master’s degree from the University of Texas at Arlington and is a member of the American Institute of Architects College of Fellows, an alumnus of Harvard Business School’s Advanced Management Program, and a former Americas Fellow at The Baker Institute at Rice University. He previously served as a director of Triumph Bancorp, Inc.

SKILLS AND QUALIFICATIONS

Risk Management

Has extensive experience in an industry where oversight and management of risks related to safety and compliance are mission-critical functions.


Financial

Alumnus of Harvard Business School’s Advanced Management Program; public company audit and investment committee member.


Leadership

Nine years of service as Chief Executive Officer of The Beck Group.


 

 

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JOSHUA COOPER RAMO INDEPENDENT

 

 

Age: 53

Director Since: 2011

Committees: Audit and Finance

Cyber and Technology Oversight (Chairman)

Other Public Company Directorships: Starbucks Corporation

    

Mr. Ramo is Chairman and Chief Executive Officer of Sornay, LLC, a strategic advisory firm, a position he has held since January 2021. He previously served as Vice Chairman, Co-Chief Executive Officer, of Kissinger Associates, Inc., a strategic advisory firm, from 2011 through 2020 (he was Vice Chairman since 2011 and Co-Chief Executive Officer since 2015). He served as Managing Director of Kissinger Associates from 2006 to 2011. Prior to joining Kissinger Associates, he was Managing Partner of JL Thornton & Co., LLC, a consulting firm. Before that, he worked as a journalist and served as Senior Editor, Foreign Editor, and then Assistant Managing Editor of TIME Magazine from 1995 to 2003.

SKILLS AND QUALIFICATIONS

Leadership

Chairman and Chief Executive Officer, Sornay, LLC; former Vice Chairman, Co-Chief Executive Officer, of Kissinger Associates.


International

Has been a term member of the Council on Foreign Relations, Asia 21 Leaders Program, World Economic Forum’s Young Global Leaders, and Global Leaders of Tomorrow. He co-founded the U.S.-China Young Leaders Forum in conjunction with the National Committee on U.S.-China Relations.


 

SUSAN C. SCHWAB INDEPENDENT

 

 

Age: 67

Director Since: 2009

Committees: Compensation and Human Resources

Cyber and Technology Oversight

Other Public Company Directorships: Caterpillar Inc. and Marriott International, Inc.

    

Ambassador Schwab is currently Professor Emerita at the University of Maryland School of Public Policy, a position she has held since June 2020. Prior to being named Professor Emerita, Ambassador Schwab was a Professor from January 2009 to May 2020. She has also served as a strategic advisor to Mayer Brown LLP, a law firm, since March 2010. She served as U.S. Trade Representative from 2006 to January 2009 and as Deputy U.S. Trade Representative from 2005 to 2006. She was Vice Chancellor of the University System of Maryland and President and Chief Executive Officer of the University System of Maryland Foundation from 2004 to 2005. She was Dean of the University of Maryland School of Public Policy from 1995 to 2003. She was Director of Corporate Business Development of Motorola, Inc., an electronics manufacturer, from 1993 to 1995. She was Assistant Secretary of Commerce for the U.S. and Foreign Commercial Service from 1989 to 1993. She is a former director of The Boeing Company.

SKILLS AND QUALIFICATIONS

International; Government

Former U.S. Trade Representative and former Director–General of the U.S. and Foreign Commercial Service (Assistant Secretary of Commerce), the export promotion arm of the U.S. government.


Leadership

Former U.S. Trade Representative, former Director–General of the U.S. and Foreign Commercial Service (Assistant Secretary of Commerce), former President and Chief Executive Officer of the University System of Maryland Foundation, and former Dean of the University of Maryland School of Public Policy.


 

 

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Corporate Governance Matters – Nominees for Election to the Board

DAVID P. STEINER INDEPENDENT — LEAD INDEPENDENT DIRECTOR

 

 

Age: 62

Director Since: 2009

Committees: Governance, Safety, and Public Policy (Chairman)

Other Public Company Directorships: Vulcan Materials Company

    

Mr. Steiner is the former Chief Executive Officer of Waste Management, Inc., a provider of integrated waste management services, serving as Chief Executive Officer from 2004 through October 2016. He was President of Waste Management, Inc. from 2010 through July 2016, Executive Vice President and Chief Financial Officer from 2003 to 2004, Senior Vice President, General Counsel and Corporate Secretary from 2001 to 2003, and Vice President and Deputy General Counsel from 2000 to 2001. He was a partner at Phelps Dunbar L.L.P., a law firm, from 1990 to 2000. Mr. Steiner was previously a director of TE Connectivity Ltd. and Waste Management, Inc.

SKILLS AND QUALIFICATIONS

Transportation/Logistics/Supply Chain Management

Former CEO of Waste Management, which transports waste materials.


Financial

Has an accounting degree from Louisiana State University and was CFO of Waste Management before becoming its CEO.


Energy

Former CEO of Waste Management, which has taken an industry leadership role in converting waste to renewable energy.


 

RAJESH SUBRAMANIAM

 

 

i

Age: 56

Director Since: 2020

Committees: None

Other Public Company Directorships: First Horizon National Corporation

    

Mr. Subramaniam serves as President and Chief Executive Officer of FedEx Corporation, a position he has held since June 2022. In this position, Mr. Subramaniam provides strategic direction for the FedEx portfolio of operating companies.

During his more than 30-year tenure with FedEx, Mr. Subramaniam has served in a multitude of leadership roles, including President and Chief Executive Officer-Elect of FedEx Corporation from March 2022 to May 2022, President and Chief Operating Officer of FedEx Corporation from March 2019 to March 2022, President and Chief Executive Officer of FedEx Express, the world’s largest express transportation company, from January 2019 to March 2019, and Executive Vice President and Chief Marketing and Communications Officer of FedEx Corporation from January 2017 to December 2018. He served as Executive Vice President of Marketing and Communications at FedEx Services from 2013 to January 2017.

SKILLS AND QUALIFICATIONS

Transportation/Logistics/Supply Chain Management

Over 30 years of experience at FedEx in several operating companies.


International; Leadership

Has held leadership roles at FedEx in the Asia-Pacific region and Canada. Serves on the U.S.-India Strategic Partnership Forum and the U.S.-China Business Council.


Marketing; Retail/E-Commerce

Oversaw all aspects of FedEx’s global marketing and communications, including advertising, brand and reputation, product and business development, e-commerce, revenue and forecasting planning, retail marketing, and digital access.


Technological/Digital/Cybersecurity

Responsible for several landmark developments at FedEx, including the continuing digital transformation of FedEx Services, and has had an instrumental role in recent technology upgrades to address the continued growth of e-commerce.


 

 

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V. JAMES VENA INDEPENDENT

 

 

Age: 63

Director Since: 2022

Committees: Audit and Finance

Governance, Safety, and Public Policy

Other Public Company Directorships: None

    

Mr. Vena is the former Chief Operating Officer of Union Pacific Corporation, the parent company of Union Pacific Railroad Company, a position he held from 2019 until his retirement in 2021. Mr. Vena previously spent 40 years at Canadian National Railway Company (CN) where he held a number of senior leadership roles, most recently as Executive Vice President and Chief Operating Officer of CN from 2013 until his retirement in 2016.

SKILLS AND QUALIFICATIONS

Transportation/Logistics/Supply Chain Management

Over 40 years of experience in the railroad industry, most recently as COO of Union Pacific.


International; Leadership

Has held leadership roles at Union Pacific and Canadian National Railway Company, including serving as COO of both companies.


Risk Management; Marketing

Has extensive experience in an industry where oversight and management of risks related to safety, operations, and compliance are key, as well as marketing experience through senior roles in marketing and sales.


 

PAUL S. WALSH INDEPENDENT

 

 

Age: 67

Director Since: 1996

Committees: Compensation and Human Resources (Chairman)

Other Public Company Directorships: McDonald’s Corporation and Vintage Wine Estates, Inc.

    

Mr. Walsh is Executive Chairman of the Board of McLaren Group Limited, a luxury automotive, motorsport, and technology company, a position he has held since January 2020. He also currently serves as an advisor for L.E.K. Consulting, a global strategy consulting firm, and TPG Capital LLP, a private investment firm. Mr. Walsh formerly served as Operating Partner at Bespoke Capital Partners LLC, an investment company, and Executive Chairman of Bespoke Capital Acquisition Corp., in each case from August 2016 until June 2021, and he served as Chairman of the Board of Compass Group PLC, a food service and support services company, from February 2014 to December 2020. Mr. Walsh served as Chief Executive Officer of Diageo plc, a beverage company, from 2000 to June 2013 and then served as an advisor to the company from July 2013 through 2014. Mr. Walsh also is a director of Chime Communications Limited, where he serves as Chairman of the Board. He has been a member of the U.K. Prime Minister’s Business Advisory Group since July 2015 and has been a Business Ambassador on the U.K. government’s Business Ambassador Network since his appointment in August 2012. Mr. Walsh was Chairman, President, and Chief Executive Officer of The Pillsbury Company, a wholly owned subsidiary of Diageo plc, from 1996 to 2000, and Chief Executive Officer of The Pillsbury Company from 1992 to 1996. He was previously a director of Avanti Communications Group PLC, Centrica plc, Compass Group PLC, Diageo plc, HSBC Holdings plc, Ontex Group NV, Pace Holdings Corp., RM2 International S.A., TPG Pace Holdings Corp., Unilever PLC, and Bespoke Capital Acquisition Corp.

SKILLS AND QUALIFICATIONS

International

Former CEO of a U.K.–based, large multinational corporation.


Financial

Has held executive finance positions, including CFO of a major division, at a U.K.–based public company.


Marketing; Retail/E-Commerce

Led a company that owes much of its growth and success to highly effective marketing of its brands. His consumer-centric experience brings a vital and unique perspective to the Board.


Government

Has held executive positions at companies where government interface is crucial.


 

 

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Summary of Director Nominee Experience, Qualifications, Attributes, and Skills

   
Transportation/Logistics/Supply Chain Management Experience is a positive attribute as it greatly increases a director’s understanding of our business operations and its management.
International Experience is beneficial given our operations in over 220 countries and territories.
Financial Expertise is important given our use of financial targets as measures of success and the importance of accurate financial reporting and robust internal auditing.
Marketing Expertise is valuable because we emphasize promoting and protecting the FedEx brand, one of our most important assets.
Retail/E-Commerce Expertise is significant because we are strategically focused on the opportunity presented by this massive and fast-growing market.
Technological/Digital/Cybersecurity Expertise is beneficial because attracting and retaining customers and competing effectively depend in part upon the sophistication and reliability of our technology.
Energy Expertise is important as we are committed to protecting the environment and have initiatives under way to reduce our energy use and minimize our environmental impact.
Human Resource Management Expertise is important because our success depends on the talent, dedication, and well-being of our people — our greatest asset.
Government Experience is useful in our highly regulated industry as we work constructively with governments around the world.
Risk Management Expertise is important as we work to identify and manage risks to our business and operations in a complex global economy.
Leadership Experience is critical because we want directors with the experience and confidence to capably advise our executive management team on a wide range of issues.
   
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Audit Committee Financial Expert

The Board of Directors has determined that R. Brad Martin is an audit committee financial expert as that term is defined in SEC rules.

Director Independence

The Board of Directors has determined that each member of the Audit and Finance, Compensation & HR, and GSPP Committees is independent. With the exception of Frederick W. Smith and Rajesh Subramaniam, each of the Board’s current members and director nominees (Marvin R. Ellison, Stephen E. Gorman, Susan Patricia Griffith, Kimberly A. Jabal, Shirley Ann Jackson, Amy B. Lane, R. Brad Martin, Nancy A. Norton, Frederick P. Perpall, Joshua Cooper Ramo, Susan C. Schwab, David P. Steiner, V. James Vena, and Paul S. Walsh) is independent and meets the applicable independence requirements of the New York Stock Exchange (including the additional requirements for Audit and Finance Committee and Compensation & HR Committee members, as applicable, with respect to current committee members and members who will serve on either committee if all of the director nominees are elected at the annual meeting) and the Board’s more stringent standards for determining director independence. Mr. Smith is FedEx’s Executive Chairman, and Mr. Subramaniam is FedEx’s President and Chief Executive Officer.

Under the Board’s standards of director independence, which are included in FedEx’s Corporate Governance Guidelines, available under the ESG heading on the Investor Relations page of our website at investors.fedex.com, a director will be considered independent only if the Board affirmatively determines that the director has no direct or indirect material relationship with FedEx, other than as a director. The standards set forth certain categories or types of transactions, relationships, or arrangements with FedEx, as follows, each of which (i) is deemed not to be a material relationship with FedEx, and thus (ii) will not, by itself, prevent a director from being considered independent:

Prior Employment of Director. The director was employed by FedEx or was personally working on FedEx’s audit as an employee or partner of FedEx’s independent auditor, and over five years have passed since such employment, partner, or auditing relationship ended.
   
Prior Employment of Immediate Family Member. An immediate family member was an officer of FedEx or was personally working on FedEx’s audit as an employee or partner of FedEx’s independent auditor, and over five years have passed since such employment, partner, or auditing relationship ended.
   
Current Employment of Immediate Family Member. An immediate family member is employed by FedEx in a non-officer position, or by FedEx’s independent auditor not as a partner and not personally working on FedEx’s audit.
   
Interlocking Directorships. An executive officer of FedEx served on the board of directors of a company that employed the director or employed an immediate family member as an executive officer, and over five years have passed since either such relationship ended.
   
Transactions and Business Relationships. The director or an immediate family member is a partner, greater than 10% shareholder, director, or officer of a company that makes or has made payments to, or receives or has received payments (other than contributions, if the company is a tax-exempt organization) from, FedEx for property or services, and the amount of such payments has not within any of such other company’s three most recently completed fiscal years exceeded one percent (or $1 million, whichever is greater) of such other company’s consolidated gross revenues for such year.
   
Indebtedness. The director or an immediate family member is a partner, greater than 10% shareholder, director, or officer of a company that is indebted to FedEx or to which FedEx is indebted, and the aggregate amount of such debt is less than one percent (or $1 million, whichever is greater) of the total consolidated assets of the indebted company.
   
Charitable Contributions. The director is a trustee, fiduciary, director, or officer of a tax-exempt organization to which FedEx contributes, and the contributions to such organization by FedEx have not within any of such organization’s three most recently completed fiscal years exceeded one percent (or $250,000, whichever is greater) of such organization’s consolidated gross revenue for such year.

In determining each director nominee’s independence, the Board broadly considered all relevant facts and circumstances, including the following immaterial transactions, relationships, and arrangements:

Mr. Ellison serves, and Mr. Martin served (through June 30, 2022), on the Board of Trustees of the University of Memphis, a non-profit entity to which FedEx makes payments and charitable contributions. The payments and charitable contributions made by FedEx to the University of Memphis in each of its 2021, 2020, and 2019 fiscal years represented less than one percent of the University’s consolidated gross revenue for the year. The Board determined that Messrs. Ellison and Martin are independent directors under the Board’s independence standards as neither of them has a direct or indirect material relationship with either FedEx or the University of Memphis, other than as a director or trustee, and neither of them derive any financial or other personal benefit from these transactions.
   
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Mr. Steiner serves as an Advisory Director of Pritzker Private Capital, a private investment firm. FedEx has an ordinary course business relationship with Pritzker. The amount of payments received by FedEx from Pritzker in calendar 2021 was approximately 1.3% of Pritzker’s gross revenue for calendar 2021, and the amount of FedEx’s payments received from Pritzker (and vice versa) in each of calendar years 2020 and 2019 did not exceed one percent (or $1 million, whichever is greater) of its consolidated gross revenue. The Board determined that Mr. Steiner is an independent director under the Board’s independence standards as he does not have a direct or indirect material relationship with either FedEx or Pritzker, other than as a director or advisory director, and he does not derive any financial or other personal benefit from these transactions.
   
FedEx has an ordinary course business relationship with Lowe’s Companies, Inc., an entity for which Mr. Ellison has served as Chairman of the Board since June 2021 and President and Chief Executive Officer and as a director since July 2018. The amount of the payments made by FedEx to Lowe’s (and vice versa) within any of its three most recently completed fiscal years has not exceeded one percent (or $1 million, whichever is greater) of its consolidated gross revenue for such year.
   
FedEx has an ordinary course business relationship with The Progressive Corporation, an entity for which Ms. Griffith serves as President and Chief Executive Officer and as a director since July 2016. The amount of the payments made by FedEx to Progressive (and vice versa) within any of its three most recently completed fiscal years has not exceeded one percent (or $1 million, whichever is greater) of its consolidated gross revenue for such year.
   
Mr. Martin and Robert B. Carter, FedEx’s Executive Vice President, FedEx Information Services and Chief Information Officer, serve as members of the board of managers of Pilot Travel Centers LLC. The amount of the payments made by FedEx to Pilot Travel Centers in calendar 2021 was approximately 1.1% of Pilot Travel Center’s consolidated gross revenue in 2021, and payments made by FedEx to Pilot (and vice versa) in each of calendar years 2020 and 2019 did not exceed one percent (or $1 million, whichever is greater) of its consolidated gross revenue for such year.

Related Person Transactions

In accordance with the company’s Policy on Review and Preapproval of Related Person Transactions, which is described in more detail below in “— Board Processes and Policies — Policy on Review and Preapproval of Related Person Transactions,” the GSPP Committee has reviewed the following existing related person transactions and determined that they remain in the best interests of FedEx and our stockholders:

FedEx’s policy on personal use of corporate aircraft requires officers to pay FedEx two times the cost of fuel, plus applicable passenger ticket taxes and fees, for personal trips. Pursuant to this requirement, Mr. Smith paid FedEx $858,009 during fiscal 2022 in connection with certain personal use of corporate aircraft.
   
Mr. Smith’s oldest son is employed by FedEx Express as its President and Chief Executive Officer–Elect and was formerly its Regional President – The Americas & Executive Vice President – Global Support. The compensation of Mr. Smith’s oldest son for fiscal 2022 (including any incentive compensation amounts and the Black-Scholes value of any stock option award) was $2,213,626.
   
Mr. Smith’s daughter is employed by FedEx Corporation as a staff director of global public policy; Mr. Smith’s brother-in-law is employed by FedEx Express as a lead global vehicle technician; the brother of Mr. Subramaniam is employed by FedEx Services as a manager of information technology; and the son-in-law of Mark R. Allen, FedEx’s Executive Vice President, General Counsel and Secretary, is employed by FedEx as a managing director in the legal department. The total annual compensation of each of Mr. Smith’s daughter, Mr. Smith’s brother-in-law, Mr. Subramaniam’s brother, and Mr. Allen’s son-in-law for fiscal 2022 (including any incentive compensation and the Black-Scholes value of any stock option award) did not, individually, exceed $369,000.
   
In fiscal 2017, following the Board’s approval, FedEx entered into a two-year software services agreement with LiveSafe, Inc., a leading mobile risk intelligence solution for safety and security incident prevention, response, and communication. Mr. Smith is a former member of the board of directors of LiveSafe, and an affiliated entity of Mr. Smith invested $7.25 million in LiveSafe’s Series B financings. Mr. Smith’s youngest son was an employee and partial owner of LiveSafe. Under the terms of the agreement, FedEx paid LiveSafe $300,000 per year, in addition to an initial set-up fee of approximately $20,000. In July 2018, following the Board’s approval, FedEx and LiveSafe agreed to amend and extend the agreement through July 2021. Pursuant to the amendment, the number of licensed FedEx users of the LiveSafe application increased, and FedEx paid total license fees of approximately $4.4 million over the three-year term of the agreement. In October 2020, Vector Solutions, an unrelated third party and provider of software solutions for learning, operational readiness, workforce management, and risk reduction, acquired LiveSafe. Following the sale of LiveSafe to Vector Solutions, Mr. Smith and Mr. Smith’s youngest son no longer hold any ownership interests in LiveSafe or Vector Solutions, and Mr. Smith’s youngest son is no longer employed by LiveSafe or Vector Solutions. In connection with the sale of LiveSafe, Vector Solutions and Mr. Smith’s youngest son entered into a referral agreement pursuant to which Mr. Smith’s youngest son receives commissions upon the renewal of certain LiveSafe agreements in place prior to the sale, including the FedEx agreement. LiveSafe is an integral part of our workplace safety program. Based on the recommendations of our Security and Information Technology leadership, in the first quarter of fiscal 2022 FedEx extended the term of the software services agreement with Vector Solutions (as successor to LiveSafe)
   
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  for a three-year term beginning July 31, 2021 through July 30, 2024. The GSPP Committee and the independent members of the Board approved the extension of the agreement. FedEx will pay an annual license fee of $1,545,000 for each year of the three-year term based on the current number of licensed FedEx users. Pursuant to the referral agreement, Vector Solutions will pay Mr. Smith’s youngest son a commission of $154,500 per year over the three-year renewal term based on the current number of licensed FedEx users.

The Board’s Role and Responsibilities

FedEx Corporate Governance

Our Board of Directors and management team are committed to achieving and maintaining high standards of corporate governance, as well as a culture of and reputation for the highest levels of ethics, integrity, and reliability. We periodically review our governance policies and practices against evolving standards and make changes when the Board believes they would be in the best interest of stockholders. We value the perspectives of our stockholders and other stakeholders, including our employees and the communities in which we operate, and take steps to address their concerns where warranted.

In considering possible modifications of our corporate governance policies and practices, our Board and management focus on those changes that are best for our company and our industry. Our focus is on the best long-term interests of our company, our stockholders, and our other stakeholders.

The following sections summarize our corporate governance policies and practices, including our Board leadership structure and the responsibilities and activities of our Board and its committees. Our corporate governance documents, including our Corporate Governance Guidelines, our Board committee charters, and our Code of Conduct, are available under the ESG heading on the Investor Relations page of our website at investors.fedex.com.

Board Risk Oversight

The Board of Directors’ role in risk oversight at FedEx is consistent with the company’s leadership structure, with management having day-to-day responsibility for assessing and managing the company’s risk exposure and the Board and its committees providing oversight in connection with those efforts, with particular focus on ensuring that FedEx’s risk management practices are adequate and regularly reviewing the most significant risks facing the company. The Board performs its risk oversight role by using several different levels of review. Each Board meeting includes a strategic overview by the Chief Executive Officer that describes the most significant issues, including risks, affecting the company, and also includes business updates from each reporting segment CEO. In addition, at least annually, the Board reviews in detail the business and operations of each of the company’s reporting segments, including the primary risks associated with that segment. The Board also reviews the risks associated with the company’s financial forecasts and annual business plan.

Additionally, risks are identified and managed in connection with the company’s robust enterprise risk management (“ERM”) process. Our ERM process provides the enterprise with a common framework and terminology to ensure consistency in identification, reporting, and management of key risks. The ERM process is embedded in our strategic financial planning process, which ensures explicit consideration of risks that affect the underlying assumptions of strategic plans and provides a platform to facilitate integration of risk information in business decision-making.

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The Board has four standing committees. The Board has delegated to each of its committees responsibility for the oversight of specific risks that fall within the committee’s areas of responsibility.

Audit and Finance
Committee
   Cyber and Technology
Oversight Committee
               
             
   The Audit and Finance Committee reviews and discusses with management the company’s financial affairs, capital allocation and returns, strategic financial outlook, annual business plan, major financial and other risk exposures and the steps management has taken to monitor and control such exposures, and the implementation and effectiveness of the company’s compliance and ethics programs, including the Code of Conduct and the FedEx Alert Line. In addition, the Audit and Finance Committee is responsible for reviewing and discussing with management the guidelines and policies that govern the processes by which the company assesses and manages its exposure to all risk, including our ERM process. The ERM process culminates in an annual presentation to the Audit and Finance Committee on the key enterprise risks facing FedEx.               The Cyber and Technology Oversight Committee reviews and discusses with management the company’s cyber and technology-related risks, including network security, information security, and data privacy and protection, and the technologies, policies, processes, and practices for managing and mitigating such risks, and it reviews and discusses with management the cybersecurity, cyber-resiliency, and technology aspects of the company’s business continuity and disaster recovery capabilities and contingency plans.
                     
                     

Compensation and Human
Resources Committee
                
Governance, Safety, and
Public Policy Committee
               
            
  The Compensation and Human Resources Committee, or “Compensation & HR Committee,” reviews and discusses with management the relationship between the company’s compensation policies and practices and the company’s risk management, including the extent to which those policies and practices create or decrease risks for the company. In addition, the Compensation & HR Committee reviews and discusses with management the company’s key human resource management strategies and programs, including company culture; diversity, equity, and inclusion (“DEI”); workforce demographics; and enterprise health care programs. The Governance, Safety, and Public Policy Committee, or “GSPP Committee,” reviews and discusses with management, in light of the company’s risk exposure, the composition, structure, processes, and practices of the Board and the Board committees. In addition, the GSPP Committee reviews and discusses with management the company’s safety strategies, policies, programs, and practices and safety-related risk management strategies, programs, and initiatives; steps taken by management to identify, assess, and manage risks relating to the company’s political activities and expenditures; and corporate social responsibility (“CSR”) goals, strategies, and programs, including the management of sustainability- and climate-related risks.
   
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Board Oversight of Sustainability and Corporate Social Responsibility Matters

FedEx is well recognized as a leader not only in the transportation industry and for technological innovation, but also in global CSR. We understand that a sustainable global business is tied to our ESG commitments, strategies, and goals, and we are committed to connecting the world responsibly and resourcefully. Our CSR strategies and programs emphasize long-term performance that creates lasting, positive value for our business, society, and our stakeholders, including customers, team members, suppliers, communities, and stockholders. Our culture, principles, and emphasis on long-term performance have guided our company since our founding five decades ago. Key elements of our CSR strategy include environmental efficiency innovations; a sustainable supply chain; our “Safety Above All” commitment for all our operations; a diverse, equitable, and inclusive workplace; and the robust giving and volunteering platform known as FedEx Cares. We have aligned our CSR platform with our company’s mission and values and embedded it into our strategies, governance, operations, systems, and culture. We conduct regular ESG materiality assessments to make sure we remain focused on the right CSR priorities for the benefit of our business, our customers, our team members, our stockholders, and other key stakeholders.

The FedEx Enterprise Sustainability Council is responsible for setting, implementing, and reviewing our company-wide sustainability strategy and is chaired by our Chief Sustainability Officer. The Chief Sustainability Officer also oversees the company-wide implementation of our environmental management system and reviews performance on an annual basis. The Chief Sustainability Officer regularly reviews our sustainability programs with the GSPP Committee.

Our governance, operations, culture, and CSR priorities are closely aligned. The Board of Directors and its committees oversee our global CSR initiatives. The Board is responsible for reviewing and overseeing our culture and evaluating management’s efforts to align corporate culture with our stated values and long-term strategy. Additionally, the Board has delegated to each of its committees responsibility for the oversight of specific aspects of our corporate culture and other CSR activities that fall within the committee’s areas of responsibility.

The Audit and Finance Committee reviews and discusses with management legislative, regulatory, and other developments regarding ESG reporting and disclosures, including the alignment of our financial reporting and ESG disclosures; reviews the implementation and effectiveness of the company’s corporate integrity and compliance programs and internal controls and procedures relating to ESG disclosures; and, in consultation with the GSPP Committee, reviews our annual ESG Report.
   
The GSPP Committee reviews and discusses with management: (1) our CSR goals, strategies, and programs and management of sustainability- and climate-related risks, and, in consultation with the Audit and Finance Committee, our annual ESG Report; (2) our safety strategies, policies, programs, and practices; and (3) our participation in the political process, including our lobbying activities and expenditures.
   
The Compensation & HR Committee reviews and discusses with management the company’s key human resource management strategies and programs, including company culture; diversity, equity, and inclusion; workforce demographics; and enterprise healthcare programs.
   
The Cyber and Technology Oversight Committee reviews and discusses with management the company’s technologies, policies, processes, and practices for managing and mitigating cyber- and technology-related risks and monitors the company’s business continuity and disaster recovery capabilities and contingency plans.

FedEx is committed to actively supporting the communities we serve worldwide through the strategic investment of our people, resources, and network. We provide financial contributions, in-kind charitable shipping services, and volunteer efforts by our team members to help a variety of non-profit organizations achieve their goals and make a measurable impact on the world.

FedEx publishes an annual ESG Report describing how we think about our responsibilities in the area of global CSR that includes important goals and metrics demonstrating our commitment to fulfilling these responsibilities. Our 2022 ESG Report is available at fedex.com/en-us/sustainability/reports.html. The 2022 ESG Report is not incorporated by reference in, and does not form a part of, this proxy statement.

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Corporate Culture

We believe that maintaining a sound corporate culture furthers our corporate mission to produce superior financial returns for our stockholders by providing high value-added logistics, transportation, and related business services through our focused operating companies. In furtherance of its oversight responsibilities, the Board periodically discusses with the Chief Executive Officer and other members of management (1) the implementation and effectiveness of the company’s policies, practices, programs, and initiatives that promote a culture consistent with the company’s stated values and (2) how the company’s culture supports the achievement of its long-term strategic objectives.

The Board also engages with management regarding the development of the company’s corporate strategy by reviewing and approving the annual business plan, strategic acquisitions, and significant capital allocations. The Board is provided with regular updates on the company’s performance against its business plan and the progress of strategic initiatives. These actions allow the Board to have an ongoing and open dialogue with management regarding corporate strategy and long-term value creation.

Culture has been a priority for FedEx since operations began nearly 50 years ago, and each operating company has demonstrated its commitment in its own unique way. As we pursue a strategy to support the operating principles of compete collectively, operate collaboratively, and innovate digitally, our culture will now reflect this same alignment over time. Based on extensive research, a global enterprise-wide culture quality action team has identified enterprise values and behaviors to evolve our culture from now to next. Our five culture values are grounded in everything that makes FedEx special—culture fundamentals, strategic operating principles, brand, and reputation—reflect who we are, align us to what’s important, help make us resilient, and empower us to deliver great results. These values apply consistently to all team members, regardless of role, region, or operating company.

Take care of each other Commit to do good Drive business results Own outstanding Create what’s next

We put safety above all. We make “safety” a place, a habit, and a mindset. We bring our whole selves to work. We value our differences and believe every voice counts.

 

We seek connections. We seeks ways to protect our planet.

We do the right things the right way. We help communities thrive.

 

We know how our roles support the business. We deliver results aligned to our strategy. We invest wisely to drive profit. We create value for our stockholders.

We make every experience matter. We simplify and work smarter for our customers. We find ways to stand out from the crowd.

We are fast, flexible, and focused.

 

We anticipate the future. We stay curious. We act now to stay ahead. We provide a path to growth for everyone.

Workplace Priorities

At FedEx, our people form the foundation of our strong reputation and stand at the heart of our success. We are dedicated to recruiting, retaining, and developing our team members across the enterprise. Team member feedback is extremely valuable, and we provide several engagement methods, such as annual surveys, employee networks, and direct feedback, which help us understand and act upon employee concerns and expectations. We conduct annual surveys to measure employee perspectives on culture, engagement, and diversity. Senior leaders review these results to inform leadership development plans.

Safety

Our longstanding “Safety Above All” philosophy is the first and foremost value in every respect of our business. It is backed by strict policies, robust team member education, safety recognition awards, and continued investment in technology. Across the enterprise, we are committed to making our workplaces and communities safer for our employees, customers, and the public. The GSPP Committee oversees our safety strategies, policies, programs, and practices. In fiscal 2022, we amended the GSPP Committee’s charter to add “Safety” to the name of the Committee and expressly state that the Committee will review and discuss with management the company’s safety strategies, policies, programs, and practices and safety-related risk management strategies, programs, and initiatives.

We utilize safety management systems to reduce work-related injuries and illnesses. Each operating company implements policies and procedures to adhere to international standards and manage health and safety risks. Driving is a key responsibility for many team members throughout our organization. We ensure the safety of our drivers, as well as the people and communities

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with whom we share the road, by equipping current and new vehicles with innovative road safety technologies, such as video event data recorder technology, advanced driver-assistance systems, audible turn-by-turn directions to prevent drivers from looking at a screen for navigation assistance, auto-docking technology, GPS tracking to improve route safety, and other collision-avoidance features. In addition, FedEx Ground recently introduced new vehicle safety technologies and incentives for adoption by its service providers, as well as new eligibility standards for drivers employed by service providers.

During the COVID-19 pandemic, we implemented numerous measures to keep our team members, customers, and communities safe while operating on the front lines in impacted areas and delivering critical medical supplies around the world. Our team members demonstrated incredible resiliency in the face of adversity and did not lose sight of our long-term strategy. We remained agile and collaborated across our operating companies to build systems from the ground up to track positive cases, oversee employees return to work, and manage country–specific quarantine and testing regulations for team members around the world.

More information regarding our safety initiatives is available in the 2022 ESG Report at fedex.com/en-us/sustainability/reports.html.

Diversity, Equity, and Inclusion

We believe that DEI delivers a better future for all team members, customers, suppliers, and communities. As a global company, we see exceptional business and community value in the diversity of perspectives and experiences that our team members bring to work every day. We are committed to embracing DEI so everyone feels appreciated and valued. While we are proud of what we have achieved during our almost 50-year history, we know that DEI must always be at the forefront of our business strategy.

The FedEx workforce is as diverse as the world we serve, and we believe that everyone deserves respect. We are committed to being a diverse, equitable, and inclusive employer. We set, measure, and assess our DEI goals and progress through four strategic pillars: Our People; Our Education and Engagement; Our Communities, Customers, and Suppliers; and Our Story.

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While we provide a consistent framework for DEI, each operating company structures and operationalizes its approach separately to account for regional differences in regulations and cultures. During fiscal 2022, we continued to align our strategy with these pillars by investing in programs, initiatives, and people across our workforce, culture, marketplace, and communities. The most important outcomes of our DEI efforts have been the opportunities created for our team members to grow and advance their careers. We actively invest in recruiting, developing, and retaining a diverse workforce that reflects the communities we serve.

In furtherance of our efforts towards continued transparency regarding our workforce composition, we report the prior year gender, racial, and ethnic composition of our U.S. workforce by EEO-1 job category as set forth in the consolidated EEO-1 Reports filed by FedEx and its operating subsidiaries with the Equal Employment Opportunity Commission. These reports can be found on our DEI webpage at fedex.com/en-us/about/diversity-inclusion.html.

More information regarding our DEI initiatives is available in the 2022 ESG Report at fedex.com/en-us/sustainability/reports.html and on our DEI webpage at fedex.com/en-us/about/diversity-inclusion.html. The information on our DEI webpage is not incorporated by reference in, and does not form a part of, this proxy statement.

Climate Change and Progress Towards Our 2040 Goal

At FedEx, we understand our business has an impact on the environment, and we remain steadfast in our commitment to minimize these impacts. FedEx recognizes that climate change implications, such as severe weather events, greenhouse gas (“GHG”) emissions regulations, and increased public awareness of the impacts of climate change, pose strategic risks for our company and our stakeholders. FedEx has demonstrated its commitment to minimize our environmental impact through a history of sustainable practices.

In March 2021, we announced our ambitious goal to achieve carbon neutral operations by 2040 across our global operations’ Scope 1 and 2 emissions and our Scope 3 contracted transportation GHG emissions. To meet this goal, we are investing more than $2 billion over the next several years to support bold action in three key areas: vehicle electrification, sustainable energy, and carbon sequestration. In addition, we continue to leverage other approaches to reduce vehicle emissions, such as increased intermodal rail usage at FedEx Ground and FedEx Freight, which avoided nearly 600,000 metric tons of carbon dioxide equivalent (CO2e) in fiscal 2021 alone.

Our path to carbon neutral operations includes focus on the following areas:

Vehicle electrification – we are leveraging various innovative technologies to transition our pickup–and–delivery and last-mile fleets to electric vehicles.
   
Sustainable fuels – we support policy measures and incentives to enhance the availability and affordability of low-carbon fuels.
   
Fuel conservation and aircraft modernization – we continue to modernize our aircraft fleet and implement fuel-saving initiatives while facing challenges due to the COVID-19 pandemic.
   
Facilities – we are improving the efficiency of our facilities and reducing our Scope 2 emissions despite increased energy demand from electric vehicle charging.

Additional information regarding our climate change efforts is available in the 2022 ESG Report at fedex.com/en-us/sustainability/reports.html.

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Stockholder Engagement

We believe that thoughtful stockholder engagement is important, and we have a long history of such engagement. We have an active stockholder engagement program in which we meet regularly with our largest stockholders to discuss our business strategy, operations, sustainability and CSR programs, and corporate governance, as well as other topics of interest to them. Our stockholder engagement efforts allow us to better understand our stockholders’ priorities, perspectives, and concerns, and enable the company to effectively address issues that matter most to our stockholders.

We also give our stockholders the means by which they can communicate with our Board. As set forth in our Corporate Governance Guidelines, one of the responsibilities of each of our Lead Independent Director and Vice Chairman of the Board is to communicate with stockholders, as appropriate, and if so requested. Moreover, as discussed in more detail in “— Board Processes and Policies — Communications with Directors,” our stockholders have the ability to communicate directly with any director (including our Lead Independent Director or Vice Chairman of the Board), any Board committee, or the full Board.

Stockholder Engagement

 

     

Before Annual Meeting of Stockholders

    Discuss stockholder proposals with proponents

    Publish Annual Report and Proxy Statement, highlighting recent Board and company activities

    Engage stockholders and seek feedback on matters presented for their consideration

           

Annual Meeting of Stockholders

    Engage directly with stockholders and other stakeholders

    Receive voting results for management and stockholder proposals

     
           
           
           
           
 

Off-Season Engagement and Evaluation of Practices

    Engage with stockholders and other stakeholders regarding topics of interest, including our Board, corporate governance, executive compensation, and sustainability and CSR practices to better understand their viewpoints and inform Board discussions

    Attend and participate in investor and corporate governance-related events to learn about emerging trends and issues and further engage stockholders

    Evaluate potential changes to corporate governance or executive compensation practices in light of stockholder feedback and review of practices

   

After Annual Meeting of Stockholders

    Discuss voting results from annual meeting in light of existing corporate governance and executive compensation practices, as well as feedback received from stockholders, and determine if any follow-up actions are appropriate

    Review corporate governance trends, recent regulatory developments, and the company’s corporate governance documents, policies, and procedures to determine if any changes should be considered

    Determine topics for discussion during off-season stockholder engagement

 
           
           
           
           


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Engagement Highlights
Since our last annual meeting, we have engaged with a global and diverse group of over 200 stockholders, including actively managed funds, index funds, union and public pension funds, and socially responsible investment funds. This group represented approximately 50% of our outstanding shares. Participants included our President and Chief Executive Officer, Lead Independent Director and Chair of the GSPP Committee, Vice Chairman of the Board and Chair of the Audit and Finance Committee, Chair of the Compensation & HR Committee, Chief Sustainability Officer, Corporate Vice President – Human Resources, and legal and investor relations teams.
   
Focus Areas
Business Strategy and Performance Human Resource Management
Executive Compensation Board Governance, Composition, and Refreshment
Corporate Culture and DEI Climate Change and Other Sustainability Matters
       

Board Responsiveness to 2021 Nonbinding Stockholder Proposals

At our 2021 annual meeting, two stockholder proposals received majority support:

a proposal regarding a lobbying activity and expenditure report (Proposal 6 at the 2021 annual meeting); and
a proposal regarding shareholder ratification of termination pay (Proposal 8 at the 2021 annual meeting).

Following the 2021 annual meeting, with respect to these proposals, we requested meetings with our largest 15 institutional investors who own, in the aggregate, over 40% of our outstanding common stock and engaged with investors owning, in the aggregate, more than 35% of our common stock, to discuss their views regarding these proposals and solicit feedback used to develop our responses. The feedback received was shared with the Compensation & HR Committee and the GSPP Committee as well as the Board. Set forth below is a summary of our engagement efforts, the feedback we received, and our responsiveness.

Stockholder Proposal Regarding a Lobbying Activity and Expenditure Report

At our 2021 annual meeting of stockholders, a stockholder proposed that FedEx prepare a report, updated annually, disclosing FedEx’s lobbying activities and expenditures (Proposal 6), including: (1) FedEx’s policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications; (2) payments by FedEx used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient; (3) FedEx’s membership in and payments to any tax-exempt organization that writes and endorses model legislation; and (4) a description of management’s and the Board’s decision-making process and oversight for making payments described in (2) and (3) above.

The Board believes it is in the best interests of our stockholders for FedEx to be an effective participant in the political process, including direct and indirect political spending and engaging in lobbying activities and expenditures. We are subject to extensive regulation at the federal and state levels and are involved in a number of legislative initiatives across a broad spectrum of policy areas that can have an immediate and dramatic effect on our business and operations. We ethically and constructively promote legislative and regulatory actions that further the business objectives of FedEx and attempt to protect FedEx from unreasonable, unnecessary, or burdensome legislative or regulatory actions at all levels of government.

As more fully described in our Policy on Political Contributions (which is available under the ESG heading below “Governance” on the Investor Relations page of our website at investors.fedex.com), we actively participate in the political process, including direct and indirect political spending and engaging in lobbying activities and expenditures, and maintain memberships with a variety of trade associations with the ultimate goal of promoting and protecting the economic future of FedEx and our stockholders and employees. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures. FedEx’s political contributions and expenditures are made to further the best interests of the company and our stockholders and employees, and are made without regard to the personal political preferences of individual FedEx Board members, officers, and employees.

The GSPP Committee assists the Board in its oversight of our lobbying and political activities and expenditures.

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What We Discussed

Stockholders approved of our Policy on Political Contributions and Board-level oversight of our lobbying activities and expenditures and other political activities and expenditures through the GSPP Committee.
Stockholders sought more transparency around our political activities, particularly with respect to our participation in trade associations and rationale for participating in the political process, including lobbying activities.
Stockholders requested information on our direct and indirect political spending and lobbying expenditures.
Stockholders recommended making publicly available information on our lobbying and political activities and expenditures easier to find.

How We Responded

We enhanced our disclosures about FedEx’s public policy and advocacy and created a new website page to centralize these disclosures, which is publicly available under the ESG heading below “Governance” on the Investor Relations page of our website at investors.fedex.com. This information includes:
  our policies and procedures governing our participation in the political process and lobbying activities, as described in our Policy on Political Contributions;
  a discussion of management’s decision-making processes relating to lobbying activities and expenditures and other political activities and related Board oversight;
  information on our U.S. federal and state lobbying activities, including links to the quarterly reports we file with the U.S. House of Representatives and the U.S. Senate disclosing a list of our lobbying activities and information on how to access lobbying disclosure reports filed with the Secretary of State of each of the U.S. 50 states and the District of Columbia;
  information on the FedEx non-partisan political action committee (“FedExPAC”), including links to the monthly and year-end reports filed by FedExPAC with the Federal Election Commission;
  a discussion of our participation and membership in trade associations (some of which utilize a portion of membership dues for non-deductible state and federal lobbying and political expenditures), including the reasons we believe it is important to maintain memberships with a variety of trade associations and industry organizations; our process for evaluating our trade association memberships; Board oversight of our membership in trade associations; and a list of the trade associations receiving $50,000 or more in annual payments from FedEx; and
  a list of our corporate contributions to groups organized under section 501(c)(4) or section 527 of the Internal Revenue Code.
We renamed our Nominating and Governance Committee the “Governance, Safety, and Public Policy Committee” to better reflect our commitment to Board oversight around our public policy efforts and acknowledge the Committee’s important role in oversight of our lobbying and political activities and expenditures.
We amended the GSPP Committee’s charter to expressly state that the Committee will review and discuss with senior leadership:
  public policy, political, and legislative trends and matters that affect or may affect the company’s business, performance, strategies, or reputation;
  the company’s political activities and participation in the political process, including direct and indirect political spending and lobbying activities and expenditures;
  the company’s contributions to trade associations and other tax-exempt organizations that engage in political activities;
  the steps management has taken to identify, assess, and manage risks relating to the company’s political activities and expenditures; and
  the company’s reporting of its political activities and expenditures.

Stockholder Proposal Regarding Shareholder Ratification of Termination Pay

At our 2021 annual meeting of stockholders, a stockholder proposed that FedEx seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus (Proposal 8).

Our executive compensation program is designed not only to retain and attract highly qualified and effective executives, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of stockholders and reward them for doing so. Accordingly, our Board of Directors and Compensation & HR Committee believe that there should be a strong relationship between pay and corporate performance (both financial results and stock price), and our executive compensation program reflects this belief. See “Executive Compensation — Compensation Discussion and Analysis” beginning on page 48. Each of FedEx’s executive officers is an at-will employee and, as such, does not have an employment contract. Accordingly, there are no payments or benefits that are triggered by any termination event (including resignation and severance) other than retirement,

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death, or permanent disability or in connection with a change of control of FedEx. See “Executive Compensation — Potential Payments Upon Termination or Change of Control — Benefits Triggered by Change of Control or Termination after Change of Control — Stock Option and Restricted Stock Plans” and “— Management Retention Agreements.”

What We Discussed

Stockholders did not express concerns with any actual historical severance or separation payments made by FedEx to former executives.
Stockholders expressed interest in providing some protection against extreme payouts in the future but generally indicated that such limitations should not apply in the event of death or permanent disability.
Stockholders were concerned that the excise tax provision of the 2019 Plan, which included a “best net” provision, created the potential for excise tax to be triggered upon acceleration of equity awards under the 2019 Plan upon a change of control of FedEx.
Stockholders indicated that our prior disclosures regarding potential payments due to the named executive officers could be enhanced and expressed a preference for a single table showing potential payments in all termination scenarios.

How We Responded

We adopted a policy that we will not pay or enter into any new agreement with an executive officer that provides for severance benefits in connection with the executive officer’s voluntary or involuntary termination (unless due to death or permanent disability or in connection with a change of control) in an amount that exceeds 2.99 times the sum of the executive officer’s base salary and target AIC payout for the year of termination (with the value of any unvested equity awards that accelerate on the applicable termination of employment event calculated according to Section 280G of the Internal Revenue Code (“Section 280G”)) unless approved or ratified by stockholders. This policy, in conjunction with the terms of our Management Retention Agreements and the amendment to our 2019 Plan described in the paragraph below, limits the amount of payments to any executive officer upon a termination (other than death or permanent disability), including in connection with a change of control, to less than three times the individual’s Section 280G “base amount” and was viewed favorably by substantially all the investors with whom it was discussed.
We also amended the excise tax provision of our 2019 Plan to provide that if the value of any unvested equity awards that accelerate in connection with a change of control of FedEx triggers an excise tax under Section 4999 of the Internal Revenue Code, then the amount of the individual’s awards eligible to accelerate will be reduced, to the extent possible, to one dollar ($1) less than three times the individual’s Section 280G “base amount” — in other words, the 2019 Plan now provides for a “280G cutback” instead of a “best net” excise tax provision.
We enhanced the disclosure regarding potential payments to the named executive officers upon termination of employment to show all potential termination events and related potential payments together in one comprehensive table. See “Executive Compensation — Potential Payments Upon Termination or Change of Control — Benefits Triggered by Change of Control or Termination after Change of Control — Quantification of Potential Payments Upon Termination or Change of Control” on page 86.

Executive Management Succession Planning

The Board of Directors has in place an effective planning process to select successors to the Chief Executive Officer and other members of executive management. The GSPP Committee, in consultation with the Chief Executive Officer, annually reports to the Board on executive management succession planning. The entire Board works with the GSPP Committee and the Chief Executive Officer to evaluate potential successors to the CEO and other members of executive management. Through this process, the Board receives information that includes qualitative evaluations of potential successors to the Chief Executive Officer and other executives. Each Board member has complete and open access to any member of management. We believe this enhances the Board’s oversight of succession planning. The Chief Executive Officer will at all times make available, and periodically provides to the Board, his recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. Additionally, the Board periodically reviews and revises as necessary the company’s emergency executive management succession plan, which details the actions to be taken by specific individuals in the event a member of executive management suddenly dies, departs unexpectedly, or becomes incapacitated.

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Board Structure

Board Leadership Structure

FedEx’s strong and independent Board of Directors effectively oversees our management and provides vigorous oversight of FedEx’s business and affairs in support of our mission of producing superior financial returns for our stockholders by providing high value-added logistics, transportation, and related business services through focused operating companies.

The leadership structure of our Board of Directors includes:

A separate Executive Chairman and Chairman of the Board and Chief Executive Officer, as well as an independent Vice Chairman, who is the designated successor to the Chairman of the Board.       Independent, active, and effective directors of equal importance and rights, who all have the same opportunities and responsibilities in providing vigorous oversight of the effectiveness of management policies.      

A Lead Independent Director.

The chairperson of the GSPP Committee, who is elected annually by a majority of the independent Board members, serves as the Lead Independent Director.

Currently, the roles of FedEx Chairman of the Board and Chief Executive Officer are held by two separate individuals. From 1977 until May 31, 2022, Frederick W. Smith, FedEx’s founder, served as both Chairman of the Board of Directors and Chief Executive Officer. On March 25, 2022, in connection with the announcement that Mr. Smith was stepping down as Chief Executive Officer and that Rajesh Subramaniam had been promoted to the role of President and Chief Executive Officer, effective June 1, 2022, the Board determined to name Mr. Smith as Executive Chairman. As Executive Chairman, Mr. Smith will focus on Board governance as well as issues of global importance, including sustainability, innovation, and public policy. This separation of the roles of Chairman and Chief Executive Officer allows FedEx to leverage Mr. Smith’s extensive knowledge of FedEx while transitioning full oversight of FedEx’s strategic initiatives and business plans to Mr. Subramaniam. In addition, effective March 25, 2022, the Board named R. Brad Martin, the independent chair of the Audit and Finance Committee, as Vice Chairman of the Board and designated him as the successor to the Chairman of the Board, meaning that he will become the independent Chairman of the Board at such time as Mr. Smith leaves the Board. The Board also determined to maintain the policy requiring that if the Chairman of the Board is the Chief Executive Officer, an Executive Chairman, or otherwise not independent, the chairperson of the GSPP Committee shall serve as Lead Independent Director.

The current Board leadership model, when combined with the composition of the Board, the strong leadership of our independent directors, Board committees, Vice Chairman, and Lead Independent Director, and the highly effective corporate governance structures and processes in place, strikes an appropriate balance between consistent leadership and independent oversight of FedEx’s business and affairs. As set forth in our Corporate Governance Guidelines, the Lead Independent Director has the following responsibilities and authority:

presides at executive sessions of the non-management and independent Board members and, if a Vice Chairman of the Board is not serving, presides at all other meetings of the Board of Directors at which the Chairman of the Board is not present;
serves as a liaison between the Chairman of the Board and independent Board members, it being understood that all Board members have complete and open access to any member of management;
reviews and approves Board meeting agendas and Board meeting schedules;
consults with the Chairman of the Board with regard to other information sent to the Board of Directors in connection with Board meetings or other Board action;
may call meetings of the independent Board members as he deems necessary or appropriate; and
is available to communicate with stockholders of the Company, as appropriate, if requested by such stockholders.

In addition, under our Corporate Governance Guidelines, the Board may elect an independent director to serve as Vice Chairman, and such Vice Chairman will serve as the designated successor to the Chairman of the Board. FedEx’s Bylaws provide that a Vice Chairman of the Board shall exercise the powers and perform the duties of the Chairman of the Board when the Chairman of the Board is not present. In addition, the Vice Chairman of the Board:

works closely with the Chairman of the Board to assist the Chairman of the Board in carrying out his duties;
provides such other assistance as the Chairman of the Board may request;
communicates with stockholders of the company, as appropriate, if requested by such stockholders; and
has additional responsibilities as may be prescribed by the Board from time to time.

 

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The Board believes that FedEx’s Bylaws and Corporate Governance Guidelines help ensure that strong and independent directors will continue to play the central oversight role necessary to maintain FedEx’s commitment to the highest quality corporate governance. Under our Bylaws and Corporate Governance Guidelines, the Board maintains the following practices, in addition to those described above:

     
Directors stand for election annually by majority vote.       Under our Bylaws, all members of our Board of Directors are elected annually. In addition, our Bylaws require that we use a majority-voting standard in uncontested director elections in which a director nominee must receive more votes cast “for” than “against” in order to be elected.
Our independent directors hold regular executive sessions.   Our independent Board members meet at regularly scheduled executive sessions without management present. The Chairman of the Board, if independent, or the Lead Independent Director conducts and presides at these meetings. In addition, the Lead Independent Director may call such meetings of the independent Board members as he or she deems necessary or appropriate, may be designated to preside at any Board or stockholder meeting if no Vice Chairman is serving, and presides at all Board meetings at which the Chairman of the Board or Vice Chairman (if serving) is not present.
Board members may submit agenda items and request information.   Each Board member may place items on the agenda for Board meetings, raise subjects that are not on the agenda for that meeting, or request information that has not otherwise been provided to the Board. Additionally, the Lead Independent Director (if serving) reviews and approves all Board meeting schedules and agendas and consults with the Chairman of the Board regarding other information sent to the Board in connection with Board meetings or other Board action.
Our Board members interact with management.   Consistent with our philosophy of empowering each member of our Board of Directors, each Board member has complete and open access to any member of management and to the chairperson of each Board committee for the purpose of discussing any matter related to the work of such committee. The Chairman of the Board (if independent) and Lead Independent Director also serve as liaisons, but not a buffer, between the Chief Executive Officer and independent Board members.
Our directors are encouraged to interact with stockholders.   If any of our major stockholders asks to speak with any Board member on a matter related to FedEx, we encourage that director to make himself or herself available and will facilitate such interaction. Additionally, the Lead Independent Director and Vice Chairman of the Board are available to communicate with stockholders, as appropriate, if requested by such stockholders.
Our directors can request special Board meetings.   Special meetings of the Board can be called by the Chairman of the Board, the Chief Executive Officer, or the Vice Chairman or at the request of two or more directors.
The Board or any Board committee can retain independent advisors.   The Board and each Board committee have the authority to retain independent legal, financial, and other advisors as they deem appropriate.
Our Bylaws provide stockholders a meaningful proxy access right.   Our Bylaws provide stockholders a meaningful proxy access right. The Bylaws include the following terms: a 3% ownership threshold and 3-year holding period requirement; a cap on the number of director nominees at two directors or 20% of the Board, whichever is greater; and a stockholder group aggregation limit of 20.
Our Bylaws provide stockholders a right to call a special meeting.   Our Bylaws provide holders of 20% or more of our common stock the right to call a special meeting, subject to the terms of our Bylaws.

Board Committees

The Board of Directors has four standing committees. In 2022, the Board renamed each of the committees to better reflect their respective oversight responsibilities. The four committees are the Audit and Finance Committee, Compensation & HR Committee, Cyber and Technology Oversight Committee, and GSPP Committee. Each committee’s written charter, as adopted by the Board of Directors, is available on the Investor Relations page of our website at investors.fedex.com under the ESG heading below “Board of Directors.” Committee memberships are as follows:

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AUDIT AND FINANCE COMMITTEE

 

COMMITTEE MEMBERS:

R. BRAD MARTIN*
(CHAIRMAN)

Marvin R. Ellison
Kimberly A. Jabal
Amy B. Lane**
Frederick P. Perpall
Joshua Cooper Ramo
V. James Vena**

FY22 MEETINGS HELD
10

COMMITTEE REPORT
page 91

*   Audit Committee Financial Expert

** Joined effective June 14, 2022

     

COMMITTEE FUNCTIONS:

  Oversees the independent registered public accounting firm’s qualifications, independence, and performance;

  Assists the Board of Directors in its oversight of (i) the integrity of FedEx’s financial statements, (ii) the effectiveness of FedEx’s disclosure controls and procedures and internal control over financial reporting, (iii) the performance of the internal auditors, (iv) the Company’s controls and procedures related to its ESG disclosures, and (v) the Company’s financial affairs, including capital structure, allocation, and returns;

  Preapproves all audit and allowable non-audit services to be provided by FedEx’s independent registered public accounting firm;

  Reviews and discusses with management and the Board of Directors (i) the guidelines and policies that govern the processes by which the company assesses and manages its exposure to risk and (ii) the company’s major financial and other risk exposures and the steps management has taken to monitor and control such exposures;

  Oversees FedEx’s integrity and compliance programs, including compliance with legal and regulatory requirements, and reviews and discusses with management legislative, regulatory, and other developments regarding ESG reporting and disclosures; and

  Reviews and discusses with management and the Board of Directors (i) the Company’s annual business plan and strategic financial outlook, (ii) capital expenditure and lease requests (subject to Board-established approval thresholds) and the company’s return on invested capital and other financial performance metrics, and (iii) the Company’s capital structure and allocation, cash dividend policy, stock repurchase authorizations, debt and equity financings, and material credit agreements.

 

COMPENSATION AND HUMAN RESOURCES COMMITTEE

 

COMMITTEE MEMBERS:

PAUL S. WALSH
(CHAIRMAN)

Susan Patricia Griffith
Shirley Ann Jackson*
Amy B. Lane**
Susan C. Schwab

FY22 MEETINGS HELD
6

COMMITTEE REPORT
page 48

*   Dr. Jackson will retire immediately before the 2022 annual meeting

** Joined effective June 14, 2022

     

COMMITTEE FUNCTIONS:

  Evaluates, together with the independent members of the Board, the performance of each of FedEx’s Executive Chairman and Chief Executive Officer and recommends their compensation for approval by the independent directors;

  Reviews and discusses with management the Compensation Discussion and Analysis and produces a report recommending whether the Compensation Discussion and Analysis should be included in the proxy statement;

  Oversees the administration of FedEx’s equity compensation plans and reviews the strategies relating to, and costs and structure of, key employee benefit and fringe-benefit plans and programs;

  Helps discharge the Board’s responsibilities relating to the compensation of executive management; and

  Reviews and discusses with management the company’s key human resource management strategies and programs, including company culture; diversity, equity, and inclusion; workforce demographics; and enterprise health care programs.

 

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CYBER AND TECHNOLOGY OVERSIGHT COMMITTEE

 

COMMITTEE MEMBERS:

JOSHUA COOPER RAMO
(CHAIRMAN)

Kimberly A. Jabal
Susan C. Schwab

FY22 MEETINGS HELD
6

     

COMMITTEE FUNCTIONS:

  Reviews major cyber and technology–related projects and technology architecture decisions;

  Assesses whether FedEx’s cyber and technology programs effectively support the company’s business objectives and strategies;

  Assists FedEx’s Board of Directors in oversight of cyber and technology-related risks and management’s efforts to monitor and mitigate those risks; and

  Advises FedEx’s senior Information Technology management team and the Board of Directors on cyber and technology-related matters.

 

GOVERNANCE, SAFETY, AND PUBLIC POLICY COMMITTEE

 

COMMITTEE MEMBERS:

DAVID P. STEINER
(CHAIRMAN)

Marvin R. Ellison
Susan Patricia Griffith
Shirley Ann Jackson*
Frederick P. Perpall
V. James Vena**

FY22 MEETINGS HELD
6

*   Dr. Jackson will retire immediately before the 2022 annual meeting

** Joined effective June 14, 2022

     

COMMITTEE FUNCTIONS:

  Identifies individuals qualified to become Board members;

  Recommends to the Board director nominees to be proposed for election at the annual meeting of stockholders;

  Recommends to the Board directors for appointment to Board committees;

  Assists the Board in determining director independence, overseeing Board and committee evaluations, and developing and implementing effective corporate governance programs;

  Reviews and discusses with management the company’s safety strategies, policies, programs, and practices and safety-related risk management strategies, programs, and initiatives;

  Reviews and discusses with management (i) public policy, political, and legislative trends and matters that affect or may affect the company’s business, performance, strategies, or reputation; (ii) the company’s political activities and participation in the political process; (iii) the company’s contributions to trade associations and other tax-exempt organizations that engage in political activities; (iv) the steps management has taken to identify, assess, and manage risks relating to the company’s political activities and expenditures; (v) the company’s reporting of its political activities and expenditures, and (vi) the company’s Policy on Political Contributions; and

  Reviews and discusses with management the company’s CSR goals, strategies, and programs, including the management of sustainability- and climate-related risks, and, in consultation with the Audit and Finance Committee, reviews and discusses with management the company’s annual ESG Report.

In addition, as discussed above under “— The Board’s Role and Responsibilities — Board Risk Oversight,” each Board committee has responsibility for the oversight of specific risks that fall within the committee’s areas of responsibility. Also, the Audit and Finance Committee is responsible for reviewing and discussing with management the guidelines and policies that govern the processes by which the company assesses and manages its exposure to all risk, including our ERM process.

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As discussed above, Dr. Jackson is retiring as a director immediately before this year’s annual meeting and is not standing for reelection. The Board of Directors has approved reconstituting the committees so that, immediately following the annual meeting, if all of the director nominees are elected, committee memberships will be as follows:

       
             
AUDIT AND FINANCE COMMITTEE       COMPENSATION AND HUMAN RESOURCES COMMITTEE       CYBER AND TECHNOLOGY OVERSIGHT COMMITTEE       GOVERNANCE, SAFETY, AND PUBLIC POLICY COMMITTEE
             

R. Brad Martin

(Chairman)
Marvin R. Ellison
Kimberly A. Jabal
Amy B. Lane
Frederick P. Perpall
V. James Vena

 

Paul S. Walsh

(Chairman)
Susan Patricia Griffith
Amy B. Lane
Nancy A. Norton
Susan C. Schwab

 

Joshua Cooper Ramo

(Chairman)
Stephen E. Gorman
Kimberly A. Jabal
Nancy A. Norton
Susan C. Schwab

 

David P. Steiner

(Chairman)
Marvin R. Ellison
Stephen E. Gorman
Susan Patricia Griffith
Frederick P. Perpall
V. James Vena

Board Meetings and Meeting Attendance

During fiscal 2022, the Board of Directors held six regular meetings and one special meeting. The average attendance of all directors at Board and committee meetings was 98%. Each director attended at least 90% of the aggregate meetings of the Board and any committees on which he or she served that were held during the periods that he or she served as a director. Our policy on director attendance at meetings can be found in our Corporate Governance Guidelines, which are available under the ESG heading on the Investor Relations page of our website at investors.fedex.com.

Attendance at Annual Meeting of Stockholders

FedEx expects all Board members to attend annual meetings of stockholders. Each then-current member of the Board of Directors attended the 2021 annual meeting of stockholders.

Board Processes and Policies

Director Mandatory Retirement

FedEx’s Corporate Governance Guidelines provide that a non-management director must retire immediately before the annual meeting of FedEx’s stockholders during the calendar year in which he or she attains age 75. Under this policy, a non-management director may not be nominated to a new term if he or she would be age 75 or older at the end of the calendar year in which the election is held. In order to provide the GSPP Committee and the Board of Directors greater flexibility in director succession planning, the policy provides that the Board of Directors, upon the recommendation of the GSPP Committee, may grant an exception to the mandatory retirement provision for a specific director, with each such exception required to be renewed annually.

Pursuant to this policy, Dr. Jackson is retiring as a director immediately before this year’s annual meeting and the Board did not nominate her for reelection.

Policy on Poison Pills

The Board of Directors has adopted a policy requiring stockholder approval for any future “poison pill” prior to or within twelve months after adoption of the poison pill. (A poison pill is a device used to deter a hostile takeover. Note that FedEx does not currently have, nor have we ever had, a poison pill.) The policy on poison pills is included in FedEx’s Bylaws and Corporate Governance Guidelines.

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Policy on Review and Preapproval of Related Person Transactions

The Board of Directors has adopted a Policy on Review and Preapproval of Related Person Transactions, which is included in FedEx’s Corporate Governance Guidelines. The policy requires that all proposed related person transactions (as defined in the policy) and all proposed material changes to existing related person transactions be reviewed and preapproved by the GSPP Committee. To the extent the related person (as defined in the policy) is a director or immediate family member of a director, the transaction or change must also be reviewed and preapproved by the full Board. The policy provides that a related person transaction or a material change to an existing related person transaction may not be preapproved if it would:

Interfere with the objectivity and independence of any related person’s judgment or conduct in carrying out his or her duties and responsibilities to FedEx;
Not be fair as to FedEx; or
Otherwise be opposed to the best interests of FedEx and its stockholders.

The policy requires the GSPP Committee to annually (i) review each existing related person transaction that has a remaining term of at least one year or remaining payments of at least $120,000, and (ii) determine, based upon all material facts and circumstances and taking into consideration our contractual obligations, whether it is in the best interests of FedEx and our stockholders to continue, modify, or terminate the transaction or relationship.

Communications with Directors

Stockholders and other interested parties may communicate directly with the entire Board or any member (including the Lead Independent Director or Vice Chairman), committee, or group of independent directors of the Board of Directors by writing to: FedEx Corporation Board of Directors, c/o Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120. Please specify to whom your letter should be directed. The Corporate Secretary of FedEx will review all such correspondence and regularly forward to the Board a summary of all such correspondence and copies of all correspondence that, in his opinion, deals with the functions of the Board or its committees or that he otherwise determines requires the attention of any member, group, or committee of the Board of Directors. Board members may at any time review a log of all correspondence received by FedEx that is addressed to Board members and request copies of any such correspondence.

Policy Regulating Trading by Insiders

We have comprehensive and detailed policies (memorialized in the FedEx Securities Manual) that regulate trading by our insiders, including Board members. The Securities Manual includes information regarding quiet periods, explains when transactions in FedEx stock are permitted, and contains a mandatory pre-clearance policy for transactions in FedEx securities by certain insiders, including Board members. The Securities Manual prohibits insiders, including Board members, from trading (or tipping others to trade) in FedEx securities on the basis of “material, non-public information” until the information has been disclosed to the public. The policy explains the principles governing “material, non-public information” and provides examples of the types of events or information that may be considered material. The Securities Manual, including the examples and contextual information contained therein, are reviewed regularly and updated, as applicable.

The Securities Manual and our Corporate Governance Guidelines also set forth certain types of transactions in FedEx securities that are always prohibited, even when permitted by law, in order to further align the interests of our executives and directors with our stockholders’ interests. Specifically, (1) publicly traded (or exchange-traded) options, such as puts, calls, and other derivative securities; (2) short sales, including “sales against the box”; and (3) hedging or monetization transactions designed to limit the financial risk of ownership, including prepaid variable forward contracts, equity swaps, collars, exchange funds, and other similar transactions, are prohibited.

The Securities Manual and our Corporate Governance Guidelines also prohibit margin accounts and pledges; however, our Lead Independent Director (if serving) and the Executive Vice President, General Counsel and Secretary, acting together, may grant an exception to the prohibition against holding company securities in a margin account or pledging company securities on a case-by-case basis to any Board member, the Executive Chairman (if serving), any non-independent Chairman of the Board, or the Chief Executive Officer if he or she clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. If the Chairman of the Board is independent, such exceptions may be granted by the Chairman of the Board and the Executive Vice President, General Counsel and Secretary to the Chief Executive Officer or any Board member other than the Chairman of the Board, and by the other independent members of the Board and the Executive Vice President, General Counsel and Secretary to the Chairman of the Board. The Executive Vice President, General Counsel and Secretary may grant case-by-case exceptions for other company officers and employees and will inform the Chairman of the Board and the Lead Independent Director (if serving) of any such exception granted.

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Corporate Governance Matters – Directors’ Compensation

Stock Ownership Goal for Directors and Senior Officers

In order to encourage significant stock ownership by our directors and senior officers, and to further align their interests with the interests of FedEx’s stockholders, the Board of Directors has established a goal that (a) each non-management director own FedEx shares valued at five times his or her annual retainer fee within five years after joining the Board and (b) within five years after being appointed to his or her position, each member of senior management own FedEx shares valued at the following multiple of his or her annual base salary:

SENIOR MANAGEMENT POSITION       OWNERSHIP GOAL        
Executive Chairman (if serving)     6x annual base salary
President and Chief Executive Officer     6x annual base salary
Other FedEx Executive Officers, including the Chief Executive Officers of FedEx Express, FedEx Ground, and FedEx Freight     3x annual base salary
Executive Vice Presidents of FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services     2x annual base salary
Certain Other Senior Officers     1x annual base salary

For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock options are not. The Board also recommends that each director and senior officer retain shares acquired upon stock option exercises until his or her goal is met. The stock ownership goal is included in FedEx’s Corporate Governance Guidelines. As of July 25, 2022, each director currently serving owned sufficient shares to comply with this goal or was within the five-year period to obtain compliance. In addition, each executive officer owned sufficient shares to comply with this goal or was within the five-year period to attain compliance.

Directors’ Compensation

Outside Directors’ Compensation

During fiscal 2022 non-management (outside) directors were paid an annual retainer of $140,000. Chairpersons of the Compensation & HR, Cyber and Technology Oversight, and GSPP Committees were paid an additional annual fee of $15,000. The Audit and Finance Committee chairperson was paid an additional annual fee of $25,000. Non-employee directors may elect to receive their annual retainer in all cash, all shares, or 50% in cash and 50% in shares. The number of retainer shares issued was based on the fair market value of FedEx’s common stock on the 2021 annual meeting date (the average of the high and low prices of the stock on the New York Stock Exchange (“NYSE”)), with any fractional amounts paid in cash. In addition, each outside director who was elected at FedEx’s 2021 annual meeting received a stock option for 2,850 shares of FedEx common stock.

Frederick W. Smith and Rajesh Subramaniam, the only directors who are also FedEx employees, do not receive any additional compensation for serving as a director.

The Compensation & HR Committee annually reviews director compensation, including, among other things, comparing FedEx’s director compensation practices with those of other companies with annual revenues between $25 billion and $100 billion (this year’s comparison group included 86 companies, which are listed in Appendix A, and was based on proxy statement data provided by a third-party compensation data provider). Before making a recommendation regarding director compensation to the Board, the Compensation & HR Committee considers that the directors’ independence may be compromised if compensation exceeds appropriate levels or if FedEx enters into other arrangements beneficial to the directors.

Retirement Plan for Outside Directors

In July 1997, the Board of Directors of FedEx Express (FedEx’s predecessor) voted to freeze the Retirement Plan for Outside Directors (that is, no further benefits would be earned under this plan). Concurrent with the freeze, the Board amended the plan to accelerate the vesting of the benefits for each outside director who was not yet vested under the plan. This plan is unfunded and any benefits under the plan are general, unsecured obligations of FedEx. Once all benefits are paid from the plan, it will be terminated.

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Corporate Governance Matters – Directors’ Compensation

Paul S. Walsh is the only director who served on the Board during fiscal 2022 who is entitled to benefits under this plan. Mr. Walsh has not yet received any plan benefits, which will be paid as a single lump-sum distribution on or before the fifteenth business day of the month immediately following the date of Mr. Walsh’s retirement. In the event of Mr. Walsh’s death, his surviving spouse shall be entitled to receive the lump-sum payment. The following table sets forth the amount payable to Mr. Walsh assuming a hypothetical retirement date of June 1, 2022.

NAME       LUMP SUM
PAYMENT
AMOUNT
($)
 
P.S. Walsh   71,146 (1) 

 

(1)  Discounted from the age 60 normal retirement date provided for in the plan.

Fiscal 2022 Director Compensation

The following table sets forth information regarding the compensation of FedEx’s non-employee (outside) directors for the fiscal year ended May 31, 2022:

NAME       FEES
EARNED
OR PAID
IN CASH
($)(1)
      STOCK
AWARDS
IN LIEU
OF CASH
RETAINER
($)(2)
      OPTION
AWARDS
($)(3)(4)
      ALL OTHER
COMPENSATION
($)
      TOTAL
($)
M.R. Ellison   70,168   69,832   179,994     319,994
S.P. Griffith   109   139,891   179,994     319,994
J.C. Inglis(5)          
K.A. Jabal   140,000     179,994     319,994
S.A. Jackson   140,000     179,994     319,994
A.B. Lane(6)          
R.B. Martin   25,109   139,891   179,994     344,994
F.P. Perpall(7)   54,770   54,430   141,433     250,633
J.C. Ramo   19,159   139,891   179,994     339,044
S.C. Schwab   70,168   69,832   179,994     319,994
D.P. Steiner   155,000     179,994     334,994
V.J. Vena(6)          
P.S. Walsh   155,000     179,994     334,994

 

(1) Includes (a) retainer payments and committee chairperson fees (as applicable) and (b) cash paid in lieu of fractional shares issued to Messrs. Ellison, Perpall, and Ramo, Ms. Griffith, and Ambassador Schwab in connection with their election to receive shares of FedEx’s common stock in lieu of all or a portion of their retainer fees. Mr. Ramo received a payment of $4,050 for his service as chairperson of the Cyber and Technology Oversight Committee from June 21, 2021, through the date of the 2021 annual meeting of stockholders. See “— Outside Directors’ Compensation” above.
(2) Messrs. Martin and Ramo and Ms. Griffith elected to receive 100% of their annual retainer ($140,000) in shares of FedEx’s common stock (615 shares each), and Mr. Ellison and Ambassador Schwab elected to receive 50% of their annual retainer ($70,000) in shares of FedEx’s common stock (307 shares each). The number of shares received was determined by dividing the dollar amount of the retainer to be paid in shares by the fair market value of our common stock on the date of the 2021 annual meeting of stockholders ($227.465), rounded down to the nearest whole share. Mr. Perpall elected to receive 50% of his prorated annual retainer ($54,600) in shares of FedEx’s common stock (224 shares). The number of shares received was determined by dividing the dollar amount of the retainer to be paid in shares by the fair market value of our common stock on December 13, 2021 ($242.99), rounded down to the nearest whole share.
(3) On September 27, 2021, each outside director elected at the 2021 annual meeting received a stock option for 2,850 shares of common stock. On December 13, 2021, following his appointment to the Board, Mr. Perpall received a stock option for 1,992 shares of common stock. The grant date fair value of each such option was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 and is set forth in this column. Assumptions used in the calculation of these amounts are included in note 11 to our audited consolidated financial statements for the fiscal year ended May 31, 2022, included in our Annual Report on Form 10-K for fiscal 2022. Stock options granted to the outside directors generally vest fully one year after the grant date.

 

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(4)The following table sets forth the aggregate number of outstanding stock options held by each current outside director listed in the above table as of May 31, 2022:
NAME       OPTIONS
OUTSTANDING
M.R. Ellison   26,685
S.P. Griffith   14,888
J.C. Inglis(5)  
K.A. Jabal   12,810
S.A. Jackson   8,220
A.B. Lane(6)  
R.B. Martin   35,105
F.P. Perpall(7)   1,992
J.C. Ramo   24,150
S.C. Schwab   30,385
D.P. Steiner   30,385
V. J. Vena(6)  
P.S. Walsh   30,385

 

(5) John C. (“Chris”) Inglis resigned from the Board of Directors on June 21, 2021, to become the U.S. National Cyber Director.
(6) Ms. Lane and Mr. Vena were first appointed to the Board on June 14, 2022.
(7) Mr. Perpall was first appointed to the Board on December 13, 2021.

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EXECUTIVE COMPENSATION

Proposal 2

Advisory Vote to Approve Named Executive Officer Compensation    

 

We are asking stockholders to approve, on a non-binding basis, the following advisory resolution at the annual meeting:

“RESOLVED, that the compensation paid to FedEx’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the accompanying compensation tables and the related narrative discussion, is hereby APPROVED.”

This advisory vote is not intended to address any specific element of executive compensation, but instead is intended to address the overall compensation of the named executive officers as disclosed in this proxy statement. Consistent with the results of the 2017 stockholder vote on the frequency of its “say-on-pay” advisory vote, FedEx holds the “say-on-pay” advisory vote annually.

Our executive compensation program is designed not only to retain and attract highly qualified and effective executives, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of stockholders and reward them for doing so. Accordingly, our Board of Directors and Compensation & HR Committee believe that there should be a strong relationship between pay and corporate performance (both financial results and stock price), and our executive compensation program reflects this belief. As more fully discussed in the Compensation Discussion and Analysis beginning on page 48:

Annual and long-term incentive payments and stock options continue to represent a significant portion of our executive compensation program. This variable compensation is “at risk” and directly dependent upon the achievement of corporate financial-performance goals or stock price appreciation. In fiscal 2022, 91% of the Chairman and Chief Executive Officer’s target total direct compensation (“TDC”) consisted of variable, at-risk components. With respect to the other named executive officers, 62% to 67% of their fiscal 2022 target TDC consisted of variable, at-risk components.
In June 2021, the Board of Directors approved the fiscal 2022 AIC plan for our team members, including executive officers. Under the fiscal 2022 AIC plan, annual bonus payments were tied to achieving specified levels of fiscal 2022 adjusted consolidated operating income. Achievement below the target objective for adjusted consolidated operating income for fiscal 2022 resulted in below-target payouts under the fiscal 2022 AIC plan.
LTI payouts for fiscal 2022 were tied to meeting pre-established aggregate EPS goals over a three-fiscal-year period. While adjusted EPS growth was strong in fiscal 2021 and fiscal 2022, weaker-than-expected adjusted EPS growth in fiscal 2020 prevented us from achieving the three-fiscal-year EPS goal required for any payout under the FY20–FY22 LTI plan.
The exercise price of stock options granted under our equity incentive plans is equal to the fair market value of our common stock on the date of grant, so the options will yield value to the executive only if the stock price appreciates. The exercise price for the fiscal 2022 stock option grant to executive officers was $294.61. The closing price of FedEx common stock on July 25, 2022 was $228.17.
Our stock ownership goal effectively promotes meaningful and significant stock ownership by our executive officers and further aligns their interests with those of our stockholders. As of July 25, 2022, each of our named executive officers exceeded the stock ownership goal.
In response to feedback on the metrics used in our LTI plans, the Compensation & HR Committee and the Board of Directors incorporated an additional metric — relative Total Stockholder Return (“TSR”) — into the LTI plan for FY23–FY25 that directly aligns executive compensation with stockholder returns and adjusted the target objectives of the EPS and capital expenditures as a percentage of total revenue metrics used in the FY23–FY25 LTI plan to align with our three-fiscal-year financial targets announced in June 2022, including reducing capital expenditures over the next three years. For additional information on the FY23–FY25 LTI plan, see “Compensation Elements and Fiscal 2022 Amounts — Cash Payments Under LTI Program — Future LTI Payout Opportunities — FY21–FY23, FY22–FY24, and FY23–FY25 LTI Plans.”
   
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Executive Compensation

We responded to a stockholder proposal approved at the 2021 annual meeting of stockholders regarding severance and post-termination payments by requesting meetings with our largest 15 institutional investors and engaging with investors owning, in the aggregate, more than 35% of our common stock and then adopting a policy that we will not pay or enter into any new agreement with an executive officer that provides for severance benefits in connection with the executive officer’s voluntary or involuntary termination (unless due to death or permanent disability or in connection with a change of control) in an amount that exceeds 2.99 times the sum of the executive officer’s base salary and target AIC payout for the year of termination (with the value of any unvested equity awards that accelerate on the applicable termination of employment event calculated according to Section 280G) unless approved or ratified by stockholders. We also amended our 2019 Plan to provide that if the value of any unvested equity awards that accelerate in connection with a change of control of FedEx triggers an excise tax under Section 4999 of the Internal Revenue Code, then the amount of the individual’s awards eligible to accelerate will be reduced, to the extent possible, to one dollar ($1) less than three times the individual’s Section 280G “base amount.”
We urge you to read the Compensation Discussion and Analysis, as well as the Summary Compensation Table and related compensation tables and narrative appearing on pages 48 through 87, which provides detailed information on our compensation philosophy, policies, and practices, and the compensation of our named executive officers.
Your Board of Directors recommends that you vote “FOR” this proposal.
 

Effect of the Proposal

This advisory resolution, commonly referred to as a “say-on-pay” resolution, is not binding on FedEx, the Board of Directors, or the Compensation & HR Committee. The vote on this proposal will, therefore, not affect any compensation already paid or awarded to any named executive officer and will not overrule any decisions made by the Board of Directors or the Compensation & HR Committee. Even so, the Board of Directors and the Compensation & HR Committee highly value our stockholders’ opinions and will consider the results of this advisory vote when making future executive compensation decisions.

Vote Required for Approval

The affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote is required to approve this proposal.

   
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Executive Compensation – Report of the Compensation and Human Resources Committee of the Board of Directors

Report of the Compensation and Human Resources Committee of the Board of Directors

The Compensation & HR Committee has reviewed and discussed with management the following Compensation Discussion and Analysis. Based on its review and discussions with management, the Compensation & HR Committee recommended to the Board of Directors, and the Board approved, that the Compensation Discussion and Analysis be included in this proxy statement and in FedEx’s Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

Compensation and Human Resources Committee Members

       
                 
PAUL S. WALSH
Chairman
  SUSAN PATRICIA
GRIFFITH
  SHIRLEY ANN
JACKSON
  AMY B. LANE*   SUSAN C. SCHWAB
   
* Ms. Lane was appointed to the Compensation & HR Committee effective June 14, 2022.

Compensation Discussion and Analysis

Our executive compensation program is designed not only to retain and attract highly qualified and effective executives, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of stockholders and reward them for doing so.

In this section we discuss and analyze the compensation of our principal executive officer, principal financial officer, and our three other most highly compensated executive officers (the “named executive officers”) for the fiscal year ended May 31, 2022. For additional information regarding compensation of the named executive officers, see “— Summary Compensation Table” and the other compensation-related tables and disclosure below.

During fiscal 2022, our founder, Frederick W. Smith, served as Chairman of the Board and Chief Executive Officer. On March 28, 2022, we announced that Mr. Smith would step down as Chief Executive Officer, effective May 31, 2022, and become Executive Chairman, and that Rajesh Subramaniam, who served as our President and Chief Operating Officer in fiscal 2022, would become President and Chief Executive Officer, effective June 1, 2022. Except as expressly otherwise noted, all references to “Chief Executive Officer” for fiscal 2022 in this Compensation Discussion and Analysis refer to Mr. Smith, and references to “President and Chief Operating Officer” for fiscal 2022 refer to Mr. Subramaniam.

2021 Say-on-Pay Advisory Vote Outcome

Each year, the Compensation & HR Committee carefully considers the most recent advisory vote by stockholders to approve named executive officer compensation. In the 2021 advisory vote, 76.4% of the voted shares supported the compensation of FedEx’s named executive officers. While a significant percentage of the shares voted were in support of our executive compensation program, the level of support was much lower than the 91.6% of shares voted in support of our executive compensation program in 2020.

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Executive Compensation – Compensation Discussion and Analysis

What We Heard

In response to the lower level of support we received in the 2021 advisory vote on named executive officer compensation and the 62% vote in support of the stockholder proposal presented at our 2021 annual meeting regarding shareholder ratification of termination pay, beginning in September 2021 and continuing through the end of fiscal 2022, we requested meetings with our largest 15 institutional investors who own, in the aggregate, over 40% of our outstanding common stock and engaged with investors owning, in the aggregate, more than 35% of our common stock, to solicit feedback on our named executive officer compensation program, better understand the reasons behind the 2021 advisory vote on executive compensation outcome and support of the stockholder proposal, and discuss potential changes to our executive compensation program for consideration by the Compensation & HR Committee. Our stockholder engagement effort included members of our Board, including the Lead Independent Director and Chair of our GSPP Committee, the Chair of our Compensation & HR Committee, and members of management from our Human Resources, Investor Relations, Strategic Finance, and Legal teams.

The primary areas of concern underlying the low 2021 advisory vote on executive compensation related to the special equity awards granted to our executive officers in fiscal 2021 prior to the time that the fiscal 2021 AIC plan was approved and the subsequent inclusion of our executive officers in the fiscal 2021 AIC plan. Investors also expressed a strong preference to include one or more metrics related to stockholder returns in our LTI plans and disapproval of certain adjustments to performance metrics made for purposes of determining payouts under our LTI plans.

How We Responded

The special equity awards granted to our executive officers in fiscal 2021 were driven by unique and extraordinary circumstances due to the economic and business uncertainties caused by the COVID-19 pandemic. The Compensation & HR Committee appreciates the views expressed by stockholders and will consider these views in connection with any future special equity awards for our executive officers.

In response to feedback on the metrics used in our LTI plans, the Compensation & HR Committee and the Board of Directors incorporated an additional metric — relative TSR — into the LTI plan for FY23–FY25 to directly align executive compensation with stockholder returns and adjusted the target objectives of the EPS and capital expenditures as a percentage of total revenue metrics used in the FY23–FY25 LTI plan that aligns with our three-fiscal-year financial targets announced in June 2022, including reducing capital expenditures over the next three years. For additional information on the FY23–FY25 LTI plan, see “Compensation Elements and Fiscal 2022 Amounts — Cash Payments Under LTI Program — Future LTI Payout Opportunities — FY21–FY23, FY22–FY24, and FY23–FY25 LTI Plans.”

The Compensation & HR Committee and the Board of Directors will continue to engage with stockholders as part of the ongoing process of evaluating and optimizing the design, purposes, and direction of FedEx’s executive compensation programs. In its ongoing evaluation of FedEx’s executive compensation programs and practices, the Compensation & HR Committee will continue to consider the results from future stockholder advisory votes to approve named executive officer compensation.

Executive Summary

Fiscal 2022 Incentive Compensation Highlights

We experienced revenue and operating income growth in fiscal 2022 resulting from yield management actions, including the favorable net impact of fuel. In addition, our results were positively affected by a mix shift to our higher yielding services due to strategic actions to improve revenue quality. However, our business was negatively affected by the COVID-19 pandemic, labor market challenges, and inflationary cost pressures. Labor market challenges contributed to global supply chain disruptions and affected the availability and cost of labor, resulting in network inefficiencies, higher purchased transportation costs, and higher wage rates. In addition, global recovery from the impacts of the COVID-19 pandemic slowed with the onset of new variants, which resulted in reduced shipping demand and caused network disruptions, particularly at FedEx Express during fiscal 2022. These challenges resulted in adjusted consolidated operating income that was below the target objective under our fiscal 2022 AIC plan. Accordingly, and consistent with our pay-for-performance philosophy, below-target payouts were earned by participants under the fiscal 2022 AIC plan, including the named executive officers.

Under our LTI plan for FY20–FY22, which was tied to financial performance over a three-fiscal-year period (fiscal 2020 through fiscal 2022), no payouts were earned in fiscal 2022 by any participants, including our named executive officers. While adjusted EPS growth was strong in fiscal 2021 and fiscal 2022, weaker-than-expected adjusted EPS growth in fiscal 2020 prevented us from achieving the three-year EPS goal required for any payout under the FY20–FY22 LTI plan.

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Executive Compensation – Compensation Discussion and Analysis

The following table, which details key incentive compensation highlights of the last five fiscal years, demonstrates the pay-for-performance nature of our executive compensation program.

Incentive Compensation Highlights

FY18 FY19 FY20 FY21 FY22
         
AIC plan paid below target No AIC plan payout   No AIC plan payout   AIC plan paid at maximum AIC plan paid below target
FY16–FY18 LTI plan paid at maximum FY17–FY19 LTI plan paid above target No FY18–FY20 LTI plan payout   No FY19–FY21 LTI plan payout   No FY20–FY22 LTI plan payout
         

Philosophy

FedEx is consistently ranked among the world’s most admired and trusted employers and respected brands. Maintaining this reputation and continuing to position FedEx for future success requires high-caliber talent to protect and grow the company in support of our mission of producing superior financial returns for our stockholders. We design our executive compensation program to provide a competitive and internally equitable compensation and benefits package that reflects individual and company performance, job complexity, and strategic value of the position while ensuring long-term retention and motivation.

Each of the named executive officers is a longstanding member of our management, and Frederick W. Smith, our Chairman of the Board and Chief Executive Officer in fiscal 2022, founded the company and pioneered the express transportation industry almost 50 years ago. As a result, our named executive officers are especially knowledgeable about our business and our industry and thus particularly valuable to the company and our stockholders.

As with tenure, position and level of responsibility are important factors in the compensation of any FedEx employee, including our named executive officers. There are internal salary ranges for each level, and annual target bonus percentages, long-term bonus amounts, and the number of stock options and restricted shares awarded are all closely tied to management level and responsibilities. For instance, our General Counsel and Chief Information Officer have the same salary range and annual target bonus percentages and receive the same long-term bonus and the same number of options and restricted shares in the annual grant.

Our philosophy is to (i) closely align the compensation paid to our executives with the performance of the company on both a short-term and long-term basis and (ii) set performance goals that do not promote excessive risk while supporting the company’s core long-term financial goals. In June 2022, we announced financial targets for fiscal 2025, which include:

         
Stable, sustained revenue growth Expanding operating margins and profitability Lowering our capital intensity Increasing focus on return on invested capital Annualized TSR of 18% to 22% over the next three fiscal years*
         
   
* Assumes no change in P/E multiple in order to isolate the impact of net income growth and dividend yield.

Our executive compensation is, in large measure, highly variable and linked to the above goals and the performance of the FedEx stock price over time.

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Executive Compensation – Compensation Discussion and Analysis

Compensation Objectives and Design-Related Features

We design our executive compensation program to further FedEx’s mission of producing superior financial returns for our stockholders by pursuing the following objectives:

        HOW PURSUED  
  OBJECTIVE     GENERALLY     SPECIFICALLY  
                 
  Retain and attract highly qualified and effective executive officers.     Pay competitively.     Use comparison survey data as a point of reference in evaluating target levels for total direct compensation, which includes both fixed and variable, at-risk components tied to stock price appreciation and short- and long-term financial performance.  
  Motivate executive officers to contribute to our future success and to build long-term stockholder value and reward them accordingly.     Link a significant part of compensation to FedEx’s financial and stock price performance, especially long-term performance.     Weight executive compensation program in favor of incentive and equity-based compensation elements (rather than base salary), especially long-term incentive cash compensation and equity incentives in the form of stock options and restricted stock.  
  Further align executive officer and stockholder interests.     Encourage and facilitate long-term stockholder returns and significant ownership of FedEx stock by executives.     Make annual equity-based grants; tie long-term cash compensation to growth in our EPS, which strongly correlates with long-term stock price appreciation and, beginning with the FY23–FY25 LTI plan, relative TSR; maintain a stock ownership goal for senior officers and encourage each officer to retain shares acquired upon stock option exercises until his or her goal is met.  
                 

Commitment to Retain and Attract

FedEx is widely acknowledged as one of the world’s most admired and respected companies, and it is our people — our greatest asset — who have earned FedEx its strong reputation. Because FedEx operates a global enterprise in a highly challenging business environment, we compete for talented management with some of the largest companies in the world — in our industry and in others. Our global recognition and reputation for excellence in management and leadership make our people attractive targets for other companies, and our key employees are aggressively recruited. To prevent loss of our managerial talent, we seek to provide an overall compensation program that is competitive with all types of companies and continues to retain and attract outstanding people to conduct our business. Each element of compensation is intended to fulfill this important obligation.

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Executive Compensation – Compensation Discussion and Analysis

Market Referencing

Because retention is imperative and tenure and management level are determinative factors, we use external survey data solely as a market reference point to assess the competitiveness of our compensation programs. The target compensation levels of our named executive officers are not designed to correspond to a specific percentile of compensation in those surveys. Instead, our analysis considers multiple market reference points for the analyzed positions, rather than referring to a specific percentile.

For the fiscal 2022 executive compensation review, we considered survey data published by two major consulting firms engaged by the company: Willis Towers Watson and Aon Consulting. Each consulting firm provided target compensation data for general industry companies (excluding financial services companies), including U.S. and multinational companies, in its respective database with annual revenues between $25 billion and $100 billion. These companies are listed in Appendix B.

General industry companies, including U.S. and multinational companies, is the appropriate comparison category because our executives are recruited by and from businesses outside of FedEx’s industry peer group. Moreover, our industry peer group does not provide a sufficient number of companies that are of a comparable size to FedEx. Using a robust data sample (138 companies for fiscal 2022) mitigates the impact of outliers, year-over-year volatility of compensation levels, and the risk of selection bias, and increases the likelihood of comparing with companies with executive officer positions similar to ours. Because the annual revenues of these companies vary significantly, each consulting firm used regression analysis to allow for the inclusion of data from a large number of both larger and smaller companies. The data results provided by each firm were then averaged to arrive at blended market compensation data for general industry executives.

When we evaluate the elements of compensation of our executive officers in light of the referenced survey data, we consider TDC as illustrated below:

Elements of TDC

SHORT-TERM COMPENSATION LONG-TERM COMPENSATION
Base Salary AIC Restricted Stock* Stock Options LTI
   
* includes related tax payments

TDC includes AIC at target (i.e., assuming achievement of all objectives) and all long-term components at target. Tax payments on restricted stock awards are included in TDC.

Other elements of compensation of the named executive officers (such as perquisites and retirement benefits) are not included in TDC, consistent with our referenced survey information. Accordingly, these other elements are not referenced against survey data, and decisions as to these other elements do not influence decisions as to the elements of compensation that are included in TDC. These other elements of compensation, however, are reviewed and approved by the Compensation & HR Committee.

While we may reference our target executive compensation levels against the survey group of companies, we do not compare our AIC and LTI financial-performance goals against these companies or any other group of companies. Rather, as discussed below, our AIC and LTI financial-performance goals are based upon our internal business objectives which, when set each year, represent aggressive goals. Accordingly, the relationship between our financial performance and the financial performance of the survey companies does not affect the relationship between our executive compensation and the executive compensation of that group in a given year.

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Executive Compensation – Compensation Discussion and Analysis

Pay for Performance

Our executive compensation program is intended not only to retain and attract highly qualified and effective managers, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of stockholders and appropriately reward them for doing so. Accordingly, we believe that there should be a strong relationship between pay and corporate performance (both financial results and stock price), and our executive compensation program reflects this belief. In particular, AIC payments, LTI payments, and stock options represent a significant portion of our executive compensation program, and this variable compensation is “at risk” and directly dependent upon the achievement of corporate financial-performance goals and stock price appreciation:

Fiscal 2022 AIC payouts for all plan participants, including the named executive officers, were tied to achieving specified levels of adjusted consolidated operating income, as well as individual performance objectives as described further below. Actual adjusted consolidated operating income (which excluded certain items that did not reflect core business performance, as described in detail below) was below the target objective level for fiscal 2022, resulting in a below-target payout under the fiscal 2022 AIC plan.
LTI payouts for fiscal 2022 were tied to meeting pre-established aggregate EPS goals over a three-fiscal-year period. While adjusted EPS growth was strong in fiscal 2021 and fiscal 2022, weaker-than-expected adjusted EPS growth in fiscal 2020 prevented us from achieving the three-year EPS goal required for any payout under the FY20–FY22 LTI plan.
The exercise price of stock options granted under our equity incentive plans is equal to the fair market value of our common stock on the date of grant, so the options will yield value to the executive only if the stock price appreciates.

The following chart illustrates for each named executive officer the allocation of fiscal 2022 target TDC between base salary and incentive and equity-oriented compensation elements (the restricted stock value includes the related tax payment):

Fiscal 2022 Target TDC Components

 

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We believe that long-term performance is the most important measure of our success, as we manage FedEx’s operations and business for the long-term benefit of our stockholders. Accordingly, not only is our executive compensation program weighted towards variable, at-risk pay components, but we also emphasize incentives that are dependent upon long-term corporate performance and stock price appreciation. These long-term incentives include LTI plan cash compensation and equity awards (stock options and restricted stock), which comprise a significant portion of an executive officer’s total compensation. These incentives are designed to motivate and reward our executive officers for achieving long-term corporate financial-performance goals and maximizing long-term stockholder value.

The actual compensation paid out in a given year may vary widely from target levels because compensation earned under the AIC and LTI programs is variable and commensurate with the level of achievement of financial-performance goals. When we fall short of our business objectives, payments under these variable programs decrease correspondingly. Conversely, when we achieve superior results, we reward our executives accordingly under the terms of these programs. In addition, with regard to the stock-option component of TDC, officers realize value from the stock options recognized in the TDC calculation only if the stock price appreciates after the grant date.

The following chart illustrates for each named executive officer the allocation of fiscal 2022 target TDC between short-term components — base salary and AIC — and long-term incentives — LTI, stock options, and restricted stock, including the related tax payment:

Fiscal 2022 Target Long-Term vs Target Short-Term Compensation

Align Management and Stockholder Interests

We award stock options and restricted stock to create and maintain a long-term economic stake in the company for our officers, thereby aligning their interests with the interests of our stockholders.

In addition, for LTI plans approved prior to fiscal 2021 (including the FY20–FY22 LTI plan), the payout under our LTI program was dependent solely upon achievement of a pre-established aggregate EPS goal for a three-fiscal-year period. EPS was selected as the financial measure for the LTI plan because growth in our EPS strongly correlates to long-term stock price appreciation.

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The following graph illustrates the relationship between FedEx’s EPS growth and stock price appreciation (based on the fiscal year-end stock price and adjusted for stock splits) from 1978 to 2022:

   
* Fiscal 2019, 2020, 2021, and 2022 EPS of $2.03, $4.90, $19.45, and $14.33, respectively, are included in the EPS GAAP line. Fiscal 2019, 2020, 2021, and 2022 adjusted EPS of $15.14, $7.92, $16.12, and $18.67, respectively, are included in the adjusted EPS line. As discussed in detail below, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved certain adjustments to fiscal 2019, 2020, 2021, and 2022 EPS for LTI plan purposes in order to ensure that payouts, if any, under the applicable LTI plans more accurately reflect core financial performance. See Appendix C for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.

Stock Ownership Goal for Senior Officers

In order to encourage significant stock ownership by FedEx’s senior management, including the named executive officers, and to further align their interests with the interests of our stockholders, the Board of Directors has adopted a stock ownership goal for senior officers, which is included in FedEx’s Corporate Governance Guidelines. With respect to our executive officers, the goal is that within five years after being appointed to his or her position, each officer own FedEx shares valued at the following multiple of his or her annual base salary:

6x for the Executive Chairman;
6x for the President and Chief Executive Officer; and
3x for the other executive officers.

For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock options are not. Until the ownership goal is met, the officer is encouraged to retain “net profit shares” resulting from the exercise of stock options. Net profit shares are the shares remaining after payment of the option exercise price and taxes owed upon the exercise of options. As of July 25, 2022, each named executive officer exceeded the stock ownership goal.

Policy Against Hedging and Pledging Transactions

In addition, we have adopted comprehensive and detailed policies (set forth in the FedEx Securities Manual) that regulate trading by our insiders, including the named executive officers and Board members. The Securities Manual includes information regarding quiet periods and explains when transactions in FedEx stock are permitted.

The Securities Manual and our Corporate Governance Guidelines also set forth certain types of transactions that are prohibited, even when permitted by law, in order to further align the interests of our executives and directors with stockholders’ interests. Specifically, company officers, employees, and Board members are prohibited from, directly or indirectly, purchasing financial instruments or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity or other securities of the company or any of its subsidiaries that were granted as compensation to or that are held, directly or indirectly, by the officer, employee, or Board member, including the following financial instruments and transactions: (1) publicly traded (or exchange-traded) options, such as puts, calls, and other derivative securities; (2) short sales, including “sales against the box”; and (3) hedging or monetization transactions designed to limit the financial risk of ownership, including prepaid variable forward contracts, equity swaps, collars, exchange funds, and other similar transactions. The Securities Manual and our Corporate Governance Guidelines also prohibit margin accounts and pledges; however, our (i) Lead Independent

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Director (if serving) and General Counsel, acting together, with respect to the Executive Chairman (if serving), any non-independent member of the Board, or Chief Executive Officer, (ii) the independent Chairman of the Board and General Counsel, with respect to the Chief Executive Officer or any member of the Board other than the Chairman, or (iii) the other independent members of the Board and General Counsel, with respect to the Chairman of the Board, may, as applicable, grant an exception to the prohibition against holding FedEx securities in a margin account or pledging FedEx securities on a case-by-case basis if he or she clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities.

Based upon this criterion, such an exception has been granted with respect to the shares that are disclosed in this proxy statement as having been pledged as security by Frederick W. Smith, FedEx’s Executive Chairman, and Frederick Smith Enterprise Company, Inc. (“Enterprise”). See “Stock Ownership — Directors, Director Nominees, and Executive Officers.” With respect to the shares pledged by Mr. Smith and Enterprise as of July 25, 2022:

None of the shares pledged were acquired through a FedEx equity compensation plan.
The pledged shares are not used to shift or hedge any economic risk in owning FedEx shares. These shares collateralize loans used to fund outside personal business ventures and prior purchases of FedEx shares. If Mr. Smith had been unable to pledge these shares, he may have been forced to sell the shares in order to obtain the necessary funds.
The pledged shares represent less than 1% of FedEx’s outstanding shares as of July 25, 2022, and therefore, do not present any appreciable risk for investors or the company.
Mr. Smith is FedEx’s founder and one of the company’s largest stockholders, and a substantial portion of his personal net worth is in the form of company stock. Mr. Smith has pledged only 10.6% of his total share ownership. The number of shares pledged by Mr. Smith is unchanged since last year. Based on the fiscal year-end stock price ($224.58), the value of his pledged shares was approximately $462 million. Additionally, excluding the pledged shares, as of July 25, 2022, Mr. Smith’s stock ownership is 517 times what he is required to hold under the company’s stock ownership goal.
In accordance with our policy, Mr. Smith has established his financial capacity to repay the loan without resorting to the pledged shares. In the unlikely event such a sale was necessary, based on the 30-day average trading volume for FedEx shares as of July 25, 2022, it would take two days for the pledged shares to be sold in the open market. Furthermore, Mr. Smith’s unpledged share ownership is very substantial and would likely be able to prevent any margin call.

As discussed, we have an active stockholder engagement program in which we meet regularly with our largest stockholders. During these discussions, none of our largest stockholders have raised any concerns regarding Mr. Smith’s pledged shares.

No other FedEx executive officer or Board member currently holds FedEx securities that are pledged pursuant to a margin account, loan, or otherwise.

Clawback Policy

The Board of Directors, upon the recommendation of the Compensation & HR Committee, has adopted the FedEx Corporation Policy on Recoupment of Incentive Compensation, or clawback policy, which is available under the ESG heading below “Governance” on the Investor Relations page of our website at investors.fedex.com. Under the policy, the company’s current or former Section 16 officers may have their cash or equity-based incentive compensation awards that are based on a company financial reporting measure recouped if a triggering event occurs. A triggering event arises under the policy when: (i) there is a restatement of the company’s financial statements due to material noncompliance with any financial reporting requirement under the federal securities laws, (ii) the officer engaged in fraud or intentional misconduct that resulted in the need for the restatement, and (iii) a lower payment or award would have been made or granted based upon the restated financial results. The Board of Directors, taking into account the Compensation & HR Committee’s recommendation, has enforcement discretion under the policy. The policy is applicable to incentive compensation awards granted on or after March 11, 2019, the date of the policy’s adoption.

Role of the Compensation & HR Committee, its Compensation Consultant, the Executive Chairman, and the Chief Executive Officer

Our Board of Directors is responsible for the compensation of our executive management. The purpose of the Board’s Compensation & HR Committee, which is composed solely of independent directors, is to help discharge this responsibility by, among other things:

Reviewing and discussing with management the factors underlying our compensation policies and decisions, including overall compensation objectives;
Reviewing and discussing with management the relationship between the company’s compensation policies and practices and the company’s risk management, including the extent to which those policies and practices create risks for the company;
   
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Reviewing and approving all company goals and objectives (both financial and non-financial) relevant to the compensation of the Chief Executive Officer;
Reviewing and approving all company goals and objectives relevant to the compensation of the Executive Chairman;
Evaluating, together with the other independent directors, the performance of the Executive Chairman and the Chief Executive Officer in light of these goals and objectives and the quality and effectiveness of his leadership;
Recommending to the Board for approval by the independent directors each element of the compensation of the Executive Chairman and the Chief Executive Officer;
Reviewing the performance evaluations of all other members of executive management (the Chief Executive Officer is responsible for the performance evaluations of the non-CEO executive officers who report to him);
Reviewing and approving (and, if applicable, recommending to the Board for approval) each element of compensation, as well as the terms and conditions of employment, of these other members of executive management;
Granting awards under our equity compensation plans and overseeing the administration of all such plans; and
Reviewing the strategies relating to, and costs and structure of, our key employee benefit and fringe-benefit plans and programs.

The Compensation & HR Committee may form and delegate authority to any subcommittee as it deems appropriate or advisable in accordance with the terms of its written charter. To date, however, the Committee has not formed or delegated authority to any subcommittee.

In furtherance of the Compensation & HR Committee’s responsibility, the Committee has engaged Steven Hall & Partners (the “consultant”) to assist the Committee in evaluating FedEx’s executive compensation, including during fiscal 2022. In connection with this engagement, the consultant reports directly and exclusively to the Committee. The consultant participates in Committee meetings, reviews Committee materials, and provides advice to the Committee upon its request. For example, the consultant: updates the Committee on trends and issues in executive compensation and comments on the competitiveness and reasonableness of FedEx’s executive compensation program; assists the Committee in the development and review of FedEx’s AIC and LTI programs, including commenting on performance measures and the goal-setting process; and reviews and provides advice to the Committee for its consideration in reviewing compensation-related proxy statement disclosure, including this Compensation Discussion and Analysis, and on any new equity compensation plans or plan amendments proposed for adoption.

Other than services provided to the Compensation & HR Committee, the consultant does not perform any services for FedEx. Additionally, the consultant has robust policies and procedures in place to prevent conflicts of interest; the fees received by the consultant from FedEx in the consultant’s most recently completed fiscal year represented less than 5% of the consultant’s revenues; neither the consultant nor any adviser of the consultant had a business or personal relationship with any member of the Compensation & HR Committee or any executive officer of FedEx during fiscal 2022; and no adviser of the consultant directly owns, or directly owned during fiscal 2022, any FedEx stock. Accordingly, the Compensation & HR Committee has determined the consultant to be independent from the company and that no conflicts of interest exist related to the consultant’s services provided to the Committee. Compensation & HR Committee preapproval is required for any services to be provided to the company by the Committee’s independent compensation consultant. This ensures that the consultant maintains the highest level of independence from the company, in both appearance and fact.

The Chief Executive Officer, who attends most meetings of the Compensation & HR Committee by invitation of the Committee’s chairman, assists the Committee in determining the compensation of all other executive officers by, among other things:

Approving any annual merit increases to the base salaries of the executive officers who report to him within limits established by the Committee;
Approving, as needed, any special base salary adjustments designed to maintain market competitiveness, within limits established by the Committee;
Establishing annual individual performance objectives for the executive officers who report to him and evaluating their performance against such objectives (the Committee reviews these performance evaluations); and
Making recommendations, from time to time, for special stock option and restricted stock grants (e.g., for motivational or retention purposes) to other executive officers.

During fiscal 2022, the other executive officers did not have a role in determining their own compensation, other than discussing their annual individual performance objectives and results achieved with the Chief Executive Officer and President and Chief Operating Officer, as applicable.

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Compensation Elements and Fiscal 2022 Amounts

Base Salary

Our primary objective with respect to the base salary levels of our executive officers is to provide sufficient fixed cash income to retain and attract these highly marketable executives in a competitive market for executive talent. The base salaries of our executive officers are reviewed and adjusted (if appropriate) at least annually to reflect, among other things, economic conditions, base salaries of the officers relative to one another, and the internal salary ranges for the officer’s level.

Effective October 1, 2021, the annual base salary for each named executive officer was increased by 3%. As a result, the base salaries of FedEx’s named executive officers effective as of October 1, 2021, were as follows:

NAME       ANNUAL
BASE SALARY
($)
F.W. Smith   1,426,365
M.C. Lenz   755,119
R. Subramaniam   1,126,389
D.F. Colleran   922,748
R.B. Carter   920,215

Effective June 1, 2022, (1) the base salary for Mr. Subramaniam increased to $1,300,000 to reflect his new position as President and Chief Executive Officer and (2) the base salary for Mr. Smith decreased to $910,000 to reflect his new position as Executive Chairman. Additionally, the base salary for Mr. Lenz increased to $850,000 in connection with our annual compensation review.

Cash Payments Under AIC Program

The primary objective of our AIC program is to motivate our people to achieve our annual financial goals and other business objectives and reward them accordingly. The program generally provides an annual cash bonus opportunity to many of our salaried employees on an enterprise-wide basis, including the named executive officers, at the conclusion of each fiscal year. The payout opportunity is based upon the achievement of financial-performance objectives that apply equally to all plan participants, as well as individual performance objectives as described below.

Target AIC payouts are established as a percentage of the executive officer’s base salary actually paid during the fiscal year. Payouts above target levels are based exclusively upon the company’s financial performance (except with respect to the Chief Executive Officer as discussed below). Accordingly, the executive officer receives above-target payouts only if the company exceeds the AIC target objective for annual financial performance.

AIC objectives for company annual financial performance have historically been based upon our business plan for the fiscal year, which is reviewed and approved by the Board of Directors and which reflects, among other things, the risks and opportunities identified in connection with our ERM process. Consistent with our long-term focus and in order to discourage unnecessary and excessive risk-taking, the AIC program has historically measured performance against our business plan, rather than a fixed growth rate or an average of growth rates from prior years, to account for short-term economic and competitive conditions and anticipated strategic investments that may have adverse short-term profit implications. We have historically addressed year-over-year improvement targets through our LTI plans, as discussed below.

Fiscal 2022 AIC Plan Design

In order to continue motivating management to achieve strong financial performance, the performance measure for all participants in the fiscal 2022 AIC plan was adjusted consolidated operating income. In order to ensure that payouts under the fiscal 2022 AIC plan accurately reflected the company’s core financial performance, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved excluding fiscal 2022 costs related to business realignment activities in connection with the FedEx Express workforce reduction plan in Europe that was announced in January 2021 from fiscal 2022 consolidated operating income for purposes of the plan. The Board of Directors determined it was appropriate to minimize the impact of business realignment activities for all plan participants. However, fiscal 2022 TNT Express integration expenses were not excluded for purposes of the fiscal 2022 AIC plan. In June 2022, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved excluding charges incurred in the fourth quarter of fiscal 2022 for accrued pre- and post-judgment interest from fiscal 2022 consolidated operating income in connection with an adverse decision in a 2012 lawsuit relating to a vehicle accident involving a driver employed by a service provider engaged by FedEx Ground.

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The adjusted consolidated operating income target objective under the fiscal 2022 AIC plan was equal to the fiscal 2022 business plan objective for adjusted consolidated operating income due to the inherent risk and uncertainty in the business plan given the economic environment. The target objective under the fiscal 2022 AIC plan required significant year-over-year growth in adjusted consolidated operating income to achieve a target or above-target payout. Actual adjusted consolidated operating income performance that exceeded the fiscal 2022 target objective for adjusted consolidated operating income under the AIC plan would result in an above-target payout opportunity, up to the maximum payout amount. The maximum payout opportunity under the plan was 200% of the target amount.

The actual payout for plan participants, including the non-CEO named executive officers, depended on the achievement level of their respective individual performance objectives. The fiscal 2022 AIC payout amount for the Chief Executive Officer was not based on individual performance objectives, but could be adjusted by the independent Board members based on their annual evaluation of his performance, as described below.

The fiscal 2022 AIC payout opportunity for each of the named executive officers was based on the achievement of corporate objectives for adjusted consolidated operating income, as described above, and the fiscal 2022 AIC plan did not have a funding floor for the named executive officers. The minimum payout opportunity under the plan for Messrs. Smith and Subramaniam was zero, as a result of the threshold financial-performance objective and the independent directors’ ability to adjust Mr. Smith’s and Mr. Subramaniam’s (based on Mr. Smith’s recommendation) bonus amount downward based on their respective annual performance evaluation. The minimum payout opportunity for each other named executive officer was also zero, as a result of the threshold financial-performance objective and Mr. Smith’s ability (with respect to Messrs. Lenz, Subramaniam, and Carter) and Mr. Subramaniam’s ability (with respect to Mr. Colleran) to adjust each applicable officer’s payout amount downward based on his achievement of individual performance objectives established at the beginning of the fiscal year.

The fiscal 2022 AIC target payouts for the named executive officers, as a percentage of their respective base salary paid during fiscal 2022, were as follows:

NAME TARGET PAYOUT
(AS A PERCENTAGE OF BASE SALARY)(1)
F.W. Smith 165%
M.C. Lenz 120%
R. Subramaniam 140%
D.F. Colleran 120%
R.B. Carter 120%
(1) The maximum fiscal 2022 AIC payout opportunity for each named executive officer was 200% of his target bonus.

Chief Executive Officer

The Chief Executive Officer’s fiscal 2022 AIC payout opportunity was based on the achievement of specified levels of adjusted consolidated operating income, as described above. The Chief Executive Officer’s minimum AIC payout opportunity was zero, as a result of the threshold financial-performance objective and the independent directors’ ability to adjust his bonus amount downward based on his annual performance evaluation, as described above.

The Chief Executive Officer’s target AIC payout is set as a percentage of his base salary, and his maximum AIC payout is set as a multiple of the target payout. The independent members of the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved these percentages. The actual AIC payout ranges on a sliding scale based upon the performance of the company against our financial performance goal.

In addition, the independent members of the Board of Directors, upon the recommendation of the Compensation & HR Committee, may adjust this amount upward or downward, or may determine that no AIC payout is justified, based on their annual evaluation of the Chief Executive Officer’s performance. When performing this evaluation, the Compensation & HR Committee and the independent Board members consider many factors, including the quality and effectiveness of the Chief Executive Officer’s leadership, the execution of key strategic initiatives, and the following corporate performance measures:

FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Transportation Average, the Dow Jones Industrial Average, and competitors;
FedEx’s stock price to earnings (P/E) ratio relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Industrial Average, and competitors;
FedEx’s market capitalization;
FedEx’s revenue growth and operating income growth (excluding certain items) relative to competitors;
   
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FedEx’s free cash flow (excluding business acquisitions), return on invested capital (excluding certain items), and weighted average cost of capital;
Analyst coverage and ratings for FedEx’s stock;
FedEx’s U.S. and international revenue market share;
FedEx’s reputation rankings by various publications and surveys; and
FedEx’s achievement of corporate objectives for financial performance under the AIC program.

None of these factors is given any particular weight in determining whether to adjust the Chief Executive Officer’s bonus amount.

Non-CEO Named Executive Officers

The fiscal 2022 AIC payout opportunity for each of the non-CEO named executive officers was based on the achievement of specified levels of adjusted consolidated operating income, as described above. The minimum AIC payout opportunity for each of the non-CEO named executive officers was zero, as a result of the threshold financial-performance objective and the ability of Mr. Smith (or the independent directors based on Mr. Smith’s recommendation with respect to Mr. Subramaniam) or Mr. Subramaniam, as applicable, to adjust the officer’s bonus amount downward based on his achievement of individual performance objectives, as described below.

The target AIC payout for each non-CEO named executive officer is set as a percentage of the executive’s base salary, and the maximum AIC payout is set as a multiple of the target payout. The actual AIC payout ranges on a sliding scale based upon the performance of the individual and the company against the objectives.

For fiscal 2022, Mr. Smith, the independent directors, or Mr. Subramaniam (as applicable) were able to adjust the applicable officer’s bonus amount based on the achievement of individual performance objectives established at the beginning of the fiscal year. Individual performance objectives for the non-CEO named executive officers vary by management level and by operating segment and include (but are not limited to):

Provide leadership to support the achievement of financial goals;
Guide and support key strategic initiatives;
Enhance the FedEx customer experience and meet goals related to internal metrics that measure customer satisfaction and service quality;
Recruit and develop executive talent and ensure successors exist for all management positions;
Guide continued improvement in safety and security across all FedEx operations;
Promote the People-Service-Profit culture and Purple Promise commitment throughout the company;
Implement and document good faith efforts designed to ensure inclusion of females and minorities in the pool of qualified applicants for open positions and promotional opportunities, and otherwise promote FedEx’s commitment to diversity, equity, tolerance, and inclusion in the workplace; and
Maintain the highest standards of corporate governance including continued focus on compliance activities, appropriate CSR activities, and enhancement of the FedEx worldwide brand and reputation.

Individual performance objectives are designed to further the company’s business objectives. Achievement of individual performance objectives is generally within each officer’s control or scope of responsibility, and the objectives are intended to be achieved with an appropriate level of effort and effective leadership by the officer. The achievement level of each non-CEO named executive officer’s individual performance objectives is based on Mr. Smith’s, the independent directors’, or Mr. Subramaniam’s evaluation (as applicable, for fiscal 2022) at the conclusion of the fiscal year, which is also reviewed by the Compensation & HR Committee.

Fiscal 2022 AIC Performance and Payouts

Fiscal 2022 adjusted consolidated operating income was below the target objective under the company’s fiscal 2022 AIC plan. The following table presents the threshold, target, and maximum objectives for adjusted consolidated operating income under our fiscal 2022 AIC plan and our actual adjusted consolidated operating income under the plan for fiscal 2022 (in millions):

COMPANY PERFORMANCE MEASURE      THRESHOLD       TARGET       MAXIMUM       ACTUAL
Adjusted Consolidated Operating Income(1)  $6,273   $7,323   $7,989   $6,733
(1) As discussed above, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved the exclusion of certain items from actual adjusted consolidated operating income for purposes of the fiscal 2022 AIC plan. See Appendix C for a reconciliation of fiscal 2022 adjusted consolidated operating income to the most directly comparable GAAP measure.

 

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The following table sets forth the actual AIC payout for each named executive officer as compared to his target AIC payout:

NAME      TARGET AIC PAYOUT
($)
      ACTUAL AIC PAYOUT
($)
F.W. Smith  2,330,652  819,224
M.C. Lenz  897,345  322,057
R. Subramaniam  1,561,634  548,915
D.F. Colleran  1,096,547  369,207
R.B. Carter  1,093,537  364,148

Fiscal 2023 AIC Plan Design

In order to continue motivating management to achieve strong financial performance, the performance measure for all participants in the fiscal 2023 AIC program is adjusted consolidated operating income. In order to ensure that payouts under the fiscal 2023 AIC plan accurately reflect the company’s core financial performance, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved excluding the impact of fiscal 2023 costs related to business realignment activities in connection with the FedEx Express workforce reduction plan in Europe that was announced in January 2021 from fiscal 2023 consolidated operating income for purposes of the plan. The Board of Directors determined it was appropriate to minimize the impact of business realignment activities for all plan participants.

The adjusted consolidated operating income target objective under the fiscal 2023 AIC plan is equal to the fiscal 2023 business plan objective for adjusted consolidated operating income due to the inherent risk and uncertainty in the business plan in the current economic environment. The target objective under the fiscal 2023 AIC plan requires significant year-over-year growth in adjusted consolidated operating income to achieve a target or above-target payout. The maximum payout opportunity under the plan is 200% of the target amount. However, the actual payout for plan participants, including the non-CEO named executive officers, depends on the achievement level of their respective individual performance objectives. The AIC payout amount for the President and Chief Executive Officer, Mr. Subramaniam, is not based on individual performance objectives, but may be adjusted by the independent Board members based on their annual evaluation of his performance, as described above.

The fiscal 2023 AIC payout opportunity for each of the named executive officers will be based on the achievement of corporate objectives for adjusted consolidated operating income, as described above, and the fiscal 2023 AIC plan does not have a funding floor for the named executive officers. The minimum payout opportunity under the plan for Mr. Subramaniam will be zero, as a result of the threshold financial-performance objective and the independent directors’ ability to adjust Mr. Subramaniam’s bonus amount downward based on his annual performance evaluation, as described above. The minimum payout opportunity for each non-CEO named executive officer also will be zero, as a result of the threshold financial-performance objective and Mr. Subramaniam’s ability to adjust each applicable officer’s payout amount downward based on his achievement of individual performance objectives established at the beginning of the fiscal year. Mr. Subramaniam will determine the achievement level of the officer’s individual objectives at the conclusion of fiscal 2023.

The fiscal 2023 AIC target payouts for the named executive officers, as a percentage of their respective base salary actually paid during fiscal 2023, are as follows:

NAME      TARGET PAYOUT
(AS A PERCENTAGE OF BASE SALARY)
F.W. Smith(1)  —%
M.C. Lenz  120%
R. Subramaniam  165%
D.F. Colleran  120%
R.B. Carter  120%
(1) In his new role as Executive Chairman, Mr. Smith will not participate in the fiscal 2023 AIC plan.

The maximum fiscal 2023 AIC payout opportunity for each named executive officer will be 200% of his target bonus.

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Cash Payments Under LTI Program

The primary objective of our LTI program is to motivate management to contribute to our future success and to build long-term stockholder value and reward them accordingly. The program provides a long-term cash payment opportunity to members of management, including the named executive officers, based upon achievement of long-term objectives for financial performance. For the FY20–FY22 LTI plan, the sole metric was achievement of EPS goals for the three-fiscal-year period. The LTI plan design provides for payouts that correspond to specific EPS goals established by the Board of Directors. The EPS goals represent total growth in EPS (over a base year) for the three-year term of the LTI plan. The following chart illustrates the relationship between EPS growth and payout for the FY20–FY22 LTI plan.

FY20–FY22 LTI PLAN PAYOUT OPPORTUNITY

(as a percentage of target)

As illustrated by the above chart, the FY20–FY22 LTI plan provides for:

No LTI payment unless the three-year average annual EPS growth rate (“EPS growth rate”) is at least 5%;
Target payout if the EPS growth rate is 12.5%;
Above-target payout if the EPS growth rate is above 12.5%, up to a maximum amount (equal to 150% of the target payout) if the EPS growth rate is 15% or higher; and
Below-target payout if the EPS growth rate is below 12.5%, down to a threshold amount (equal to 25% of the target payout) if the EPS growth rate is 5%.

Mark-to-Market Retirement Plans Accounting and Other Adjustments to EPS for LTI Plan Purposes

The Board of Directors, upon the recommendation of the Compensation & HR Committee, approved the exclusion of certain items from fiscal 2020, 2021, and 2022 EPS for purposes of FedEx’s FY20–FY22, FY21–FY23, and FY22–FY24 LTI plans, and for establishing the baseline EPS for the FY21–FY23, FY22–FY24, and FY23–FY25 LTI plans, as applicable. The Board determined that, by excluding each of these items, payouts, if any, under the LTI plans will more accurately reflect FedEx’s core financial performance in fiscal 2020, 2021, and 2022, as applicable.

Mark-to-Market Retirement Plans Accounting Adjustments

The mark-to-market retirement plans accounting adjustments (“MTM Adjustments”), which reflect year-end and other adjustments to the valuation of the company’s defined benefit pension and other postretirement plans, can vary dramatically from year-to-year, as they are significantly impacted by changes in interest rates and the financial markets. As a result, the Board previously determined that MTM Adjustments will be excluded from EPS calculations under all LTI plans.

Other Adjustments

Additionally, the company incurred significant expenses through fiscal 2022 in connection with the integration of TNT Express. The Board approved the exclusion of TNT Express integration expenses from fiscal 2020 EPS for purposes of determining payouts under the FY20–FY22 LTI plan and for establishing the baseline EPS for the FY21–FY23 LTI plan because the company generally would not incur such expenses as part of its continuing operations. The Board approved the exclusion of each of the other adjustments described below from fiscal EPS for the applicable LTI plans because they are unrelated to the company’s core financial performance.

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The EPS impact of each adjustment for the applicable fiscal year is set forth in the narrative below. The table following the narrative sets forth the adjusted EPS measures for the 2020, 2021, and 2022 fiscal years that are used for each applicable LTI plan, as compared against the corresponding GAAP EPS measures. A full reconciliation showing the individual adjustments to the GAAP EPS measure for the applicable fiscal year, as compared against the non-GAAP EPS measure used for each applicable LTI plan, is set forth in Appendix C.

Fiscal 2020 GAAP EPS was adjusted for purposes of the applicable plans to exclude: (i) MTM Adjustments ($2.22 per diluted share); and (ii) fiscal 2020 TNT Express integration expenses ($0.80 per diluted share).

Fiscal 2021 GAAP EPS was adjusted for purposes of the applicable plans to exclude MTM Adjustments ($(3.33) per diluted share).

Fiscal 2022 GAAP EPS was adjusted for purposes of the FY20–FY22, FY21–FY23, and FY22–FY24 LTI plans to exclude MTM Adjustments ($4.49 per diluted share). Fiscal 2022 GAAP EPS was further adjusted for purposes of the FY22–FY24 LTI plan to exclude fiscal 2022 costs related to business realignment activities in connection with the FedEx Express workforce reduction plan in Europe that was announced in January 2021 ($0.80 per diluted share).

For purposes of the FY23–FY25 LTI plan, the Board of Directors, upon the recommendation of the Compensation & HR Committee, determined that fiscal 2022 GAAP EPS (the baseline EPS for the FY23–FY25 LTI plan) would be further adjusted to exclude: (i) fiscal 2022 TNT Express integration expenses ($0.39 per diluted share) and (ii) the accrued pre- and post-judgment interest incurred in connection with the FedEx Ground legal matter discussed above ($0.60 per diluted share). As a result, adjusted fiscal 2022 EPS of $20.61 is the baseline EPS for purposes of the FY23–FY25 LTI plan.

For purposes of the FY22–FY24 and FY23–FY25 LTI plans, the Board of Directors, upon the recommendation of the Compensation & HR Committee, determined to exclude fiscal 2023 costs related to business realignment activities in connection with the FedEx Express workforce reduction plan in Europe from the EPS calculations under both plans.

Stock Repurchase Program-Related Adjustments to EPS for LTI Plan Purposes

The company repurchased 20,000 shares as part of our stock repurchase program in fiscal 2020, which had no impact on adjusted fiscal 2020 EPS. No shares were repurchased in fiscal 2021. During fiscal 2022, the Company repurchased 8,857,202 shares under stock repurchase programs. Because the positive impact on EPS resulting from the fiscal 2022 stock repurchases did not reflect core business performance, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved the exclusion of the impact of the fiscal 2022 stock repurchases in excess of that which offset dilution from equity awards ($(0.15) per diluted share) from fiscal 2022 EPS for purposes of calculating attainment under the FY20–FY22, FY21FY23, and FY22FY24 LTI plans. As a result, adjusted fiscal 2022 EPS of $18.67, rather than adjusted fiscal 2022 EPS of $18.82, is being used for purposes of calculating attainment under the FY20–FY22 and FY21FY23 LTI plans, and adjusted fiscal 2022 EPS of $19.47, rather than adjusted fiscal 2022 EPS of $19.62, is being used for purposes of calculating attainment under the FY22FY24 LTI plan. See Appendix C for a full reconciliation of the non-GAAP financial measures used for each LTI plan.

EPS for LTI Plans

The table below sets forth the adjusted EPS for fiscal years 2020, 2021, and 2022 that are used for each applicable LTI plan, as compared against the reported GAAP EPS. See Appendix C for a reconciliation of the applicable non-GAAP EPS measure to the corresponding GAAP EPS measure.

   2020 EPS  2021 EPS  2022 EPS  
LTI PLAN      GAAP EPS      ADJUSTED EPS      GAAP EPS      ADJUSTED EPS      GAAP EPS      ADJUSTED EPS  
FY20–FY22  $4.90  $7.92  $19.45  $16.12  $14.33  $18.67 (2) 
FY21–FY23  $4.90  $7.92(1)    $19.45  $16.12  $14.33  $18.67 (2) 
FY22–FY24  n/a  n/a  $19.45  $16.12(1)    $14.33  $19.47 (2) 
FY23–FY25  n/a  n/a  n/a  n/a  $14.33  $20.61 (2) 
(1) This is the baseline EPS for the applicable LTI plan.
(2) As described in more detail above, adjusted fiscal 2022 EPS of $18.67 is being used for purposes of calculating attainment under the FY20–FY22 and FY21–FY23 LTI plans and adjusted fiscal 2022 EPS of $19.47 is being used for purposes of calculating attainment under the FY22–FY24 LTI plan to account for the effect of stock repurchases in excess of that which offset dilution from equity awards.
   
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Fiscal 2022 LTI Performance and Payouts

For the FY20–FY22 LTI plan, the baseline EPS over which the three-fiscal-year average annual EPS growth rate goals are measured is $15.52.

For purposes of establishing the baseline EPS for the FY20–FY22 LTI plan, fiscal 2019 GAAP EPS of $2.03 was adjusted to exclude: (i) MTM Adjustments ($11.22 per diluted share); (ii) fiscal 2019 TNT Express integration expenses ($1.18 per diluted share); (iii) costs related to business realignment activities, including the company’s U.S.-based voluntary employee buyout program ($0.91 per diluted share); (iv) costs related to FedEx Ground’s settlement of pending lawsuits with the City and State of New York arising from FedEx Ground’s alleged shipments of cigarettes to New York residents ($0.16 per diluted share); and (v) the revision of the provisional benefit associated with the remeasurement of the company’s net U.S. deferred tax liability following the passage of the TCJA ($0.02 per diluted share).

The following table presents the aggregate EPS threshold (minimum), target, and maximum under our FY20–FY22 LTI plan, which was established by the Board of Directors in June 2019, and our actual adjusted aggregate EPS under the plan for the three-fiscal-year period ended May 31, 2022:

PERFORMANCE MEASURE      THRESHOLD      TARGET      MAXIMUM      ACTUAL  
FY20–FY22 Aggregate Adjusted EPS  $51.40  $59.20  $61.99  $42.71 *
* The actual aggregate adjusted EPS consists of $7.92 for fiscal 2020, $16.12 for fiscal 2021, and $18.67 for fiscal 2022. See Appendix C for a reconciliation of the applicable non-GAAP EPS measure to the corresponding GAAP EPS measure.

The following table shows the threshold, target, and maximum payout opportunities under the FY20–FY22 LTI plan and the actual payout:

NAME  THRESHOLD
LTI PAYOUT
($)
  TARGET LTI
PAYOUT
($)
  MAXIMUM
LTI PAYOUT
($)
  ACTUAL LTI
PAYOUT
($)
 
F.W. Smith      1,150,000      4,600,000      6,900,000      0  
M.C. Lenz  256,667  1,026,667  1,540,001  0  
R. Subramaniam  518,750  2,075,000  3,112,500  0  
D.F. Colleran  437,500  1,750,000  2,625,000  0  
R.B. Carter  343,750  1,375,000  2,062,500  0  

Future LTI Payout Opportunities

FY21–FY23, FY22–FY24, and FY23–FY25 LTI Plans

In June 2020, based on feedback obtained through the stockholder engagement process, the Board of Directors, upon the recommendation of the Compensation & HR Committee, adopted a new LTI plan design beginning with the three-fiscal-year period 2021 through 2023. The FY21–FY23 and FY22–FY24 LTI plans include two financial performance metrics: (1) an aggregate EPS goal for the three-fiscal-year period, weighted at 75% of the total payout opportunity; and (2) a component based on total capital expenditures as a percentage of total revenue over the three-fiscal-year period (“CapEx/Revenue”), weighted at 25% of the total payout opportunity.

In June 2022, based upon further feedback obtained through the stockholder engagement process, the Board of Directors, upon the recommendation of the Compensation & HR Committee, further revised the LTI plan design, beginning with the FY23–FY25 LTI plan, to include three financial performance metrics: (1) an aggregate EPS goal for the three-fiscal-year period, weighted at 50% of the total payout opportunity; (2) a component based on CapEx/Revenue over the three-fiscal-year period, weighted at 25% of the total payout opportunity; and (3) a relative TSR goal for the three-fiscal-year period, weighted at 25% of the total payout opportunity.

EPS

As discussed above, prior to the FY21–FY23 LTI plan, EPS was the sole metric for our LTI plans. The Compensation & HR Committee and Board of Directors determined that EPS was still an appropriate financial metric for the FY21–FY23, FY22–FY24, and FY23FY25 LTI plans given that growth in EPS strongly correlates to long-term stock price appreciation. The EPS performance goals under the FY21–FY23 and FY22–FY24 LTI plans are consistent with the EPS goals in the FY20-FY22 LTI plan:

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No payment under the EPS component unless the EPS growth rate is at least 5%;
Target payout under the EPS component if the EPS growth rate is 12.5%;
Above-target payout if the EPS growth rate is above 12.5%, up to a maximum amount (equal to 150% of the target payout) if the EPS growth rate is 15% or higher; and
Below-target payout if the growth rate is below 12.5%, down to a threshold amount (equal to 25% of the target payout) if the growth rate is 5%.

For the FY23–FY25 LTI plan, the EPS performance goals are as follows:

No payment under the EPS component unless the EPS growth rate is at least 5%;
Target payout under the EPS component if the EPS growth rate is 15.0%;
Above-target payout if the EPS growth rate is above 15.0%, up to an amount equal to 150% of the target payout if the EPS growth rate is 17.5%;
Above-target payout if the EPS growth rate is above 17.5%, up to a maximum amount (equal to 200% of the target payout) if the EPS growth rate is 20.0% or higher; and
Below-target payout if the EPS growth rate is below 15.0%, down to a threshold amount (equal to 25% of the target payout) if the EPS growth rate is 5%.

As described above under “Mark-to-Market Retirement Plans Accounting and Other Adjustments to EPS for LTI Plan Purposes,” adjusted fiscal 2021 EPS of $16.12 is being used for purposes of calculating attainment under the FY21–FY23 LTI plan, adjusted fiscal 2022 EPS of $18.67 is being used for purposes of calculating attainment under the FY21–FY23 LTI plan, adjusted fiscal 2022 EPS of $19.47 is being used for purposes of calculating attainment under the FY22–FY24 LTI plan, and adjusted fiscal 2022 EPS of $20.61 is the baseline EPS for the FY23–FY25 LTI plan.

The following table presents the aggregate EPS thresholds, targets, and maximums under the EPS component of the FY21–FY23, FY22–FY24, and FY23–FY25 LTI plans and our progress toward the FY21–FY23, FY22–FY24, and FY23–FY25 LTI plan goals:

PERFORMANCE MEASURE  THRESHOLD  TARGET  MAXIMUM  ACTUAL AGGREGATE
ADJUSTED EPS AS OF
MAY 31, 2022*
FY21–FY23 Aggregate Adjusted EPS      $26.24      $30.20      $31.64      $34.79
FY22–FY24 Aggregate Adjusted EPS  $53.38  $61.51  $64.38  $19.47
FY23–FY25 Aggregate Adjusted EPS  $68.22  $82.31  $90.03  N/A
* See Appendix C for a reconciliation of the applicable non-GAAP measure to the corresponding GAAP measure.

CapEx/Revenue

The second metric, CapEx/Revenue, was chosen to incent management to further optimize capital deployment and efficiency over each three-fiscal-year period. The Compensation & HR Committee and the Board of Directors chose to use CapEx/Revenue in combination with the historical EPS metric because it can easily be calculated from publicly available information, is easily understood by all plan participants, and works in conjunction with EPS to improve cash flow. The threshold, target, and maximum payout objectives are established each fiscal year based on the forecasted level of capital expenditures in the company’s business plan for the applicable fiscal year.

Payouts under the CapEx/Revenue component are determined as follows:

No payout unless CapEx/Revenue is at or below the threshold objective;
Target payout if CapEx/Revenue is at the target objective;
Above-target payout if CapEx/Revenue is below the target objective up to a maximum payout (equal to 150% of the target payout) if CapEx/Revenue is at or below the maximum objective; and
Below-target payout if CapEx/Revenue is above the target objective, down to a threshold amount (equal to 25% of the target payout) if CapEx/Revenue is at the threshold objective.
   
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The following table presents the CapEx/Revenue threshold, target, and maximum under the FY21–FY23, FY22–FY24, and FY23–FY25 LTI plans and our progress toward this goal as of May 31, 2022:

PERFORMANCE PERIOD      CAPEX/
REVENUE
THRESHOLD
       CAPEX/
REVENUE
TARGET
       CAPEX/
REVENUE
MAXIMUM
       ACTUAL
CAPEX/
REVENUE
YEAR AS OF
MAY 31, 2022
     
FY21–FY23  8.5 %  7.0 %  6.0 %  7.1 %
FY22–FY24  9.5 %  8.0 %  7.0 %  7.2 %
FY23–FY25  7.2 %  6.9 %  6.6 %  N/A  

RELATIVE TSR

The third metric, relative TSR, was chosen to directly align executive compensation with stockholder returns and our three-fiscal-year financial targets announced in June 2022. The relative TSR metric measures the total return on an investment in FedEx stock to an investor (stock price appreciation plus dividends) compared to the total return of the stock of the companies in the S&P 500 Index over a three-fiscal-year period. If our TSR over the three-fiscal-year period is negative, there will be no payout, regardless of performance against the companies in the S&P 500 Index. The maximum payout for the relative TSR portion of the FY23–FY25 LTI plan is 200%.

Potential payouts under the relative TSR metric are shown in the table below:

THREE-FISCAL-YEAR TSR COMPARED TO S&P 500 INDEX      PERCENTAGE OF
TARGET EARNED
Greater than 75th Percentile  200%
Greater than 50th Percentile  100%
Greater than 25th Percentile  50%
Less than 25th Percentile  0%

Potential Future Payouts

The following table sets forth the potential threshold, target, and maximum payouts for the named executive officers under the FY21–FY23, FY22–FY24, and FY23–FY25 LTI plans.

        POTENTIAL FUTURE PAYOUTS
NAME      PERFORMANCE
PERIOD
       THRESHOLD
($)
      TARGET
($)
      MAXIMUM
($)
F.W. Smith  FY21–FY23 (1)   271,875  4,350,000  6,525,000
   FY22–FY24 (1)   264,583  4,233,333  6,350,000
   FY23–FY25    240,625  3,850,000  7,218,750
M.C. Lenz  FY21–FY23    85,937  1,375,000  2,062,500
   FY22–FY24    109,375  1,750,000  2,625,000
   FY23–FY25    125,000  2,000,000  3,750,000
R. Subramaniam  FY21–FY23 (2)   182,292  2,916,667  4,375,000
   FY22–FY24 (2)   265,625  4,250,000  6,375,000
   FY23–FY25    343,750  5,500,000  10,312,500
D.F. Colleran  FY21–FY23    109,375  1,750,000  2,625,000
   FY22–FY24    109,375  1,750,000  2,625,000
   FY23–FY25    125,000  2,000,000  3,750,000
R.B. Carter  FY21–FY23    85,937  1,375,000  2,062,500
   FY22–FY24    85,937  1,375,000  2,062,500
   FY23–FY25    109,375  1,750,000  3,281,250
(1) Amounts shown are prorated to reflect Mr. Smith’s position as Chairman of the Board and Chief Executive Officer in fiscal 2021 and 2022 and his new position, effective June 1, 2022, as Executive Chairman and Chairman of the Board.
(2) Amounts shown are prorated to reflect Mr. Subramaniam’s position as President and Chief Operating Officer in fiscal 2021 and 2022 and his new position, effective June 1, 2022, as President and Chief Executive Officer.
   
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Long-Term Equity Incentives — Stock Options and Restricted Stock

Our primary objective in providing long-term equity incentives to executive officers is to further align their interests with those of our stockholders by facilitating significant ownership of FedEx stock by the officers. This creates a direct link between their compensation and long-term stockholder return. Equity awards also serve as an effective retention and motivational vehicle, focusing executive officers on the long-term success of FedEx and rewarding them when the stock price appreciates. During fiscal 2022 the Compensation & HR Committee again reviewed our long-term equity incentive programs and determined that they continue to be appropriate for FedEx.

Amount

Stock options and restricted stock are generally granted to executive officers on an annual basis. As discussed above, an officer’s position and level of responsibility are the primary factors that determine the number of options and shares of restricted stock awarded to the officer in the annual grant. For instance, FedEx’s General Counsel and Chief Information Officer receive the same number of options and restricted shares in the annual grant.

The number of stock options and restricted shares awarded at each management level can vary from year to year. In determining how many options and shares of restricted stock should be awarded at each level, the Compensation & HR Committee may consider:

Target TDC levels and referenced survey data — as discussed above, we include the total target value of all equity-based awards (including tax payments for restricted stock awards) in our calculation of target TDC, and in evaluating the fiscal 2022 target TDC levels for our named executive officers, we referred to multiple market reference points for comparable positions in the referenced surveys;
The total number of shares then available to be granted; and
Potential stockholder dilution.

As of July 25, 2022, the total number of shares underlying options and shares of restricted stock outstanding or available for future grant under our equity compensation plans represented 9.0% of the sum of shares outstanding plus the shares underlying options outstanding or available for future grant plus shares of restricted stock available for future grant.

Other factors that the Compensation & HR Committee may consider, especially with respect to special grants outside of the annual-grant framework, include the promotion of an officer or the desire to retain a valued executive or recognize a particular officer’s contributions. None of these factors is given any particular weight and the specific factors used may vary among individual executives.

Timing

Stock option and restricted stock awards are generally made to executive officers on an annual basis according to a pre-established schedule. Annual equity-based compensation awards to our executive officers are approved annually at the June meeting of the Compensation & HR Committee. The date of this meeting is generally scheduled at least one year in advance. If the meeting date is not on a business day, the grant date is the next business day. If the meeting date falls within a quiet period when trading in FedEx securities is prohibited under our Securities Manual, the Compensation & HR Committee may approve the awards but make them effective as of a future grant date that falls outside of such quiet period.

Throughout the year, equity awards are made to new hires, promoted employees, and, in rare circumstances, as a reward for exceptional performance. When the Compensation & HR Committee approves a special grant outside of the annual-grant framework, such grants are typically made at a regularly scheduled meeting and the grant date of the awards is the approval date or the next business day, if the meeting does not fall on a business day. If the grant is made in connection with the promotion of an individual or the election of an officer, the grant date may be the effective date of the individual’s promotion or the officer’s election, if such effective date is after the approval date. If the meeting date falls within a quiet period when trading in FedEx securities is prohibited under our Securities Manual, the Compensation & HR Committee may approve the awards but make them effective as of a future grant date that falls outside of such quiet period.

Pricing

The exercise price of stock options granted under our equity incentive plans is equal to the fair market value of FedEx’s common stock on the date of grant. Under the terms of our equity incentive plans, the fair market value on the grant date is defined as the average of the high and low trading prices of FedEx’s common stock on the NYSE on that day. We believe this is the most equitable method for determining the exercise price of our stock option awards given the intra-day price volatility often shown by our stock.

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Vesting

Stock options and restricted stock granted to executive officers generally vest ratably over four years beginning on the first anniversary of the grant date. This four-year vesting period is intended to further encourage the retention of our executive officers, since unvested stock options are forfeited upon termination of the officer’s employment for any reason other than death or permanent disability and unvested restricted stock is forfeited upon termination of the officer’s employment for any reason other than death, permanent disability, or retirement.

Tax Payments for Restricted Stock Awards

When granting restricted stock, FedEx first determines the total target value of the award and then approves the delivery of that value in two components: restricted shares and cash payment of taxes due. Therefore, the total target value of the award is the same as it would be if there were no tax payments. In particular, because the amount of the tax payment is included in the calculation of the target value of the restricted stock award, the officers receive fewer shares in each award than they would in the absence of the tax payment: fewer by an amount equal in value to the tax payment.

This methodology prevents the need for an officer to make a disposition of FedEx stock to cover the tax consequences of a restricted stock award and dilute his or her interest in FedEx. Conversely, absent the tax payment, the number of shares received in each award would be larger by an amount equal in value to the forgone tax payment, thereby having a dilutive effect on our stockholders’ equity interest in FedEx. While SEC disclosure rules require that these payments be included with tax reimbursement payments and reported as “other compensation” in the Summary Compensation Table, we do not believe these payments are “tax gross-ups” in the conventional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients. The following chart illustrates this principle, using the target value for the fiscal year 2022 annual restricted stock awards granted to our General Counsel and Chief Information Officer (as in previous years, Mr. Smith did not receive a restricted stock award in fiscal 2022):

Target Value of Restricted Stock Award

Not only is the value to the officer, as well as the cost to the company, generally the same as it would be otherwise, but this practice uses fewer shares of stock to arrive at the same benefit and has proved extremely successful in retaining executives and enabling them to retain their shares. Our restricted stock program also includes certain lower-level officers and high-performing managers and individual contributors who are nominated for special awards, and we make tax payments as part of restricted stock awards to these individuals.

In sum, we strongly believe that our restricted stock program is effectively designed and is aligned with the best interests of our stockholders.

Voting and Dividend Rights on Restricted Stock

Holders of restricted shares are entitled to vote and receive any dividends on such shares. The dividend rights are included in the computation of the value of the restricted stock award for purposes of determining the recipient’s target TDC.

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Fiscal 2022 Awards

On June 15, 2021, the named executive officers were granted stock option and restricted stock awards as follows:

NAME       NUMBER OF STOCK OPTIONS       NUMBER OF SHARES OF
RESTRICTED STOCK
F.W. Smith   85,855   0
M.C. Lenz   13,850   3,030
R. Subramaniam   18,210   3,575
D.F. Colleran   13,850   3,030
R.B. Carter   10,650   2,345

As in previous years, at the request of Mr. Smith and in light of his significant stock ownership, the Compensation & HR Committee did not award him any restricted stock. Instead, his equity awards were in the form of stock options, which will yield value to him only if the stock price increases from the date of grant.

The amount reported for restricted stock awards in the Summary Compensation Table reflects the average of the high and low prices of FedEx common stock on the NYSE on the grant date, which may vary from the stock price assumption used when determining the target grant levels.

Perquisites, Tax Payments, and Other Annual Compensation

FedEx’s named executive officers receive certain other annual compensation, including:

Certain perquisites, such as personal use of corporate aircraft (though officers are required to reimburse FedEx for certain costs related to such usage), security services and equipment, tax return preparation and financial counseling services, umbrella insurance, physical examinations, travel privileges on certain airline partners, salary continuation benefits for short-term disability, and supplemental long-term disability benefits;
Group term life insurance and 401(k) company-matching contributions; and
Tax payments relating to restricted stock awards (as discussed above) and certain business-related use of corporate and commercial aircraft.

We provide this other compensation to enhance the competitiveness of our executive compensation program and to increase the productivity (corporate aircraft travel, professional assistance with tax return preparation, and financial planning), safety (security services and equipment), and health (annual physical examinations) of our executives so they can focus on producing superior financial returns for our stockholders. Our tax payments relating to restricted stock awards are a component of the total target value of the restricted stock grant. As a result, the total target value of the award is the same as it would be if there were no tax payments and there is no dilutive effect on our stockholders’ equity interest in FedEx. The Compensation & HR Committee reviews and approves each of these elements of compensation, and all of the independent directors approve each element as it relates to our Executive Chairman and our President and Chief Executive Officer. The Committee also reviews and approves FedEx’s policies and procedures regarding perquisites and other personal benefits and tax payments, including:

FedEx’s written policy setting forth guidelines and procedures regarding personal use of FedEx corporate aircraft; and
FedEx’s executive security procedures.

FedEx’s executive security procedures, which prescribe the level of personal security to be provided to the Executive Chairman and President and Chief Executive Officer and other executive officers, are based on bona fide business-related security concerns and are an integral part of FedEx’s overall risk management and security program. These procedures have been assessed by an independent security consulting firm, and deemed necessary and appropriate for the protection of the officers and their families given the history of direct security threats against FedEx executives and the likelihood of additional threats against the officers. The security services and equipment provided to FedEx executive officers may be viewed as conveying personal benefits to the executives and, as a result, their values must be reported in the Summary Compensation Table.

With respect to our President and Chief Executive Officer (and, during fiscal 2022, our Chairman of the Board and Chief Executive Officer), consistent with FedEx’s executive security procedures, the Board of Directors requires him to use FedEx corporate aircraft for all travel, including personal travel. Our Executive Chairman is not required to use FedEx corporate aircraft for all travel. In addition, FedEx provides certain physical and personal security services for our Executive Chairman and President and Chief Executive Officer, including on-site residential security at the Executive Chairman’s primary residence. The Board of Directors believes that the personal safety and security of Messrs. Smith and Subramaniam are of the utmost importance to FedEx and its stockholders and, therefore, the costs associated with such security are appropriate and necessary business expenses.

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Post-Employment Compensation

While none of FedEx’s named executive officers has an employment agreement, they are entitled to receive certain payments and benefits upon termination of employment or a change of control of FedEx, including:

Retirement benefits under FedEx’s 401(k) and pension plans, including a tax-qualified, defined contribution 401(k) retirement savings plan called the FedEx Corporation Retirement Savings Plan; a tax-qualified, defined benefit pension plan called the FedEx Corporation Employees’ Pension Plan; and a supplemental non-tax-qualified plan called the FedEx Corporation Retirement Parity Pension Plan — which is designed to provide to the executives the benefits that otherwise would be paid under the tax-qualified pension plan but for certain limits under United States tax laws;
Accelerated vesting of restricted stock upon the executive’s retirement (at or after age 60), death, or permanent disability or a change of control of FedEx;
Accelerated vesting of stock options upon the executive’s death or permanent disability or a change of control of FedEx;
Lump sum cash payments and post-employment insurance coverage under their Management Retention Agreements with FedEx (the “MRAs”) upon a qualifying termination of the executive after a change of control of FedEx. The MRAs, as well as the accelerated vesting of equity awards upon a change of control of FedEx, are intended to secure the executives’ continued services in the event of any threat or occurrence of a change of control, which further aligns their interests with those of our stockholders when evaluating any such potential transaction;
Partial payouts under applicable LTI plans based on the portion of the three-fiscal-year periods during which the executive was employed and the executive’s employment terminated as a result of his or her retirement, death, or permanent disability; and
A prorated payout under the applicable AIC plan based on the portion of the fiscal year during which the executive was employed and the executive’s employment terminated as a result of his or her retirement, death, or permanent disability.

The Compensation & HR Committee approves and recommends Board approval of all plans, agreements, and arrangements that provide for these payments and benefits.

Limitation on Severance Benefits

In response to a stockholder proposal approved at the 2021 annual meeting of stockholders regarding shareholder ratification of termination pay, the Board of Directors, upon the recommendation of the Compensation & HR Committee, adopted a policy that we will not pay or enter into any new agreement with an executive officer that provides for severance benefits in connection with the executive officer’s voluntary or involuntary termination (unless due to death or permanent disability or in connection with a change of control) in an amount that exceeds 2.99 times the sum of the executive officer’s base salary and target AIC payout for the year of termination (with the value of any unvested equity awards that accelerate on the applicable termination of employment event calculated according to Section 280G) unless approved or ratified by stockholders. We also amended our 2019 Plan to provide that if the value of any unvested equity awards that accelerate in connection with a change of control of FedEx triggers an excise tax under Section 4999 of the Internal Revenue Code, then the amount of the individual’s awards eligible to accelerate will be reduced, to the extent possible, to one dollar ($1) less than three times the individual’s Section 280G “base amount,” so as to avoid triggering the excise tax.

In the event of a change of control and qualifying termination, the MRAs limit the amounts payable to each executive officer under the MRA to the largest amount that would result in none of the MRA payments being subject to any excise tax. See “Potential Payments Upon Termination or Change of Control — Benefits Triggered by Change of Control or Termination after Change of Control — Management Retention Agreements” on page 84 for additional information.

Risks Arising from Compensation Policies and Practices

Management has conducted an in-depth risk assessment of FedEx’s compensation policies and practices and concluded they do not create risks that are reasonably likely to have a material adverse effect on the company. The Compensation & HR Committee has reviewed and concurred with management’s conclusion. The risk assessment process included, among other things, a review of (i) all key incentive compensation plans to ensure that they are aligned with our pay-for-performance philosophy and include performance metrics that meet and support corporate goals and (ii) the overall compensation mix to ensure an appropriate balance between fixed and variable pay components and between short-term and long-term incentives. The objective of the process was to identify any compensation plans and practices that may encourage employees to take unnecessary risks that could threaten the company. No such plans or practices were identified.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code limits the income tax deduction by FedEx for compensation paid to the Chief Executive Officer, Chief Financial Officer, and the three other highest-paid executive officers to $1,000,000 per year. Following the passage of the Tax Cuts and Jobs Act, beginning in fiscal 2019, FedEx is generally no longer able to take a deduction for any compensation paid to its current or former named executive officers in excess of $1 million, with the exception of specified performance-based awards outstanding on November 2, 2017. Effective for fiscal 2028, the American Rescue Plan Act of 2021 expanded the list of employees subject to the deduction limit to include the next five highest-compensated employees.

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Summary Compensation Table

In this section, we provide certain tabular and narrative information regarding the compensation of our principal executive and financial officers and our three other most highly compensated executive officers for the fiscal year ended May 31, 2022, and for each of the previous two fiscal years (except as noted).

NAME AND
PRINCIPAL POSITION(1)
  YEAR       SALARY
($)
      BONUS
($)(2)
      STOCK
AWARDS
($)(3)
      OPTION
AWARDS
($)(3)
      NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)(4)
      CHANGE IN
PENSION
VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($)(5)
      ALL OTHER
COMPENSATION
($)(6)
      TOTAL
($)
Frederick W. Smith
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
      2022   1,412,516   0   0   7,160,341   819,224     1,204,069   10,596,150
  2021   966,125   0   0   8,784,094   3,427,430     1,147,888   14,325,537
  2020   1,175,473   0   0   7,404,485   0   1,843,623   702,218   11,125,799
Michael C. Lenz(7)
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
  2022   747,788   0   892,653   1,155,096   322,057   184,314   634,765   3,936,673
  2021   633,334   100,000   987,438   947,897   1,083,000   63,514   693,204   4,508,387
Rajesh Subramaniam
President and Chief Operating Officer
  2022   1,115,453   0   1,053,213   1,518,721   548,915   195,153   738,671   5,170,126
  2021   987,667   0   1,504,730   2,469,792   1,991,136   271,001   1,013,604   8,237,930
  2020   968,301   137,500   1,141,852   1,570,283   0   549,340   787,593   5,154,869
Donald F. Colleran
President and Chief Executive Officer, FedEx Express
  2022   913,789   0   892,653   1,155,096   369,207     634,256   3,965,001
  2021   890,016   0   1,276,205   1,232,609   1,553,969     917,912   5,870,711
  2020   872,565   62,500   967,863   1,194,511   0   649,482   679,864   4,426,785
Robert B. Carter
Executive Vice President, FedEx Information Services and Chief Information Officer
  2022   911,281   0   690,849   888,214   364,148     597,740   3,452,232
  2021   887,573   0   987,438   947,897   1,565,678     766,206   5,154,792
  2020   870,170   0   749,366   918,497   0   1,551,328   616,568   4,705,929
   
(1) The titles included in this column are as of May 31, 2022, and reflect the titles held by the named executive officer during fiscal 2022. Effective June 1, 2022, Mr. Smith transitioned to the role of Executive Chairman and Mr. Subramaniam transitioned to the role of President and Chief Executive Officer.
(2) The amounts reported in this column reflect (a) promotional bonuses received by Messrs. Subramaniam and Colleran that were paid in fiscal 2020 and (b) a promotional bonus received by Mr. Lenz that was paid in fiscal 2021.
(3) The amounts reported in these columns reflect the aggregate grant date fair value of restricted stock and option awards granted to the named executive officer during each fiscal year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. These amounts reflect our calculation of the value of these awards on the grant date and do not necessarily correspond to the actual value that may ultimately be realized by the officer.
  The fair value of restricted stock awards is equal to the fair market value of FedEx’s common stock (the average of the high and low prices of the stock on the NYSE) on the date of grant multiplied by the number of shares awarded.
  For accounting purposes, we use the Black-Scholes option pricing model to calculate the grant date fair value of stock options. Assumptions used in the calculation of the amounts in the “Option Awards” column are included in note 11 to our audited consolidated financial statements for the fiscal year ended May 31, 2022, included in our Annual Report on Form 10-K for fiscal 2022. See the “Grants of Plan-Based Awards During Fiscal 2022” table for information regarding restricted stock and option awards granted to the named executive officers during fiscal 2022.
(4) Reflects cash payouts, if any, under FedEx’s fiscal 2022, 2021, and 2020 AIC plans and FY20–FY22, FY19–FY21, and FY18–FY20 LTI plans, as follows (for further discussion of the fiscal 2022 AIC plan and the FY20–FY22 LTI plan, see “— Compensation Discussion and Analysis —Compensation Elements and Fiscal 2022 Amounts — Cash Payments Under AIC Program” and “— Cash Payments Under LTI Program” above):
   
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  NAME       YEAR       AIC PAYOUT
($)
      LTI PAYOUT
($)
      TOTAL NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)
  F.W. Smith   2022   819,224   0   819,224
      2021   3,427,430   0   3,427,430
      2020   0   0   0
  M.C. Lenz   2022   322,057   0   322,057
      2021   1,083,000   0   1,083,000
  R. Subramaniam   2022   548,915   0   548,915
      2021   1,991,136   0   1,991,136
      2020   0   0   0
  D.F. Colleran   2022   369,207   0   369,207
      2021   1,553,969   0   1,553,969
      2020   0   0   0
  R.B. Carter   2022   364,148   0   364,148
      2021   1,565,678   0   1,565,678
      2020   0   0   0
   
(5) Reflects the actuarial increase in the present value of the named executive officer’s benefits under the Pension Plan and the Parity Plan (as each such term is defined under “— Fiscal 2022 Pension Benefits — Overview of Pension Plans”). The present value of the benefits under the Pension Plan and Parity Plan for Mr. Smith decreased as follows: (a) between fiscal 2022 and 2021 — $842,796 and (b) between fiscal 2021 and fiscal 2020 — $2,125,383. The present value of the benefits under the Pension Plan and Parity Plan for Messrs. Colleran and Carter decreased as follows: (a) between fiscal 2022 and fiscal 2021 — $3,191 and $278,544, respectively; and (b) between fiscal 2021 and 2020 — $295,558 and $1,083,742, respectively. The amounts in the table and this footnote were determined using assumptions (e.g., for interest rates and mortality rates) consistent with those used in the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022. See “— Fiscal 2022 Pension Benefits” below.
(6) Includes:
   The aggregate incremental cost to FedEx of providing perquisites and other personal benefits;
  Group term life insurance premiums paid by FedEx;
  Company-matching contributions under FedEx’s tax-qualified, defined contribution 401(k) retirement savings plan called the FedEx Corporation Retirement Savings Plan; and
  Tax payments relating to restricted stock awards and certain business-related use of corporate and commercial aircraft. FedEx pays the taxes resulting from a restricted stock award on behalf of the recipient to prevent the need for the officer to sell a portion of a stock award to pay the corresponding tax obligation. While SEC disclosure rules require that these payments be included with tax reimbursement payments and reported as “other compensation” in the Summary Compensation Table, we do not believe these payments are “tax gross-ups” in the conventional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients. See “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2022 Amounts — Long-Term Equity Incentives — Stock Options and Restricted Stock — Tax Payments for Restricted Stock Awards” above.
     
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The following table shows the amounts included for each such item: