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 the appropriate box): | | | | | [X] | | No fee required. | | | [ ] | | Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11. | | | (1) | | Title of each class of securities to which transaction applies: | | | | | | | | (2) | | Aggregate number of securities to which transaction applies: | | | | | | | | (3) | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | | | | | | | | (4) | | Proposed maximum aggregate value of transaction: | | | (5) | | Total fee paid: | | | | | | | | (5) | | Total fee paid: | | | | | | [ ] | | Fee paid previously with preliminary materials:materials. | [ ] | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the formForm or scheduleSchedule and the date of its filing. | | | (1) | | Amount previously paid: | | | | | Previously Paid: | | | (2) | | Form, Schedule or Registration Statement No.: | | | | | | | | (3) | | Filing Party: | | | | | | | | (4) | | Date Filed: | | | | | |
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20142017 Annual Meeting
of Stockholders
Monday, September 29, 2014 25, 2017 8:00 a.m. local time
FedEx Express World Headquarters
Auditorium
3670 Hacks Cross Road, Building G
Memphis, Tennessee 38125
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INFORMATION ABOUT THE ANNUAL MEETING
Voting Matters and Board Recommendations FedEx’s Board of Directors is furnishing you this proxy statement in connection with the solicitation of proxies on its behalf for the 20142017 Annual Meeting of Stockholders. Our stockholders will be voting on the following matters at the annual meeting: Stockholders also will consider any other matters that may properly come before the meeting.
How to Cast Your Vote and Annual Meeting Admission If you are a registered stockholder, you can vote by any of the following methods: If your shares are held by a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, these proxy materials are being forwarded to you by your bank, brokerage firm or other nominee (the “bank or broker”), along with a voting instruction form. To direct your bank or broker how to vote your shares, complete, sign and return the voting instruction form in the envelope provided or follow the instructions provided to you for voting your shares by telephone or on the Internet. To ensure your shares are voted in the way you would like, you must provide voting instructions by the deadline provided in the materials you receive from your bank or broker. As a beneficial owner, in order to beablebe able to vote your shares at the meeting, you must obtain a legal proxy from your bank or broker and bring it with you to hand in with your signed ballot. If you plan to attend the annual meeting in person, you must register in advance. The registration deadline is 11:59 p.m. Eastern time on Thursday, September 21, 2017. If you attend the annual meeting in person, you will need to present your admission ticket, or an account statement showing your ownership of FedEx common stock as of the record date,which you will receive when you register in advance, and a valid government-issued photo identification. The indicated portion of your proxy card or voting instruction form orFor more information on how to register to attend the annual meeting and obtain an admission ticket, accompanying your voting instruction form will serve as your admission ticket. If you are a registered stockholderplease see “Do I have to register in advance to attend the meeting?” and receive your proxy materials electronically, you should follow“Who can attend the instructions provided to print a paper admission ticket.meeting?” on page 90. Your vote is very important. Please vote whether or not you plan to attend the meeting. We are first sending the proxy statement, form of proxy and accompanying materials to stockholders on or about August 18, 2014.14, 2017.
2014Online www.investorvote.com/FEDX through 9/24/2017 By Phone1-800-652-VOTE (8683) through 9/24/2017 Proxy Statement Card Completing, signing and returning your proxy card In Person With a ticket obtained upon advance registration and valid photo identificationi
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Effect of Not Casting Your Vote If you are a registered stockholder and you do not sign and return your proxy card or vote electronically on the Internet or by telephone, no votes will be cast on your behalf on any of the items of business at the meeting. If you hold your shares in street name and you do not instruct your bank or broker how to vote your shares, your broker may vote your shares in its discretion on the ratification of the appointment of the independent registered public accounting firm, but will not be allowed to vote your shares on any of the other proposals.
General Information The principal executive offices of FedEx Corporation are located at 942 South Shady Grove Road, Memphis, Tennessee 38120. FedEx’s Annual Report to Stockholders for the fiscal year ended May 31, 2014,2017, which includes FedEx’s fiscal 20142017 audited consolidated financial statements, accompanies this proxy statement. Although the Annual Report is being distributed with this proxy statement, it does not constitute a part of the proxy solicitation materials and is not incorporated by reference into this proxy statement. By submitting your proxy (either by signing and returning the enclosed proxy card or by voting electronically on the Internet or by telephone), you authorize Christine P. Richards, FedEx’s Executive Vice President, General Counsel and Secretary, and Alan B. Graf, Jr., FedEx’s Executive Vice President and Chief Financial Officer, to represent you and vote your shares at the meeting in accordance with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any postponements or adjournments of the meeting.
Reduce Mailing Costs If you vote on the Internet, you may elect to have next year’s proxy statement and annual report to stockholders delivered to you electronically. We strongly encourage you to enroll in electronic delivery. It is a cost-effective way for us to provide you with proxy materials and annual reports. ii 2014
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PROXY 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 further information in this proxy statement.
Corporate Governance Matters (see page 1) 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 shareowners by providing high value-added logistics, transportation and related business services through focused operating companies. The Board is currently comprised of 1312 members — a combined Chairman and Chief Executive Officer, the Lead Independent Director and 1110 other independent, active and effective directors of equal importance and rights. The Board believes that this current leadership structure provides the most effective governance of FedEx’s business and affairs for the long-term benefit of stockholders and promotes a culture and reputation of the highest ethics, integrity and reliability. In March 2016, our Board of Directors adopted a proxy access bylaw after we engaged with a number of our largest stockholders to understand their views on proxy access and the appropriate proxy access structure for FedEx. The proxy access bylaw permits up to 20 stockholders owning 3% or more of FedEx’s outstanding voting stock continuously for at least three years to nominate and include in FedEx’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws. You can find detailed information about our corporate governance policies and practices in the Corporate Governance Matters section of thethis proxy statement. You can also access our corporate governance documents in the Governance & Citizenship section of the Investor Relations page of our website athttp://investors.fedex.cominvestors.fedex.com..
Corporate Governance Facts | | | | | Proxy Access | | | Yes | | Majority Voting for Directors | | | Yes | | Annual Election of All Directors | | | Yes | | Diverse Board | | | Yes | | Annual Board and CommitteeSelf-Evaluations | | | Yes | | Separate Chairman & CEO | | | No | | Lead Independent Director | | | Yes | | Independent Directors Meet Regularly Without Management Present | | | Yes | | Annual Independent Director Evaluation of Chairman and CEO | | | Yes | | Code of Business Conduct and Ethics Applicable to Directors | | | Yes | | Nominating & Governance Committee Composed of Independent Directors | | | Yes | | Stock Ownership Goal for Directors and Senior Officers | | | Yes | | Size of Board* | 13 | | 12 | | Number of Independent Directors* | 12 | | 11 | | Average Age of Directors* | 59 | | 62 | | Average Director Tenure (in years)* | 10 | | 13 | | Median Director Tenure (in years)* | | | 8 | |
* As of August 18, 2014
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Voting Matters and Board Recommendations Proposal 1 – Election of Directors (see page 14)15)
You are being asked to elect the 12 nominees named in this proxy statement as directors for a term of one year. Other than Steven R. Loranger, eachEach of our current directors is standing for reelection. OurYour Board of Directors recommends that you vote FOR“FOR” the election of each of the twelve nominees.
Director Nominees (see page 15)16)
| Director Nominee | | Age | | Director Since | | Independent | | Position | | Other public directorships | | AC | | ITOC | | CC | | NGC | | | Frederick W. Smith | | 70 | | 1971 | | | | Chairman, President and | | | | | | | | | | | | | | | | | | | | | Chief Executive Officer of | | | | | | | | | | | | | | | | | | | | | FedEx Corporation | | | | | | | | | | | | | James L. Barksdale | | 71 | | 1999 | | ü | | Chairman and President | | Time Warner Inc. | | | | C | | | | ü | | | | | | | | | | | of Barksdale Management | | | | | | | | | | | | | | | | | | | | | Corporation | | | | | | | | | | | | | John A. Edwardson | | 65 | | 2003 | | ü | | Former Chairman and Chief | | ACE Limited, | | C | | | | | | | | | | | | | | | | | Executive Officer of CDW | | Rockwell Collins, Inc. | | | | | | | | | | | | | | | | | | | Corporation | | | | | | | | | | | | | Marvin R. Ellison | | 49 | | 2014 | | ü | | Executive Vice President – | | H&R Block, Inc. | | | | | | ü | | (1) | | | | | | | | | | | U.S. Stores of The Home Depot, Inc. | | | | | | | | | | | | | Kimberly A. Jabal | | 45 | | 2013 | | ü | | Chief Financial Officer of | | | | (2) | | ü | | | | | | | | | | | | | | | Path, Inc. | | | | | | | | | | | | | Shirley Ann Jackson | | 68 | | 1999 | | ü | | President of Rensselaer | | International Business Machines | | | | | | ü | | ü | | | | | | | | | | | Polytechnic Institute | | Corporation, Marathon Oil | | | | | | | | | | | | | | | | | | | | | Corporation, Medtronic, Inc. and Public Service Enterprise Group Incorporated | | | | | | | | | | | Gary W. Loveman | | 54 | | 2007 | | ü | | Chairman, President and | | Caesars Entertainment | | ü | | | | | | (1) | | | | | | | | | | | Chief Executive Officer of Caesars Entertainment Corporation | | Corporation, Coach, Inc. | | | | | | | | | | | R. Brad Martin | | 62 | | 2011 | | ü | | Chairman of RBM Venture | | Chesapeake Energy | | ü | | ü | | | | | | | | | | | | | | | Company | | Corporation, First Horizon | | | | | | | | | | | | | | | | | | | | | National Corporation | | | | | | | | | | | Joshua Cooper | | 45 | | 2011 | | ü | | Vice Chairman of Kissinger | | Starbucks Corporation | | ü | | ü | | | | | | | Ramo | | | | | | | | Associates, Inc. | | | | | | | | | | | | | Susan C. Schwab | | 59 | | 2009 | | ü | | Professor at the University of | | The Boeing Company, Caterpillar | | | | ü | | ü | | | | | | | | | | | | | Maryland School of Public Policy, Former U.S. Trade Representative | | Inc. | | | | | | | | | | | David P. Steiner | | 54 | | 2009 | | ü | | Chief Executive Officer of | | TE Connectivity Ltd., Waste | | | | | | | | C | | | | | | | | | | | Waste Management, Inc. | | Management, Inc. | | | | | | | | | | | Paul S. Walsh | | 59 | | 1996 | | ü | | Chairman of Compass | | Avanti Communications Group | | | | | | ü(3) | | ü(3) | | | | | | | | | | | Group PLC | | plc (Chairman), Compass Group PLC (Chairman), RM2 International S.A., Ontex Group NV, Unilever PLC | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Director Nominee | | Age | | Director Since | | | Independent | | Position | | Other public directorships | | AC | | CC | | ITOC | | NGC | Frederick W. Smith | | 73 | | | 1971 | | | | | Chairman and Chief Executive Officer of FedEx Corporation | | | | | | | | | | | James L. Barksdale | | 74 | | | 1999 | | | ✓ | | Chairman and President of Barksdale Management Corporation | | | | | | | | C | | ✓ | John A. Edwardson | | 68 | | | 2003 | | | ✓ | | Former Chairman and Chief Executive Officer of CDW Corporation | | Chubb Limited, Rockwell Collins, Inc. | | C | | | | | | | Marvin R. Ellison | | 52 | | | 2014 | | | ✓ | | Chairman and Chief Executive Officer of J. C. Penney Company, Inc. | | J. C. Penney Company, Inc. | | | | ✓ | | ✓ | | ✓ | John C. (“Chris”) Inglis | | 62 | | | 2015 | | | ✓ | | Professor at the U.S. Naval Academy | | Huntington Bancshares Inc., KEYW Corp. | | | | ✓ | | ✓ | | ✓ | Kimberly A. Jabal | | 48 | | | 2013 | | | ✓ | | Chief Financial Officer of Weebly, Inc. | | | | ✓ | | | | ✓ | | | Shirley Ann Jackson | | 71 | | | 1999 | | | ✓ | | President of Rensselaer Polytechnic Institute | | International Business Machines Corporation, Medtronic, Inc., Public Service Enterprise Group Incorporated | | ✓ | | ✓ | | | | ✓ | R. Brad Martin | | 65 | | | 2011 | | | ✓ | | Chairman of RBM Venture Company | | Chesapeake Energy Corporation (Chairman), First Horizon National Corporation | | ✓ | | | | | | ✓ | Joshua Cooper Ramo | | 48 | | | 2011 | | | ✓ | | Vice Chairman,Co-Chief Executive Officer, Kissinger Associates, Inc. | | Starbucks Corporation | | ✓ | | | | ✓ | | | Susan C. Schwab | | 62 | | | 2009 | | | ✓ | | Professor at the University of Maryland School of Public Policy | | The Boeing Company, Caterpillar Inc., Marriott International, Inc. | | | | ✓ | | ✓ | | | David P. Steiner | | 57 | | | 2009 | | | ✓ | | Former Chief Executive Officer of Waste Management, Inc. | | Vulcan Materials Company | | | | | | | | C | Paul S. Walsh | | 62 | | | 1996 | | | ✓ | | Chairman of Compass Group PLC | | Avanti Communications Group plc (Chairman), Compass Group PLC (Chairman), RM2 International S.A. | | | | C | | | | |
(1) | If elected, Messrs. Ellison and Loveman will become members of the Nominating & Governance Committee. | | | | (2)iv | If elected, Ms. Jabal will become a member of the Audit Committee. | (3) | If elected, Mr. Walsh will replace Mr. Loranger as the Compensation Committee Chairman and will no longer be a member of the Nominating & Governance Committee. 2017 Proxy Statement | | |
iv 2014 Proxy Statement
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Director Experience, Qualifications, Attributes and Skills (see page 14)20) 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:
Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation (see page 52)57) 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 stockholdersshareowners and reward them for doing so. We believe that there should be a strong relationship between pay and corporate performance, and our executive compensation program reflects this belief. The Compensation Discussion and Analysis, Summary Compensation Table and related compensation tables and narrative provide detailed information on the compensation of our named executive officers, and can be found on pages 2021 through 51.56. We believethisbelieve this information demonstrates that our executive compensation program promotes the best interests of FedEx and our shareowners by enabling FedEx to retain and attract talented executive management, while ensuring that they are compensated in such a manner as to sustain and enhance long-term shareowner value. In the 20132016 advisory vote, 95.4%95.3% of the voted shares supported the compensation of our named executive officers. OurYour Board of Directors recommends that you vote FOR“FOR” this proposal.
Proposal 3 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation (see page 59)
You are being provided the opportunity to vote on how often you believe we should hold an advisory vote to approve executive compensation in the future. The frequency options are to hold the advisory vote to approve executive compensation every year, every two years or every three years. The Board believes that an annual advisory vote on executive compensation is the most appropriate policy for our stockholders and the company at this time. Your Board of Directors recommends that you vote for conducting future advisory votes on executive compensationEVERY YEAR. Proposal 4 – Amendment to FedEx’s 2010 Omnibus Stock Incentive Plan (see page 60) You are being asked to approve an amendment to FedEx’s 2010 Omnibus Stock Incentive Plan (as amended to the date hereof, the “Plan”) to increase the number of shares authorized for issuance under the Plan. If approved, the amendment would authorize an additional 10,000,000 shares for issuance under the Plan. However, none of the additional shares will be issuable as full-value awards. The amendment would not make any other changes to the Plan. Absent an increase in the number of authorized shares under the Plan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for fiscal 2020 (which begins on June 1, 2019). We believe that increasing the number of shares issuable under the 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.
Proposal 5 – Ratify the Appointment of Ernst & Young LLP as FedEx’s Independent Registered Public Accounting Firm (see page 56)75) The Audit 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 Committee has appointed Ernst & Young LLP (“Ernst & Young”) to serve as FedEx’s independent registered public accounting firm for fiscal 2015.2018. Ernst & Young has been our independent registered public accounting firm since 2002. Fees paid to Ernst & Young for fiscal 20142017 and 20132016 are detailed on page 56.74. Representatives of Ernst & Young will be present at 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. OurYour Board of Directors recommends that you vote FOR“FOR” this proposal.
Proposals 46 – 8: Five9: Four Stockholder Proposals, if properly presented (see pages 58 - 71)77 – 87)
FiveFour stockholder proposals are expected to be presented for a vote at the annual meeting.
OurYour Board of Directors recommends that you vote AGAINST“AGAINST” each of these proposals.
2014 Proxy Statement v
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| Notice of Annual Meeting of Stockholders
To Be Held September 29, 201425, 2017 | | | | |
To Our Stockholders: We cordially invite you to attend the 20142017 annual meeting of FedEx’s stockholders. The meeting will take place in the auditorium at the FedEx Express World Headquarters, 3670 Hacks Cross Road, Building G, Memphis, Tennessee 38125, on Monday, September 29, 2014,25, 2017, at 8:00 a.m. local time. We look forward to your attendance either in person or by proxy. The purposes of the meeting are to:
1. | | Elect the twelve nominees named in the proxy statement as FedEx directors; |
2. | | Hold an advisory vote to approve named executive officer compensation; |
3. | Hold an advisory vote on the frequency of future advisory votes on executive compensation; |
4. | Approve an amendment to FedEx’s 2010 Omnibus Stock Incentive Plan to increase the number of authorized shares; |
5. | Ratify the appointment of Ernst & Young LLP as FedEx’s independent registered public accounting firm for fiscal year 2015;2018; |
4.6. | | Act upon fivefour stockholder proposals, if properly presented at the meeting; and |
5.7. | | Transact any other business that may properly come before the meeting. |
Members of FedEx’s management team will be present at the meeting to respond to appropriate questions from stockholders. Only stockholders of record at the close of business on August 4, 2014,July 31, 2017, may vote at the meeting or any postponements or adjournments of the meeting.
By order of the Board of Directors,
Christine P. Richards
Executive Vice President, General Counsel and Secretary |
If you plan you to attend the annual meeting in person, you must register by 11:59 p.m. Eastern time on Thursday, September 21, 2017. See page 90 of the proxy statement for information on how to register in advance to attend the meeting. By order of the Board of Directors, Christine P. Richards Executive Vice President, General Counsel and Secretary August 18, 201414, 2017 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON SEPTEMBER 29, 201425, 2017: The following materials are available on the Investor Relations page of the FedEx website athttp://investors.fedex.com: The Notice of Annual Meeting of Stockholders To Be Held September 29, 2014; - 25, 2017;
FedEx’s Annual Report to Stockholders for the fiscal year ended May 31, 2014.2017.
Your vote is very important. Please vote whether or not you plan to attend the meeting.
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2014 PROXY STATEMENT Table of Contents
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CORPORATE GOVERNANCE MATTERS
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 as appropriate. We also value the perspectives of our stockholders and other stakeholders, including our employees and the communities in which we operate, and take steps to implement their points of view where warranted. In considering possible modifications of our corporate governance policies and practices, our Board and management focus on those changes that are appropriate for our company and our industry, rather than adopting aone-size-fits-all approach. 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, our criteria for director selection 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 Business Conduct and Ethics, are available in the Governance& Citizenship section of the Investor Relations page of our website athttp://investors.fedex.com. .
Board Leadership Structure The leadership structure of our Board of Directors includes (i) a combined Chairman of the Board and Chief Executive Officer, (ii) 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 and (iii) a Lead Independent Director. The Chairperson of the Nominating & Governance Committee, who is elected annually by a majority of the independent Board members, serves as the Lead Independent Director. The Board believes that FedEx has been and continues to be well served by having the company’s founder, Frederick W. Smith, serve as both Chairman of the Board and Chief Executive Officer. The current Board leadership model, when combined with the composition of the Board, the strong leadership of our independent directors, Board committees and Lead Independent Director, and the highly effective corporate governance structures and processes already in place, strikes an appropriate balance between consistent leadership and independent oversight of FedEx’s business and affairs. 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 long-standing 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 Non-Management Directors Hold Regular ExecutiveSessions.Our non-management Board members meet at regularly scheduled executive sessions without management present in conjunction with each in-person Board meeting. The Lead Independent Director conducts and presides at these meetings. At least once a year, such meetings include only the independent members of the Board. In addition, the Lead Independent Director may call such meetings of the non-management Board members as he or she deems necessary or appropriate, may also be designated to preside at any Board or stockholder meeting and presides at all Board meetings at which the Chairman of the Board and Chief Executive Officer is not present.Board Members May Submit Agenda Items/InformationRequests.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 reviews and approves all Board meeting schedules and agendas and consults with the Chairman of the Board and Chief Executive Officer regarding other information sent to the Board in connection with Board meetings or other Board action.
2014 Proxy Statement 1
• | | 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. |
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• | | OurNon-Management Directors Hold Regular Executive Sessions.Ournon-management Board members meet at regularly scheduled executive sessions without management present in conjunction with eachin-person Board meeting. The Lead Independent Director conducts and presides at these meetings. At least once a year, such meetings include only the independent members of the Board. In addition, the Lead Independent Director may call such meetings of thenon-management Board members as he or she deems necessary or appropriate, may be designated to preside at any Board or stockholder meeting and presides at all Board meetings at which the Chairman of the Board and Chief Executive Officer is not present. |
• | | Board Members May Submit Agenda Items and Information Requests.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 |
CORPORATE GOVERNANCE MATTERS
| not otherwise been provided to the Board. Additionally, the Lead Independent Director reviews and approves all Board meeting schedules and agendas and consults with the Chairman of the Board and Chief Executive Officer 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 chairman of each Board committee for the purpose of discussing any matter related to the work of such committee. The Lead Independent Director also serves as a liaison, but not a buffer, between the Chairman of the Board and 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 is 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 and Chief Executive Officer 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 Directors Conduct Annual Evaluations.Our directors evaluate the Board’s processes on an annual basis 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 dialog and that sufficient time has been allocated for such meetings. |
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 chairman of each Board committee for the purpose of discussing any matter related to the work of such committee. The Lead Independent Director also serves as a liaison, but not a buffer, between the Chairman of the Board and Chief Executive Officer and independent Board members.
Our Directors Are Encouraged to Interact WithStockholders.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 is 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 and Chief Executive Officer or at the request of two or more directors.The Board or Any Board Committee Can RetainIndependent Advisors.The Board and each Board committee have the authority to retain independent legal, financial and other advisors as they deem appropriate.Our Directors Conduct Annual Evaluations.Our directors evaluate the Board’s processes on an annual basis 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 dialog and that sufficient time has been allocated for such meetings.
Board Risk Oversight The Board of Directors’ role in risk oversight at FedEx is consistent with the company’s leadership structure, with management havingday-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 begins with a strategic overview by the Chairman of the Board President and Chief Executive Officer that describes the most significant issues, including risks, affecting the company, and also includes business updates from the President and Chief Operating Officer and 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. 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. For example: The Audit Committee reviews and discusses with management the company’s major financial and other risk exposures and the steps management has taken to monitor and control such exposures. - exposures and the implementation and effectiveness of the company’s compliance and ethics programs, including the Code of Business Conduct and Ethics and the employee hotline program.
The Compensation 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. The Information Technology Oversight Committee reviews and discusses with management the company’s cybersecurity risks and the technologies, policies, processes and practices for managing and mitigating such risks, and it reviews and discusses with management the quality and effectiveness of the company’s information technology systems and processes, including the extent to which those systems and processes provide cybersecurity and protect the company from technology-related risks.
CORPORATE GOVERNANCE MATTERS The Nominating & Governance Committee reviews and discusses with management, the implementation and effectivenessin light of the company’s compliancerisk exposure, the composition, structure, processes and ethics programs, includingpractices of the Code of Business Conduct and EthicsBoard and the employee hotline program.Board committees. In addition, the Audit 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 Committee on the key enterprise risks facing FedEx. 2 2014 Proxy Statement
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Executive Management Succession Planning The Board of Directors has in place an effective planning process to select successors to the Chairman of the Board President and Chief Executive Officer and other members of executive management. The Nominating & Governance Committee, in consultation with the Chairman of the Board President and Chief Executive Officer, annually reports to the Board on executive management succession planning. The entire Board works with the Nominating & Governance Committee and the Chairman of the Board President and 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 CEO and other executives. As noted above, each Board member has complete and open access to any member of management. We believe that this enhances the Board’s oversight of succession planning. The Chairman of the Board President and Chief Executive Officer 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 or becomes incapacitated.
Director Independence The Board of Directors has determined that each member of the Audit, Compensation and Nominating & Governance Committees and, with the exception of Frederick W. Smith, each of the Board’s current members (James L. Barksdale, John A. Edwardson, Marvin R. Ellison, John C. (“Chris”) Inglis, Kimberly A. Jabal, Shirley Ann Jackson, Steven R. Loranger, Gary W. Loveman, R. Brad Martin, Joshua Cooper Ramo, Susan C. Schwab, David P. Steiner and Paul S. Walsh) is independent and meets the applicable independence requirements of the New York Stock Exchange (including the additional requirements for Audit Committee and Compensation Committee members) and the Board’s more stringent standards for determining director independence. Mr. Smith is FedEx’s Chairman of the Board President and Chief Executive Officer. Gary W. Loveman retired as a director immediately before the 2016 annual meeting, and the Board of Directors had previously determined that he was independent. Under the Board’s standards of director independence, which are included in FedEx’s Corporate Governance Guidelines, 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 revenues for such year.
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• | | 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 anon-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. |
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• | | 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 atax-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 atax-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 revenues for such year. |
The Board broadly considered all relevant facts and circumstances, including the following immaterial transactions, relationships and arrangements: Mr. Barksdale served as an officer of FedEx, but he left the company well over five years ago (his employment at FedEx ended in 1992). In the ordinary course of business, FedEx makes purchases from Waste Management, Inc., anAn entity forwith which Mr. Steiner serves as Chief Executive Officer. The amount of the payments made by FedEx to Waste Management has not within any of its three most recently completed fiscal years exceeded one percent (or $1 million, whicheverSmith is greater) of its consolidated gross revenues for such year. Mr. Smithaffiliated has made a passive investment (holding aless-than-5% equity interest) in a privately held entity with which Mr. Barksdale is affiliated.Mr. Barksdale has made an investment (holding aless-than-10% equity interest) in a privately held entity that is headed by Mr. Smith’s daughter. - daughter and of which Mr.
Martin serves asSmith is a director of First Horizon National Corporation with Robertand 10% owner. Messrs. Ellison and Martin and Alan B. Carter,Graf, Jr., FedEx’s Executive Vice President FedEx Information Services and Chief Information Officer. Messrs. Smith and Martin are members of the board of managers of Pilot Travel Centers LLC.Mr. Martin and a FedEx executive officerFinancial Officer, serve on the boardBoard of trusteesTrustees of the same Memphis-based school.University of Memphis, anon-profit- entity to which FedEx makes payments and charitable
contributions to the University of Memphis, a non-profit entity for which Mr. Martin served as Interim President from July 2013 until May 2014. Mr. Martin did not receive any compensation for his service as Interim President.contributions. The amount of the payments and charitable contributions made by FedEx to the University of Memphis in its 2016 and 2015 fiscal years represented betweenslightly more than one and two percent of the university’sUniversity’s consolidated gross revenues for each year, and the payments made by FedEx to the University in its most recently completed2014 fiscal year for which information is publicly available andrepresented less than one percent in each of the two prior fiscal years.University’s consolidated gross revenues for the year. The Board determined that Mr.Messrs. Ellison and Martin isare still an independent directordirectors under the Board’s independence standards as he does notneither of them have a direct or indirect material relationship with either FedEx or the University of Memphis, other than as the former Interim President,a director or trustee, and does notneither of them derive any financial or other personal benefit from these transactions. Mr. Martin and Rajesh Subramaniam, FedEx’s Executive Vice President, Chief Marketing and Communications Officer, serve as members of the Board of Directors of First Horizon National Corporation. 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. In the ordinary course of business, FedEx makes purchases of aircraft and related services and equipment from The Boeing Company, for which Ambassador Schwab serves as a director. The payments made by FedEx to Boeing in its twothree most recently completed fiscal years represented lessone percent or slightly more than one percent of Boeing’s consolidated gross revenues for the year, but the payments made by FedEx to Boeing in its 2011 fiscal year represented between one and two percent of Boeing’s consolidated gross revenues for the year. Ambassador Schwab recuses herself when the Board discusses or votes on Boeing-related matters. The Board determined that Ambassador Schwab is still an independent director under the Board’s independence standards as she does not have a direct or indirect material relationship with either FedEx or Boeing, other than as a director, and does not derive any financial benefit from these ordinary course transactionstransactions. In the ordinary course of business, FedEx makes purchases from Waste Management, Inc., an entity for which Mr. Steiner served as Chief Executive Officer until November 2016. The amount of the payments made by FedEx to Waste Management 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 revenues for such year. .
Audit Committee Financial Expert The Board of Directors has determined that at least one member of the Audit Committee, John A. Edwardson, is an audit committee financial expert as that term is defined in SECSecurities and Exchange Commission (“SEC”) rules.
CORPORATE GOVERNANCE MATTERS Director Mandatory Retirement A director must retire immediately before the annual meeting of FedEx’s stockholders during the calendar year in which he or she attains age 72.75. 4 2014 Proxy Statement
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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 (i) within four years after joining the Board,(a) eachnon-management director serving as of March 13, 2017 own FedEx shares valued at (i) three times his or her annual retainer fee within four years after joining the Board and (ii) five times his or her annual retainer fee by December 31, 2020, (b) eachnon-management director who joins the Board after March 13, 2017 own FedEx shares valued at five times his or her annual retainer fee within fourfive years after joining the Board, and (c) 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: 6x for the Chairman of the Board and Chief Executive Officer; 5x for the President and Chief ExecutiveOperating Officer; 3x for the other FedEx executive officers, including the chief executive officers of FedEx’s core operating companies; - FedEx Express, FedEx Ground and FedEx Freight;
2x for executive vice presidents of FedEx’s core operating companies;FedEx Express, FedEx Ground, FedEx Freight and - FedEx Services; and
1x for certain other senior officers. 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 August 4, 2014,July 31, 2017, each director who had been a Board member for over four years (and Mr. Martin)Inglis and Ms. Jabal) and each executive officer owned sufficient shares to comply with this goal.
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. NotethatNote 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.
Communications with Directors Stockholders and other interested parties may communicate directly with any member (including the Lead Independent Director) or committee 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 summaryofsummary of all such correspondence and copies of all correspondence that, in her opinion, deals with the functions of the Board or its committees or that she 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.
CORPORATE GOVERNANCE MATTERS Proxy Access In March 2016, the Board of Directors amended our bylaws to implement proxy access. Prior to the Board’s adoption of the proxy access bylaw, we consulted with many of our largest institutional stockholders in order to understand their views and policies regarding proxy access, including the specific provisions they considered important. We spoke with, or otherwise received feedback from, representatives of stockholders owning nearly half of our then-outstanding shares. We also spoke with a representative of the proponent of the proxy access stockholder proposal that was approved at our 2015 annual meeting of stockholders. Substantially all of these stockholders indicated their support for a proxy access bylaw with terms consistent with those now included in our Bylaws, which are as follows: a 3% ownership threshold and3-year holding period requirement; a cap on the number of director nominees at 2 or 20% of the board, whichever is greater; and a stockholder group aggregation limit of 20. Based on this feedback from our stockholders, and the Board’s assessment of the relative merits of the various proxy access formulations, our Board of Directors approved amendments to our Bylaws to implement proxy access consistent with the terms set forth above, which it determined to be in the best interests of our stockholders. Our Bylaws are available in the Governance & Citizenship section of the Investor Relations page of our website at http://investors.fedex.com. Nomination of Director Candidates The Nominating & Governance Committee will consider director nominees proposed by stockholders. To recommend a prospective director candidate for the Nominating & Governance 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 “Proposal 1 — Election of Directors — Experience, Qualifications, Attributes and Skills,” and other relevant biographical information in writing to: FedEx Corporation Nominating & Governance 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 20152018 Annual Meeting.” 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 Nominating & Governance Committee, which identifies, evaluates and recruits highly qualified director candidates and recommends them to the Board. The Nominating & Governance Committee considers potential 2014 Proxy Statement 5
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candidates for director that may come to the attention of the Nominating & Governance Committee through current directors, management, professional search firms, stockholders or other persons. The Nominating & Governance Committee has engaged a third-party executive search firm to assist in identifying potential director candidates. The Nominating & Governance 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. If the Nominating & Governance Committee determines that an additional or replacement director is necessary or advisable, the Nominating & Governance Committee may take suchmeasuressuch measures that it considers appropriate in connection with its evaluation of a potential director candidate, including interviewing the candidate, engaging an outside firm to gather additional information and making inquiries of persons with knowledge of the candidate’s qualifications and character. In its evaluation of potential director candidates, including the members of the Board of Directors eligible for reelection, the Nominating & Governance Committee considers the current size, composition and needs of the Board of Directors and each of its committees.
CORPORATE GOVERNANCE MATTERS Majority-Voting Standard for Director Elections FedEx’s Bylaws require that we use a majority-voting standard in uncontested director elections and contain a resignation requirement for directors who fail to receive the required majority vote. The Bylaws also prohibit the Board from changing back to a plurality-voting standard without the approval of our stockholders. 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 forreelectionfor 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.
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 Nominating & Governance 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: THEBOARD OF DIRECTORS
Committees The Board of Directors has a standing Audit Committee, Compensation Committee, Information Technology Oversight Committee and Nominating & Governance Committee. Each committee’s written charter, as adoptedbyadopted by the Board of Directors, is available on the FedExInvestor Relations page of our website athttp://investors.fedex.com in the Governance & Citizenship section under “Committee Charters.” Committee memberships are currently as follows:
| | | | | | | | | | | | Audit Committee | | | | | | | | | | | Committee functions:
| Audit Committee | Committee members | | | | | | | | Committee functions: | | | | Committee members John A. Edwardson (Chairman) Kimberly A. Jabal Shirley Ann Jackson R. Brad Martin Joshua Cooper Ramo FY17 meetings held:10 | | | | | • | | 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; and (iii) the performance of the internal auditors; and (iv) FedEx’s compliance with legal and regulatory requirements; | | | | | | | | • | | preapproves all audit and allowablenon-audit services to be provided by FedEx’s independent registered public accounting firm; and | | | | | | | | • | | 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.exposures; and | | John A. Edwardson (Chairman)
Gary W. Loveman
R. Brad Martin
Joshua Cooper Ramo
FY14 meetings held:9
| |
| Compensation Committee | | | | | | Committee functions:•
| | oversees FedEx’s compliance with legal and regulatory requirements and the implementation and effectiveness of FedEx’s corporate integrity and compliance programs. | | | | | | |
| | Committee members | | | | | | | | | | | | | | | | | | | | | | Compensation Committee | | | | | | | | | Committee functions: | | | | Committee members Paul S. Walsh (Chairman) Marvin R. Ellison John C. (“Chris”) Inglis Shirley Ann Jackson Susan C. Schwab FY17 meetings held:6 | | | | | • | | evaluates, together with the independent members of the Board, the performance of FedEx’s Chairman of the Board President and Chief Executive Officer and recommends his compensation for approval by the independent directors; | | | | | | | | • | | helps discharge the Board’s responsibilities relating to the compensation of executive management; | | | | | | | | • | | 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; and | | | | | | | | • | | oversees the administration of FedEx’s equity compensation plans and reviews the costs and structure of key employee benefit andfringe-benefit plans and programs. | | Steven R. Loranger (Chairman)
Marvin R. Ellison
Shirley Ann Jackson
Susan C. Schwab
Paul S. Walsh
| | | |
FY14 meetings held:6
| Information Technology Oversight Committee | | | | | | | | | | | Committee functions:
| Information Technology Oversight Committee | Committee members | | | | | | | | appraisesCommittee functions: | | | | Committee members James L. Barksdale (Chairman) Marvin R. Ellison John C. (“Chris”) Inglis Kimberly A. Jabal Joshua Cooper Ramo Susan C. Schwab FY17 meetings held: 5 | | | | | • | | reviews major information technology (“IT”) related projects and technology architecture decisions; ensures that | | | | | | | | • | | assesses whether FedEx’s IT programs effectively support FedEx’s business objectives and strategies; monitors | | | | | | | | • | | assists FedEx’s Board of Directors in oversight of cybersecurity risks and assesses FedEx’s management of IT-related compliance risks, including IT-related internal audits;FedEx management’s efforts to monitor and - mitigate those risks; and
| | | | | | | | • | | advises FedEx’s senior IT management team and the Board of Directors onIT-related matters. | | James L. Barksdale (Chairman)
Kimberly A. Jabal
R. Brad Martin
Joshua Cooper Ramo
Susan C. Schwab
| | | |
FY14 meetings held:6
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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
| | | | | | | | | | | | Nominating & Governance Committee | | | | | | | | | | | Committee functions:
| | Nominating & Governance Committee members | | | | | | | | | Committee functions: | | | | Committee members David P. Steiner (Chairman) James L. Barksdale Marvin R. Ellison John C. (“Chris”) Inglis Shirley Ann Jackson R. Brad Martin FY17 meetings held:6 | | | | | • | | 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; and | | | | | | | | • | | assists the Board in developing and implementing effective corporate governance compliance and ethics programs. | | David P. Steiner (Chairman)
James L. Barksdale
Shirley Ann Jackson
Paul S. Walsh
FY14 meetings held:6
| | | |
In addition, as discussed above under “Corporate Governance Matters — 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 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. In response to stockholder demand letters, three special committees of the Board were formed, comprised of Messrs. Edwardson and Steiner and Ms. Jabal. Two of these special committees were dissolved during fiscal 2017. In the aggregate, these committees met two times during fiscal 2017. The Board of Directors has approved reconstitutingmaintaining the committees so that, immediately following the annual meeting, if all of the director nominees are elected, committee memberships will beremain the same as follows:the previous year. Audit Committee
| | Information Technology
Oversight Committee | John A. Edwardson (Chairman) | | James L. Barksdale (Chairman) | Kimberly A. Jabal | | Kimberly A. Jabal | Gary W. Loveman | | R. Brad Martin | R. Brad Martin | | Joshua Cooper Ramo | Joshua Cooper Ramo | | Susan C. Schwab | | | | | Compensation Committee | | Nominating &
Governance Committee | Paul S. Walsh (Chairman) | | David P. Steiner (Chairman) | Marvin R. Ellison | | James L. Barksdale | Shirley Ann Jackson | | Marvin R. Ellison | Susan C. Schwab | | Shirley Ann Jackson | | | Gary W. Loveman |
Board Meetings and Meeting Attendance During fiscal 2014,2017, the Board of Directors held six regular meetings and one special meeting.meetings. The average attendance of all directors at Board and committee meetings was 99%96%. Each director attended at least 94%80% (and each current director attended at least 86%) of the aggregate meetings of the Board and any committees on which he or she served.
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 20132016 annual meeting of stockholders. 2014 Proxy Statement 11
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DIRECTORS’ COMPENSATION
Outside Directors’ Compensation During the first two quarters of fiscal 2014, 2017,non-management (outside) directors were paid: a quarterly retainer of $20,000;$2,000 for each in-person Board meeting attended; and$2,000 for each in-person committee meeting attended.
Outside directors who attended a Board or committee meeting telephonically were paid 75% of the applicable in-person meeting fee.
In September 2013, the Board of Directors and the Compensation Committee conducted their annual review of outside director compensation and approved the replacement of the quarterly retainer with an annual retainer and the removal of meeting fees, both effective December 1, 2013, but no change to committee chairperson fees (discussed below). As a result, outside directors are currently paid an annual retainer of $111,000. Outside directors elected at the 2013 annual meeting of stockholders received a $55,500 retainer payment in December 2013; thereafter, the full annual retainer will be paid following each annual meeting of stockholders, beginning with the 2014 annual meeting. Each outside director who was elected at the 2013 annual meeting received a stockoption for 3,700 shares of common stock. Outside directors who were elected to the Board after the 2013 annual meeting received the applicable pro rata portion of the annual retainer and stock option grant in connection with his or her election.
For fiscal 2014, chairpersons$125,000. Chairpersons of the Compensation, Nominating & Governance and Information Technology Oversight Committees were paid an additional annual fee of $13,500.$15,000. The Audit Committee chairperson was paid an additional annual fee of $22,500.$25,000. In addition, each outside director who was elected at FedEx’s 2016 annual meeting received a stock option for 3,980 shares of FedEx common stock.
In response to stockholder demand letters, three special committees of the Board were formed. Two of these special committees were dissolved during fiscal 2017. Special committee members (Messrs. Edwardson and Steiner and Ms. Jabal) are paid $2,000 for eachin-person meeting attended and $1,500 for each telephonic meeting attended. Frederick W. Smith, the only director who is also a FedEx employee, receives no additional compensation for serving as a director. The Compensation Committee annually reviews director compensation, including, among other things, comparing FedEx’s director compensation practices with those of other companies with annual revenues between $20$25 billion and $70$100 billion. Before making a recommendation regarding director compensation to the Board, the Compensation Committee considers that the directors’ independence may be compromised if compensation exceeds appropriate levels or if FedEx enters into other arrangements beneficial to the directors.
Retirement Plan for Outside Directors In July 1997, the Board of Directors of FedEx Express (FedEx’s predecessor) voted to freeze the Retirement Plan for Outside Directors (that is, no further benefits would be earned under this plan). Concurrent with the freeze, the Board amended the plan to accelerate the vesting of the benefits for each outside director who was not yet vested under the plan. This plan is unfunded and any benefits under the plan are general, unsecured obligations of FedEx. Once all benefits are paid from the plan, it will be terminated. The plan benefit payable to the one individual who served on the Board during fiscal 20142017 who has not yet received any plan benefits will be paid as a single lump sum distribution. The lump sum distribution is payable on or before the fifteenth business day of the month immediately following the later of the date of the director’s retirement and the date he attains age 60. In the event of the outside director’s death, his surviving spouse shall be entitled to receive the lump sum payment. The following table sets forth for the one director entitled to receive future benefits under the plan who served on the Board during fiscal 2014,2017, the amount payable to him assuming a hypothetical retirement date of June 1, 2014.2017.
Name | Lump Sum
Payment Amount
($) | | | | P.S. WalshName | 65,802 | (1)Lump Sum Payment Amount ($) |
(1) | Discounted from the age 60 normal retirement date provided for in the plan. |
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DIRECTORS’ COMPENSATION
Fiscal 20142017 Director Compensation The following table sets forth information regarding the compensation of FedEx’snon-employee (outside) directors for the fiscal year ended May 31, 2014:2017: Name | Fees Earned or Paid in Cash ($) (1) | Option Awards ($) (2)(3) | All Other Compensation ($) | Total ($) | J.L. Barksdale | 127,000 | 150,175 | 0 | 277,175 | J.A. Edwardson | 131,500 | 150,175 | 0 | 281,675 | M.R. Ellison | 62,160 | 87,435 | 0 | 149,595 | K.A. Jabal | 89,910 | 125,298 | 0 | 215,208 | S.A. Jackson | 113,500 | 150,175 | 0 | 263,675 | S.R. Loranger | 127,000 | 150,175 | 0 | 277,175 | G.W. Loveman | 114,500 | 150,175 | 0 | 264,675 | R.B. Martin | 108,000 | 150,175 | 0 | 258,175 | J.C. Ramo | 108,000 | 150,175 | 0 | 258,175 | S.C. Schwab | 108,000 | 150,175 | 0 | 258,175 | J.I. Smith(4) | 36,555 | 0 | 356,987 | 393,542 | D.P. Steiner | 122,500 | 150,175 | 0 | 272,675 | P.S. Walsh | 108,000 | 150,175 | 0 | 258,175 |
| | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash ($) (1) | | | Option Awards ($) (2)(3) | | | All Other Compensation ($) | | | Total ($) | | J.L. Barksdale | | | 140,000 | | | | 175,172 | | | | 0 | | | | 315,172 | | J.A. Edwardson | | | 153,000 | | | | 175,172 | | | | 0 | | | | 328,172 | | M.R. Ellison | | | 125,000 | | | | 175,172 | | | | 0 | | | | 300,172 | | J.C. Inglis | | | 125,000 | | | | 175,172 | | | | 0 | | | | 300,172 | | K.A. Jabal | | | 128,000 | | | | 175,172 | | | | 0 | | | | 303,172 | | S.A. Jackson | | | 125,000 | | | | 175,172 | | | | 0 | | | | 300,172 | | G.W. Loveman(4) | | | 0 | | | | 0 | | | | 52,389 | | | | 52,389 | | R.B. Martin | | | 125,000 | | | | 175,172 | | | | 0 | | | | 300,172 | | J.C. Ramo | | | 125,000 | | | | 175,172 | | | | 0 | | | | 300,172 | | S.C. Schwab | | | 125,000 | | | | 175,172 | | | | 0 | | | | 300,172 | | D.P. Steiner | | | 143,000 | | | | 175,172 | | | | 0 | | | | 318,172 | | P.S. Walsh | | | 140,000 | | | | 175,172 | | | | 0 | | | | 315,172 | |
(1) | Includes meeting fees, retainer payments and committee chairperson fees (as applicable). Also includes special committee meeting fees for Messrs. Edwardson and Steiner and Ms. Jabal. See “— Outside Directors’ Compensation” above. |
(2) | On September 23, 2013,26, 2016, each outside director elected at the 20132016 annual meeting received a stock option for 3,7003,980 shares of common stock. Ms. Jabal received a stock option for 2,482 shares upon her election to the Board on December 9, 2013, and Mr. Ellison received a stock option for 1,753 shares upon his election to the Board on March 10, 2014. The grant date fair value of each such option was computed in accordance with FASB ASCFinancial 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 10 to our audited consolidated financial statements for the fiscal year ended May 31, 2014,2017, included in our Annual Report on Form10-K for fiscal 2014.2017. Stock options granted to the outside directors generally vest fully one year after the grant date. |
(3) | The following table sets forth the aggregate number of outstanding stock options held by each current or former outside director listed in the above table as of May 31, 2014:2017: |
| Name | Options
Outstanding | | J.L. Barksdale | 50,030 | | J.A. Edwardson | 50,030 | | M.R. Ellison | 1,753 | | K.A. Jabal | 2,482 | | S.A. Jackson | 3,700 | | S.R. Loranger | 38,630 | | G.W. Loveman | 27,790 | | R.B. Martin | 14,390 | | J.C. Ramo | 14,390 | | | | Name | S.C. Schwab | 29,830Options Outstanding | | J.L. Barksdale | D.P. Steiner | 25,430 | 44,355 | | J.A. Edwardson | | | 44,355 | | M.R. Ellison | | | 11,878 | | J.C. Inglis | | | 3,980 | | K.A. Jabal | | | 12,607 | | S.A. Jackson | | | 3,980 | | G.W. Loveman | | | 29,535 | | R.B. Martin | | | 24,515 | | J.C. Ramo | | | 20,155 | | S.C. Schwab | | | 39,955 | | D.P. Steiner | | | 35,555 | | P.S. Walsh | 44,030 | | 39,955 | |
(4) | Joshua I. SmithGary W. Loveman retired as a director immediately before the 20132016 annual meeting. The amount ofin the “All Other Compensation” column for Mr. SmithLoveman includes his $313,811 lump sum distribution under the Retirement Plan for Outside Directors, $24,546$29,783 for a retirement gift and a $18,630$22,606 tax reimbursement payment relating to his retirementthe gift. |
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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 thirteentwelve members. Steven R. Loranger is retiring as a director immediately before this annual meeting and is not standing for reelection. The Board proposes that each of the other current directors be reelected to the Board. Ms. Jabal and Mr. Ellison were initially elected as directors by the Board in December 2013 and March 2014, respectively. Frederick W. Smith, FedEx’s Chairman, President and Chief Executive Officer, and the members of the Nominating & Governance Committee had recommended Ms. Jabal and Mr. Ellison as nominees. Effective upon the retirement of Mr. Loranger, the size of the Board will be decreased to twelve members. Each of the nominees elected at this annual meeting will hold office until the annual meeting of stockholders to be held in 20152018 and until his or her successor is duly elected and qualified.
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’smajority-voting standard, each of the twelve 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 “Corporate Governance Matters —Majority-Voting Standard for Director Elections.” YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE TWELVE NOMINEES.
Experience, Qualifications, Attributes and Skills The Nominating & Corporate Governance Committee seeks director nominees with the skills and experience needed to properly oversee the interests 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 and structure. These were all considered by the Board in connection with this year’s director nomination process. Transportation Industry Experience Diversity:The Board is committed to diversity and inclusion and is always looking for highly qualified candidates, including women (Ms. Jabal, Dr. Jackson and Ambassador Schwab) and minorities (Dr. Jackson and Mr. Ellison), who meet our criteria. The Board seeks, and believes it has found in this group of nominees, a diverse blend of experience and perspectives, institutional knowledge and personal chemistry, and directors who will provide sound and prudent guidance with respect to all of FedEx’s operations and interests. 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. 14 2014 Proxy Statement
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PROPOSAL 1 — ELECTION OF DIRECTORS
Nominees for Election to the Board | | | | | | | | | | | Frederick W. Smith | | | | | | | | | Age:70
Director since:1971
Committees:None
Other public directorships:None
| | | | | | Age:73 Director since:1971 Committees:None Other public directorships:None | | | | | Mr. Smith is the company’s founder and has been Chairman President and Chief Executive Officer of FedEx since 1998 and Chairman of FedEx Express since 1975. Mr. Smith was 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: | | |
| | James L. Barksdale | | | | | | | | | | | Age:71 74 Director since:1999
Committees:Information Technology Oversight (Chairman), Nominating & Governance
Other public directorships:Time Warner Inc.None | | | | | | | | Mr. Barksdale is Chairman and President of Barksdale Management Corporation, an investment management company, a position he has held since 1999. He is also the former Managing Partner of The Barksdale Group, a venture capital firm, a position he held from 1999 to 2013. He was President and Chief Executive Officer of Netscape Communications Corporation, a provider of software, services and website resources to Internet users, from 1995 to 1999. He held various senior management positions at FedEx Express from 1979 to 1992, including Executive Vice President and Chief Operating Officer, and was a director of FedEx Express from 1983 to 1991. He was previously a director of Sun Microsystems, Inc. From January 2012 to June 2012, he served as the interim Executive Director of the Mississippi Development Authority. He is a former director of Sun Microsystems, Inc. and Time Warner, Inc. | | | | | | Skills and Qualifications: | | |
| | John A. Edwardson | | | | | | | | | | | Age:65 68 Director since:2003
Committees:Audit (Chairman)
Other public directorships:ACEChubb Limited and Rockwell Collins, Inc. | | | | | | | | Mr. Edwardson is the former Chairman and Chief Executive Officer of CDW Corporation, a provider of technology products and services, serving as Chief Executive Officer from 2001 to September 2011 and as Chairman from 2001 to December 2012. He was Chairman and Chief Executive Officer of Burns International Services Corporation, a provider of security services, from 1999 to 2000. He was President and Chief Operating Officer of UAL Corporation (the parent company of United Air Lines, Inc.), an airline, from 1995 to 1998. He is a former director of CDW Corporation. | | | | | | Skills and Qualifications: | | |
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PROPOSAL 1 — ELECTION OF DIRECTORS
| | | | | | | | | | | Marvin R. Ellison | | | | | | | | | Age:49
Director since:2014
Committees:Compensation
Other public directorships:H&R Block, Inc.
| | | | | | Age:52 Director since:2014 Committees:Compensation, Information Technology Oversight, Nominating & Governance Other public directorships:J. C. Penney Company, Inc. | | | | | Mr. Ellison has been Chairman of J. C. Penney Company, Inc., an apparel and home furnishings retailer, since August 1, 2016 and Chief Executive Officer since August 1, 2015. Mr. Ellison served as President andCEO-Designee of J. C. Penney from November 1, 2014 through July 2015. From August 2008 through October 2014, he served as Executive Vice President – U.S. Stores of The Home Depot, Inc., a home improvement specialty retailer, since August 2008.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 H&R Block, Inc. | | | | | | Skills and Qualifications: •Transportation Industry:Industry: Served in a variety of logistics roles during his career, including as Senior Vice President – Global Logistics at The Home Depot. Also has significante-commerce - experience due to his executive positions held at J. C. Penney and The Home Depot.
Leadership:•Marketing: Gained marketing expertise through his executive experience at The Home Depot and J. C. Penney.
•Leadership: Significant executive leadership experience gained from executive positions held at The Home Depot. Depot and J. C. Penney. | | |
| | Kimberly A. JabalJohn C. (“Chris”) Inglis | | | | | | | | | Age:45
Director since:2013
Committees:Information Technology Oversight
Other public directorships:None
| | | | | | Age:62 Director since:2015 Committees:Compensation, Information Technology Oversight, Nominating & Governance Other public directorships:Huntington Bancshares Inc. and KEYW Corp. | | | | | Mr. Inglis is currently a Visiting Professor of Cyber Studies at the U.S. Naval Academy. He previously served for 28 years at the National Security Agency as a computer scientist and operational manager, retiring in 2014 as the Agency’s Deputy Director and senior civilian leader. In this role, he acted as the NSA’s chief operating officer responsible for guiding and directing strategies, operations and policy. Prior to joining the NSA, Mr. Inglis had nine years of active duty service as an officer and pilot in the U.S. Air Force, followed bytwenty-one years with the Air National Guard, from which he retired as a Brigadier General. Skills and Qualifications: •Transportation Industry: Commanded USAFC-130 tactical airlift units at the Squadron and Group level, holds the rating of USAF Command Pilot and has more than 20 years of experience piloting USAFC-141 andC-130 aircraft. •International: Has extensive experience conducting intelligence liaison as a senior representative of the U.S. government, including three years as the U.S. Special Liaison to the United Kingdom at U.S. Embassy London. •Technology: Serves on technical advisory boards across the private and public sectors and holds graduate degrees in engineering and computer science from Columbia, Johns Hopkins, and George Washington Universities. •Government/Leadership: Served for 17 years as a senior executive in the U.S. Department of Defense, including seven andone-half years as the Deputy Director and Chief Operating Officer of the NSA. He currently serves as a member of the Strategic Advisory Groups for U.S. Strategic Command and the Director of National Intelligence. | | |
| | | | | | | | | | | Kimberly A. Jabal | | | | | | | | | Age:48 Director since:2013 Committees:Audit, Information Technology Oversight Other public directorships:None | | | | | Ms. Jabal currently is the Chief Financial Officer and oversees the legalcustomer support and human resources functions at Path,Weebly, Inc., aprivately-held social networking small business software company. Prior to joining PathWeebly in March 2013,November 2015, she served as vice presidentChief Financial Officer of financeKong Technologies, Inc. (formerly Path, Inc.) and as Vice President of Finance at Lytro, Inc., an bothearly-stage company focused on building the world’s first consumer lightfield camera. 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. | | | | | | Skills and Qualifications: | |
PROPOSAL 1 — ELECTION OF DIRECTORS | | | | | | | | | | | Shirley Ann Jackson | | | | |
| | | | Age:68 71 Director since:1999
Committees:Audit, Compensation, Nominating & Governance
Other public directorships:International Business Machines Corporation, Marathon Oil Corporation, Medtronic, Inc. and Public Service Enterprise Group Incorporated | | | | | | | | Dr. Jackson is President of Rensselaer Polytechnic Institute (RPI), a technological research university, a position she has held since 1999. She was Chairman of the U.S. Nuclear Regulatory Commission (NRC) from 1995 to 1999 and Commissioner of the NRC from 1995 to 1999. Dr. Jackson has beenwas a member of the President’s Council of Advisors on Science and Technology (PCAST) sincefrom 2009 and is a trustee of M.I.T. (memberuntil 2014,Co-Chair of the M.I.T. Corporation). She isPresident’s Intelligence Advisory Board from November 2014 to January 2017, a member of the International Security Advisory Board to the U.S. Secretary of State (sincefrom July 2011)2011 to January 2017 and a member of the Secretary of Energy Advisory Board from 2013 to 2017. Dr. Jackson was Vice-Chair of the Board of Regents of the Smithsonian Institution from 2014 to 2017 and a member of the Board of Regents from 2005 to 2017. She also is a life trustee of M.I.T. (member of the M.I.T. Corporation). Dr. Jackson is a National Medal of Science recipient. She was previously a director of Marathon Oil Corporation, NYSE Euronext and U.S. Steel Corporation. | | | | | | Skills and Qualifications: of the President’s Intelligence Advisory Board, a former member of the International Security Advisory Board to the U.S. Secretary of State, a former member of the Secretary of Energy Advisory Board and a former director of Marathon Oil Corporation. | | |
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PROPOSAL 1 — ELECTION OF DIRECTORS
Gary W. Loveman
| | | | | | | | | R. Brad Martin | | | | | | | | | Age:65 54 Director since: 2007 2011
Committees:Audit, Nominating & Governance Audit Other public directorships: Caesars Entertainment Corporation and Coach, Inc.
| | Mr. Loveman is Chairman of the Board, Chief Executive Officer and President of Caesars Entertainment Corporation (formerly Harrah’s Entertainment, Inc.), a provider of branded gaming entertainment; he has held the position of President since 2001, Chief Executive Officer since 2003 and Chairman of the Board since 2005. He held various other executive positions at Caesars Entertainment Corporation from 1998 to 2001. He was Associate Professor of Business Administration at the Harvard University Graduate School of Business Administration from 1989 to 1998.
Skills and Qualifications:
International: Member of the President’s Export Council, the principal national advisory committee on international trade.Financial: Earned a Ph.D. in economics from the Massachusetts Institute of Technology.Marketing: Led several highly successful marketing initiatives at Caesars Entertainment and previously taught marketing-related courses.
|
R. Brad Martin
| | | | Age:62
Director since:2011
Committees:Audit, Information Technology Oversight
Other public directorships:Chesapeake Energy Corporation (Chairman) and First Horizon National Corporation
| | | | | Mr. Martin is Chairman of RBM Venture Company, a private investment company, a position he has held since 2007,2007. He also is Chairman of the Board of Chesapeake Energy Corporation, a producer of natural gas and oil and natural gas liquids, a position he has held since October 2015. Mr. Martin is the former Interim President of the University of Memphis, a position he held from July 2013 until May 2014. Mr. Martin was Chairman and Chief Executive Officer of Saks Incorporated from 1989 to 2006 and remained Chairman until 2007, when he retired. He was previously a director of Caesars Entertainment Corporation, (formerly Harrah’s Entertainment, Inc.), Dillards, Inc., Gaylord Entertainment Company, lululemon athletica inc. and Ruby Tuesday, Inc. Skills and Qualifications: Marketing:•Financial: Earned an MBA from Vanderbilt University and has public company audit committee experience.
•Marketing: Gained valuable retail marketing experience and successfully applied his marketing expertise as the former CEO of Saks, a leading department store retailer. • Energy:Energy: Member of the boardboards of Chesapeake Energy Corporation, where he currently serves as Chairman, and Pilot Travel Centers LLC.• Government:Government: Former Tennessee state representative.
| | |
| | | | | | | | | | | Joshua Cooper Ramo | | | | | | | | | Age:48 45 Director since:2011
Committees:Audit, Information Technology Oversight
Other public directorships:Starbucks Corporation | | | | | Mr. Ramo is Vice Chairman, ofCo-Chief Executive Officer, Kissinger Associates, Inc., a strategic advisory firm a position he(he has heldbeen Vice Chairman since 2011.2011 andCo-Chief Executive Officer since July 1, 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: International:•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. Heco-founded the U.S.–ChinaU.S.-China Young Leaders Forum in conjunction with the National Committee on U.S.–ChinaU.S.-China Relations.
Leadership:•Leadership: Vice Chairman, ofCo-Chief Executive Officer, Kissinger Associates.
| | |
2014 Proxy Statement 17
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PROPOSAL 1 — ELECTION OF DIRECTORS
| | | | | | | | | | | Susan C. Schwab | | | | | | | | | Age:62 59 Director since:2009
Committees:Compensation, Information Technology Oversight
Other public directorships:The Boeing Company, and Caterpillar Inc. and Marriott International, Inc. | | | | | Ambassador Schwab is a Professor at the University of Maryland School of Public Policy, a position she has held since January 2009. 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 was previously a director of The Adams Express Company, Calpine Corporation and Petroleum & Resources Corporation. Skills and Qualifications: Leadership: Former U.S. Trade Representative, formerDirector-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. | | |
| | | | | | | | | | | David P. Steiner | | | | | | | | | Age:57 54 Director since:2009
Committees:Nominating & Governance (Chairman)
Other public directorships: TE Connectivity Ltd. (formerly Tyco Electronics Ltd.) and Waste Management, Inc. Vulcan Materials Company | | | | | Mr. Steiner is the former Chief Executive Officer of Waste Management, Inc., a provider of integrated waste management services, a position he has held since 2004.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 of Waste Management, Inc. from 2003 to 2004, Senior Vice President, General Counsel and Corporate Secretary of Waste Management, Inc. from 2001 to 2003, and Vice President and Deputy General Counsel of Waste Management, Inc. 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: | | |
| | | | | | | | | | | Paul S. Walsh | | | | | | | | | Age:62 59 Director since:1996
Committees:Compensation Nominating & Governance (Chairman) Other public directorships:Avanti Communications Group plc (Chairman), Compass Group PLC (Chairman), and RM2 International S.A., Ontex Group NV and Unilever PLC
| | | | | Mr. Walsh is Chairman of the Board of Compass Group PLC, a food service and support services company, a position he has held since February 2014. Since July 2013,He also is Chairman of the Board of Avanti Communications Group plc, a leading satellite operator providing high speed internet and data services, a position he has held since November 2013. Mr. Walsh has beenserves as an advisor tofor L.E.K. Consulting, a global strategy consulting firm, and TPG Capital LLP, a private investment firm. Mr. Walsh served as Chief Executive Officer of Diageo plc, a beverage company, where he served as Chief Executive Officer from 2000 to June 2013.2013 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, RM2 International S.A. and Simpsons Malt Limited, and has been a member of the U.K. Prime Minister’s Business Advisory Group since July 2015. He 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 appointed as a Business Ambassador on the U.K. government’s Business Ambassador Network in August 2012. He was previously a director of Centrica plc, Diageo plc, HSBC Holdings plc, Ontex Group NV, Pace Holdings Corp. and Centrica plc.Unilever PLC. Skills and Qualifications: | | |
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PROPOSAL 1 — ELECTION OF DIRECTORS
2014 Proxy Statement 19
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EXECUTIVE COMPENSATION
Report of the Compensation Committee of the Board of Directors The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis. Based on its review and discussions with management, the Compensation 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 onForm 10-K for the fiscal year ended May 31, 2014.2017. Compensation Committee Members Steven R. LorangerPaul S. Walsh –Chairman
Marvin R. Ellison
John C. (“Chris”) Inglis Shirley Ann Jackson
Susan C. Schwab
Paul S. Walsh
Compensation Discussion and Analysis In this section we discuss and analyze the compensation of our principal executive and financial officers, and our three other most highly compensated executive officers, and T. Michael Glenn (the “named executive officers”) for the fiscal year ended May 31, 2014.2017. Mr. Glenn retired as FedEx’s Executive Vice President — Market Development & Corporate Communications effective December 31, 2016. Upon his retirement, Mr. Glenn entered into a consulting agreement with FedEx, the terms of which are summarized beginning on page 55. In addition, on July 20, 2017, we announced that Christine P. Richards will retire as Executive Vice President, General Counsel and Secretary effective September 30, 2017. Ms. Richards and FedEx have entered into a separation and release agreement, the terms of which are described on page 56. For additional information regarding compensation of the named executive officers, see “—��Summary Compensation Table” and other compensation-related tables and disclosure below.
In
Executive Summary During fiscal 2014,2017, we experienced improved performance by all our transportation segments despite the significant negative net impact of fuel and unusually severe winter weather. Although our financial performance improved during 2014, results were below our aggressive business plan goals. We are continuingcontinued to focus on our strategic cost reduction programs, finding ways to improve efficiency and rationalize capacity, improving on our already high levels of service, and continuing to invest in critical, long-term projects (including the integration of TNT Express) as part of our global strategy to position the company for stronger growth. Consistent with Although our pay-for-performance philosophy and reflecting FedEx’s below-plan financial performance improved during fiscal 2014, the payouts2017, FedEx Express segment adjusted operating income and adjusted consolidated operating income were below our aggressive target objectives under our fiscal 2017 annual incentive compensation (“AIC”) program. Accordingly, and consistent with ourpay-for-performance philosophy, the payouts under our AIC program were below target. Above-targetMaximum payouts were earned in fiscal 20142017 by all participants, including the named executive officers, under our long-term incentive compensation (“LTI”) program, which is tied to financial performance over a three-year period (fiscal 20122015 through fiscal 20142017 for the FY2012-FY2014FY2015–FY2017 LTI plan). We exceeded the earnings per share (“EPS”) goal required for a target payout, as the company’s performance in fiscal 2012 and 2014 more than offset weaker than expected results in fiscal 2013.
The following table details key compensation highlights of the last five fiscal years.
20 2014 Proxy Statement
Compensation Highlights FY2017 AIC plan paid below target FY2015-FY2017 LTI plan paid at maximum FY2016 AIC plan paid below target (slightly below target payout for FedEx Express CEO) FY2014-FY2016 LTI plan paid at maximum FY2015 AIC plan paid below target No FY2013-FY2015 LTI plan payout FY2014 AIC plan paid below target FY2012-FY2014 LTI plan paid above target FY2013 No AIC plan payout to Chairman, President and CEO AIC plan paid below target to other named executive officers FY2011-FY2013 LTI plan paid at maximum
Table of ContentsEXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
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 shareowners. 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 our Chairman of the Board President and Chief Executive Officer, Frederick W. Smith, founded the company and pioneered the express transportation industry over 4045 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 shareowners. 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, all FedEx Corporation executive vice presidentsour Chief Financial Officer, 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, which include: Achieving a 10%+ operating margin; Increasing EPSearnings per share (“EPS”) by 10% to 15% per year; Growing profitable revenue; Increasing returns, such as return on invested capital. 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.
2013 Say-on-Pay Advisory Vote Outcome |
2016Say-on-Pay Advisory Vote Outcome The Compensation Committee annually considers the results of the most recent advisory vote by shareowners to approve named executive officer compensation. In the 20132016 advisory vote, 95.4%95.3% of the voted shares supported the compensation of FedEx’s named executive officers, and the Compensation Committee and the Board of Directors interpret this strong level of support as affirmation of the current design,purposes and direction of FedEx’s executive compensation programs. In its ongoing evaluation of FedEx’s executive compensation programs and practices, the Compensation Committee will continue to consider the results from future shareowner advisory votes to approve named executive officer compensation.
Compensation Objectives and Design-Related Features |
Compensation Objectives and Design-Related Features We design our executive compensation program to further FedEx’s mission of producing superior financial returns for our shareowners by pursuing the following objectives: | How Pursued | | | | Objective | Generally | SpecificallyHow 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 shareowner 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 shareowner interests. | | Encourage and facilitate long-term shareowner 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; 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. |
2014 Proxy Statement 21
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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. 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 20142017 executive compensation review, we considered survey data published by two major consulting firms engaged by the company: Willis Towers Watson and Aon Hewitt. Each consulting firm provided target compensation data for general industry companies (excluding financial services companies) in its respective database with annual revenues between $20$25 billion and $70$100 billion. A list of these companies is attached to this proxy statement asAppendix A .General industry 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 (134(112 companies for fiscal 2014)2017) 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 group the elements into two categories: Annual base salary plus target AIC payout (i.e.,assuming achievement of all objectives), the sum of which we call total cash compensation (“TCC”).TCC plus target LTI cash award plus long-term equity incentive grants (stock options and restricted stock) plus tax reimbursement payments on restricted stock awards, the sum of which we callconsider total direct compensation (“TDC”). The TDC composition is illustrated below:Elements of TDC | | | Short-Term Compensation | | Base Salary | | AIC | Long-Term Compensation | | LTI | | Stock Options | | Restricted Stock (includes related tax payments) |
TDC includes AIC at target (i.e., assuming achievement of all objectives) and all long-term components at target. Long-term components of target TDC are valued consistent with the valuation methodology used in the referencedsurveys.
The TDC formula is illustrated below:referenced surveys. Tax payments on restricted stock awards are included in TDC.
SHORT-TERM
COMPENSATION | | | | LONG-TERM
COMPENSATION | | | | | | | | | | | | | | | | Base Salary | + | AIC | = | TCC | + | LTI | + | Stock | + | Restricted | = | TDC | | | | | | | Cash | | Options | | Stock* | | | | | | | | | | | | | | | | | | Financial Objectives | | | | 3-Year | | | | | | | | | + | | | | Aggregate | | Annual | | Annual | | | | | Individual Objectives | | | | EPS Goal | | Grant | | Grant | | | * Includes related tax reimbursement payments. |
Other elements of compensation of the named executive officers (such as perquisites and retirement benefits) are not included in our TDC, formula, 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 the TDC formula.TDC. These other elements of compensation, however, are reviewed and approved by the Compensation 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 againsttheseagainst 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 but reasonably achievable 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. 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 22 2014 Proxy Statement
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substantially contribute to FedEx’s future success for the long-term benefit of shareowners 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, as shown by the chart below, and this variable compensation is “at
EXECUTIVE COMPENSATION “at risk” and directly dependent upon the achievement ofpre-established corporate goals and stock price appreciation: Fiscal 20142017 AIC payouts were tied to meeting aggressive business plan goals for FedEx Express segment adjusted operating income and adjusted consolidated operating income, as well as individual performance objectives for allthe named executive officers other than the Chairman of the Board President and Chief Executive Officer. ConsolidatedFedEx Express segment adjusted operating income and adjusted consolidated operating income fell below the target objectiveobjectives for annual financial performance for fiscal 2014.2017. As a result, the named executive officers received below-target AIC payouts. LTI payouts are tied to meeting aggregate EPS goals over a three-fiscal-year period. Adjusted EPS growth in fiscal 2012 and 2014over the past three years resulted in above-targetmaximum payouts under the LTI program. 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 20142017 target TDC between base salary and incentive and equity-oriented compensation elements (the restricted stock value includes the related tax reimbursement payment):
Fiscal 20142017 Target TDC Components
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 shareowners. Accordingly, not only is our executive compensation program weighted towards variable,at-risk pay components, but we emphasize incentives that are dependent upon long-term corporate performance and stock price appreciation. Theselong-termThese long-term incentives include LTI 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 shareowner value. 2014 Proxy Statement 23
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The following chart illustrates for each named executive officer the allocation of fiscal 20142017 target TDC between long-term incentives — LTI, stock options and restricted stock, including the related tax reimbursement payment — and short-term components — base salary and AIC: Fiscal 20142017 Long-Term vs. Short-Term Compensation
We include target AIC and LTI payouts (discounted to present value to be consistent with the valuation methodology used in thethis year’s survey data) in the TCC and TDC, formula, so 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 ofpre-established 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. As shown by the following chart, although fiscal 2014 AICpayouts were below target levels, the actual fiscal 2014 TDC of our named executive officers was above target levels because we exceeded our pre-established EPS goal for a target payout under the FY2012-FY2014 LTI plan. In fiscal 2013, with the exception of Mr. F.W. Smith,Glenn who retired in December 2016, the actual TDC of our named executive officers in each of fiscal 2017 and fiscal 2016 was at or above target levelsTDC because weour financial performance exceeded ourpre-established EPS goal goals for a maximum payout under the FY2011-FY2013 LTI plan. Similarly, inConversely, the actual fiscal 2012, the actual2015 TDC of our named executive officers was abovebelow target levels because we substantially exceeded our financial performance fell short of ourpre-established EPS goal goals for a maximum payout under the FY2010-FY2012AIC and LTI plan.plans. Actual TDC vs Target TDC(1)
| ____________________
| (1) | Actual TDC includes base salary, actual AIC and LTI payouts (if any), equity-based awards valued at grant date consistent with the valuation methodology used in the survey data, and tax reimbursement payments related to restricted stock awards. The forfeiture of stock options due to Mr. Glenn’s retirement is not reflected in his actual TDC values. |
24 2014 Proxy Statement
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EXECUTIVE COMPENSATION
Align Management and Shareowner Interests.We award stock options and restricted stock to create and maintain a long-term economic stake in the company for the officers, thereby aligning their interests with the interests of our shareowners. In addition, as discussed above, payout under our LTI program is dependent upon achievement of an 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. The following graph illustrates the relationship between FedEx’s EPS growth and stock price appreciation (based on the fiscalyear-end stock price and adjusted for stock splits) from 1978 to 2014:2017:
| (1) | Fiscal 2015, 2016 and 2017 adjusted EPS of $8.87, $10.60 and $12.02, respectively, are included in the adjusted EPS line. As discussed in detail below, the Board of Directors, upon the recommendation of the Compensation Committee, approved certain adjustments to fiscal 2015, 2016 and 2017 EPS for LTI plan purposes in order to ensure that payouts, if any, under the applicable LTI plans more accurately reflect core financial performance. The adjustments include those relating to stock repurchase activity andmark-to-market pension accounting, among others. SeeAppendix B for a reconciliation of thenon-GAAP 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 shareowners, 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 fourfive 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: 5x6x for the Chairman of the Board President and Chief Executive Officer; 5x for the President and - Chief Operating 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 August 4, 2014,July 31, 2017, each executive officer exceeded the stock ownership goal. Policy Against Hedging and Pledging Transactions.In addition, we have adopted comprehensive and detailed policies (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 setsset forth certain types of transactions that are restricted.prohibited. 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 such as zero-costdesigned to limit the financial risk of ownership, including
EXECUTIVE COMPENSATION prepaid variable forward contracts, equity swaps, collars, exchange funds and forward sale contracts, are strictly prohibited.other similar transactions. The Securities Manual and our Corporate Governance Guidelines also prohibitsprohibit margin accounts and pledges; provided, however, that our Lead Independent Director and General Counsel, acting together, may grant an exception to the prohibition against holding FedEx securities in a margin account or pledging FedEx securities on acase-by-case basis to any member of the Board of Directors or the Chairman of the Board President and Chief Executive Officer if he or she clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. 2014 Proxy Statement 25
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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 Chairman of the Board President and Chief Executive Officer.Officer, and Enterprise. See “Stock Ownership — Directors and Executive Officers.” With respect to the shares pledged by Mr. Smith:Smith and Enterprise as of July 31, 2017: None of the shares pledged by Mr. Smith 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 1.4% of FedEx’s outstanding shares as of August 4, 2014,July 31, 2017, 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 shareowners. Mr. Smith has pledged only 21%19.9% of his total share ownership. The number of shares pledged by Mr. Smith has decreased by 626,000100,000 during the last year and by 1,186,0001,423,000 over the last twofive years. Based on the fiscalyear-end stock price ($144.16)193.84), the value of his pledged shares was approximately $594$752 million. Excluding the pledged shares, Mr. Smith still substantially exceeds our 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 were necessary, based on the30-day average trading volume for FedEx shares as of August 4, 2014,July 31, 2017, it would take twothree 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. We have an active shareowner engagement program in which we meet regularly with our largest shareowners. During these discussions, none of our largest shareowners 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. Restricted Stock Program.FedEx’s restricted stock program has been in place for over 2025 years and has encouraged FedEx executives to own and retain company stock. Although none of our largest shareowners have raised any concerns to us regarding our restricted stock program, during fiscal 20142017 the Compensation Committee again reviewed our restricted stock program and, for all of the following reasons, determined that it continues to be appropriate for FedEx. By facilitating the ownership of FedEx shares by our executives, we strengthen the alignment of their interests with those of our investors. 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.
EXECUTIVE COMPENSATION 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 shareowners’ 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 “taxgross-ups” in the traditional 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 20142017 restricted stock awards granted to FedEx Corporation executive vice presidentsour Chief Financial Officer, General Counsel, and Chief Information Officer (as in previous years, Mr. Smith did not receive a restricted stock award in fiscal 2014)2017): 26 2014 Proxy Statement
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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. During fiscal 2014, we broadened our restricted stock program to include certain lower-level officers and high-performing managers and individual contributors. We also 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 shareowners. Role of the Compensation Committee, its Compensation Consultant and the Chairman of the Board, President and Chief Executive Officer |
Role of the Compensation Committee, its Compensation Consultant and the Chairman of the Board and Chief Executive Officer Our Board of Directors is responsible for the compensation of our executive management. The purpose of the Board’s Compensation Committee, which is composed solely of independent directors, is to help discharge this responsibility by, among other things:
| Option Awards | | Stock Awards | | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(a) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(b) | Name | Exercisable | Unexercisable(a) | | | | R.B. Carter | 24,100 | — | | 90.8100 | 06/02/2018 | | | | | | 34,580 | — | | 56.3100 | 06/08/2019 | | | | | | 17,325 | 5,775 | (20) | 78.1900 | 06/07/2020 | | | | | | 10,740 | 10,740 | (21) | 89.1050 | 06/06/2021 | | | | | | 6,058 | 18,177 | (22) | 85.2550 | 06/04/2022 | | | | | | — | 24,620 | (23) | 96.8650 | 06/03/2023 | | | | | | | | | | | | 16,684 | (24) | 2,405,165 |
(a) | The following table sets forth the vesting dates of the options and restricted stock included in these columns: |
| | | Date | Number | | | | Date | Number | | F.W. Smith | (1) | 06/07/2014 | 48,875 | | A.B. Graf, Jr. | (5) | 06/07/2014 | 5,775 | | | (2) | 06/06/2014 | 44,025 | | | (6) | 06/06/2014 | 5,370 | | | | 06/06/2015 | 44,025 | | | | 06/06/2015 | 5,370 | | | (3) | 06/04/2014 | 49,669 | | | (7) | 06/04/2014 | 6,059 | | | | 06/04/2015 | 49,669 | | | | 06/04/2015 | 6,059 | | | | 06/04/2016 | 49,669 | | | | 06/04/2016 | 6,059 | | | (4) | 06/03/2014 | 50,945 | | | (8) | 06/03/2014 | 6,155 | | | | 06/03/2015 | 50,945 | | | | 06/03/2015 | 6,155 | | | | 06/03/2016 | 50,945 | | | | 06/03/2016 | 6,155 | | | | 06/03/2017 | 50,945 | | | | 06/03/2017 | 6,155 | | | | | | | | (9) | 06/03/2014 | 1,430 | | | | | | | | | 06/04/2014 | 1,821 | | | | | | | | | 06/06/2014 | 1,750 | | | | | | | | | 06/07/2014 | 2,000 | | | | | | | | | 06/03/2015 | 1,430 | | | | | | | | | 06/04/2015 | 1,821 | | | | | | | | | 06/06/2015 | 1,750 | | | | | | | | | 06/03/2016 | 1,430 | | | | | | | | | 06/04/2016 | 1,822 | | | | | | | | | 06/03/2017 | 1,430 | | D.J. Bronczek | (10) | 06/07/2014 | 7,694 | | T. M. Glenn | (15) | 06/07/2014 | 5,775 | | | (11) | 06/06/2014 | 7,112 | | | (16) | 06/06/2014 | 5,370 | | | | 06/06/2015 | 7,113 | | | | 06/06/2015 | 5,370 | | | (12) | 06/04/2014 | 8,025 | | | (17) | 06/04/2014 | 6,059 | | | | 06/04/2015 | 8,025 | | | | 06/04/2015 | 6,059 | | | | 06/04/2016 | 8,025 | | | | 06/04/2016 | 6,059 | | | (13) | 06/03/2014 | 8,160 | | | (18) | 06/03/2014 | 6,155 | | | | 06/03/2015 | 8,160 | | | | 06/03/2015 | 6,155 | | | | 06/03/2016 | 8,160 | | | | 06/03/2016 | 6,155 | | | | 06/03/2017 | 8,160 | | | | 06/03/2017 | 6,155 | | | (14) | 06/03/2014 | 1,842 | | | (19) | 06/03/2014 | 1,430 | | | | 06/04/2014 | 2,345 | | | | 06/04/2014 | 1,821 | | | | 06/06/2014 | 2,252 | | | | 06/06/2014 | 1,750 | | | | 06/07/2014 | 2,572 | | | | 06/07/2014 | 2,000 | | | | 06/03/2015 | 1,843 | | | | 06/03/2015 | 1,430 | | | | 06/04/2015 | 2,345 | | | | 06/04/2015 | 1,821 | | | | 06/06/2015 | 2,253 | | | | 06/06/2015 | 1,750 | | | | 06/03/2016 | 1,842 | | | | 06/03/2016 | 1,430 | | | | 06/04/2016 | 2,345 | | | | 06/04/2016 | 1,822 | | | | 06/03/2017 | 1,843 | | | | 06/03/2017 | 1,430 |
44 2014 Proxy Statement
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Date | | | Number | | | | | | | | | | Date | | | Number | | F.W. Smith | | (1) | | | 06/03/2017 | | | | 50,945 | | | | | | | A.B. Graf, Jr. | | (5) | | | 06/03/2017 | | | | 6,155 | | | | (2) | | | 06/09/2017 | | | | 39,871 | | | | | | | | | (6) | | | 06/09/2017 | | | | 4,817 | | | | | | | 06/09/2018 | | | | 39,872 | | | | | | | | | | | | 06/09/2018 | | | | 4,818 | | | | (3) | | | 06/08/2017 | | | | 33,130 | | | | | | | | | (7) | | | 06/08/2017 | | | | 4,003 | | | | | | | 06/08/2018 | | | | 33,130 | | | | | | | | | | | | 06/08/2018 | | | | 4,002 | | | | | | | 06/08/2019 | | | | 33,130 | | | | | | | | | | | | 06/08/2019 | | | | 4,003 | | | | (4) | | | 06/06/2017 | | | | 39,052 | | | | | | | | | (8) | | | 06/06/2017 | | | | 4,846 | | | | | | | 06/06/2018 | | | | 39,053 | | | | | | | | | | | | 06/06/2018 | | | | 4,846 | | | | | | | 06/06/2019 | | | | 39,052 | | | | | | | | | | | | 06/06/2019 | | | | 4,846 | | | | | | | 06/06/2020 | | | | 39,053 | | | | | | | | | | | | 06/06/2020 | | | | 4,847 | | | | | | | | | | | | | | | | | | | | (9) | | | 06/03/2017 | | | | 1,430 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2017 | | | | 908 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2017 | | | | 863 | | | | | | | | | | | | | | | | | | | | | | | 06/09/2017 | | | | 996 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2018 | | | | 909 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2018 | | | | 862 | | | | | | | | | | | | | | | | | | | | | | | 06/09/2018 | | | | 997 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2019 | | | | 909 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2019 | | | | 863 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2020 | | | | 909 | | D.J. Bronczek | | (10) | | | 06/03/2017 | | | | 8,160 | | | | | | | R.B. Carter | | (15) | | | 06/03/2017 | | | | 6,155 | | | | (11) | | | 06/09/2017 | | | | 6,386 | | | | | | | | | (16) | | | 06/09/2017 | | | | 4,817 | | | | | | | 06/09/2018 | | | | 6,387 | | | | | | | | | | | | 06/09/2018 | | | | 4,818 | | | | (12) | | | 06/08/2017 | | | | 5,308 | | | | | | | | | (17) | | | 06/08/2017 | | | | 4,003 | | | | | | | 06/08/2018 | | | | 5,307 | | | | | | | | | | | | 06/08/2018 | | | | 4,002 | | | | | | | 06/08/2019 | | | | 5,308 | | | | | | | | | | | | 06/08/2019 | | | | 4,003 | | | | (13) | | | 06/06/2017 | | | | 6,298 | | | | | | | | | (18) | | | 06/06/2017 | | | | 4,846 | | | | | | | 06/06/2018 | | | | 6,299 | | | | | | | | | | | | 06/06/2018 | | | | 4,846 | | | | | | | 06/06/2019 | | | | 6,299 | | | | | | | | | | | | 06/06/2019 | | | | 4,846 | | | | | | | 06/06/2020 | | | | 6,299 | | | | | | | | | | | | 06/06/2020 | | | | 4,847 | | | | (14) | | | 06/03/2017 | | | | 1,843 | | | | | | | | | (19) | | | 06/03/2017 | | | | 1,430 | | | | | | | 06/06/2017 | | | | 1,172 | | | | | | | | | | | | 06/06/2017 | | | | 908 | | | | | | | 06/08/2017 | | | | 1,111 | | | | | | | | | | | | 06/08/2017 | | | | 863 | | | | | | | 06/09/2017 | | | | 1,284 | | | | | | | | | | | | 06/09/2017 | | | | 996 | | | | | | | 06/06/2018 | | | | 1,173 | | | | | | | | | | | | 06/06/2018 | | | | 909 | | | | | | | 06/08/2018 | | | | 1,111 | | | | | | | | | | | | 06/08/2018 | | | | 862 | | | | | | | 06/09/2018 | | | | 1,284 | | | | | | | | | | | | 06/09/2018 | | | | 997 | | | | | | | 06/06/2019 | | | | 1,172 | | | | | | | | | | | | 06/06/2019 | | | | 909 | | | | | | | 06/08/2019 | | | | 1,112 | | | | | | | | | | | | 06/08/2019 | | | | 863 | | | | | | | 06/06/2020 | | | | 1,173 | | | | | | | | | | | | 06/06/2020 | | | | 909 | |
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EXECUTIVE COMPENSATION
| | | Date | Number | | R.B. Carter | (20)48 | 06/07/2014 | 5,775 2017 Proxy Statement | | | (21) | 06/06/2014 | 5,370 |
EXECUTIVE COMPENSATION | | | 06/06/2015 | 5,370 | | | (22) | 06/04/2014 | 6,059 | | | | 06/04/2015 | 6,059 | | | | 06/04/2016 | 6,059 | | | (23) | 06/03/2014 | 6,155 | | | | 06/03/2015 | 6,155 | | | | 06/03/2016 | 6,155 | | | | | | | | | | | Date | | | Number | | | | | | | | | | | | | | | C.P. Richards | | (20) | | | 06/03/2017 | 6,155 | | | (24) | 06/03/20146,155 | 1,430 | | | | | 06/04/2014 | 1,821 | | | | | | | 06/06/2014 | 1,750 | | | | | (21) | | | 06/09/2017 | | | | 4,817 | | | | | | 06/07/2014 | 2,000 | | | | | | | 06/03/2015 | 1,430 | | | | | | | | 06/09/2018 | | | | 4,818 | | | | | | 06/04/2015 | 1,821 | | | | | | | 06/06/2015 | 1,750 | | | | | (22) | | | 06/08/2017 | | | | 4,003 | | | | | | 06/03/2016 | 1,430 | | | | | | | 06/04/2016 | 1,822 | | | | | | | | 06/08/2018 | | | | 4,002 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2019 | | | | 4,003 | | | | | | | | | | | | | | | | | | | | (23) | | | 06/06/2017 | | | | 4,846 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2018 | | | | 4,846 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2019 | | | | 4,846 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2020 | | | | 4,847 | | | | | | | | | | | | | | | | | | | | (24) | | | 06/03/2017 | | | | 1,430 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2017 | | | | 908 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2017 | | | | 863 | | | | | | | | | | | | | | | | | | | | | | | 06/09/2017 | | | | 996 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2018 | | | | 909 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2018 | | | | 862 | | | | | | | | | | | | | | | | | | | | | | | 06/09/2018 | | | | 997 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2019 | | | | 909 | | | | | | | | | | | | | | | | | | | | | | | 06/08/2019 | | | | 863 | | | | | | | | | | | | | | | | | | | | | | | 06/06/2020 | | | | 909 | | | | | | | | | | | | | | | | | |
(b) | Computed by multiplying the closing market price of FedEx’s common stock on May 30, 201431, 2017 (which was $144.16)$193.84) by the number of shares. |
Option Exercises and Stock Vested During Fiscal 20142017 The following table sets forth for each named executive officer certain information about stock options that were exercised and restricted stock that vested during the fiscal year ended May 31, 2014:2017: | Option Awards | | | Stock Awards | | | Number of | | | | Number of | | | | Shares | Value | | | Shares | Value | | | Acquired | Realized | | | Acquired | Realized | | | on Exercise | on Exercise | | | on Vesting | on Vesting | | Name | (#) | ($)(1) | | | (#) | ($)(2) | | F.W. Smith | 325,000 | 20,621,542 | | | 0 | 0 | | A.B. Graf, Jr. | 38,250 | 2,515,037 | | | 8,905 | 874,135 | | D.J. Bronczek | 49,628 | 1,826,633 | | | 11,453 | 1,124,247 | | T.M. Glenn | 38,250 | 2,545,687 | | | 8,905 | 874,135 | | R.B. Carter | 16,986 | 822,918 | | | 8,905 | 874,135 | |
| | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | | F.W. Smith | | | 175,000 | | | | 12,998,394 | | | | 0 | | | | 0 | | A.B. Graf, Jr. | | | 25,655 | | | | 2,209,495 | | | | 5,110 | | | | 833,946 | | D.J. Bronczek | | | 57,698 | | | | 4,784,875 | | | | 6,582 | | | | 1,074,178 | | R.B. Carter | | | 60,235 | | | | 6,253,773 | | | | 5,110 | | | | 833,946 | | C.P. Richards | | | 80,080 | | | | 7,353,603 | | | | 5,110 | | | | 833,946 | | T.M. Glenn(3) | | | 171,615 | | | | 17,641,299 | | | | 14,756 | | | | 2,636,012 | |
(1) | If the shares were sold immediately upon exercise, the value realized on exercise of the option is the difference between the actual sales price and the exercise price of the option. Otherwise, the value realized is the difference between the fair market value of FedEx’s common stock (the average of the high and low prices of the stock on the New York Stock Exchange) on the date of exercise and the exercise price of the option. |
(2) | Represents the fair market value of the shares on the vesting date. |
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(3) | In accordance with the terms of FedEx’s 2010 Omnibus Stock Incentive Plan, the restrictions applicable to 9,646 shares lapsed upon Mr. Glenn’s retirement on December 31, 2016. |
EXECUTIVE COMPENSATION Table of Contents
EXECUTIVE COMPENSATION
Fiscal 20142017 Pension Benefits
The following table sets forth for each named executive officer the present value of accumulated benefits at May 31, 2014,2017, under FedEx’s defined benefit pension plans. For information regarding benefits triggered by retirement under our stock option and restricted stock plans, see “— Potential Payments Upon Termination or Change of Control” below.
| | Number | Present | Payments | | | of Years | Value of | During | | | Credited | Accumulated | Fiscal | | | Service | Benefit | 2014 | Name | Plan Name | (#) | ($)(1) | ($) | F.W. Smith | FedEx Corporation Employees’ Pension Plan | 42 | 1,429,059 | 0 | | FedEx Corporation Retirement Parity Pension Plan | 42 | 23,566,141 | 0 | A.B. Graf, Jr. | FedEx Corporation Employees’ Pension Plan | 34 | 1,636,769 | 0 | | FedEx Corporation Retirement Parity Pension Plan | 34 | 11,889,907 | 0 | D.J. Bronczek | FedEx Corporation Employees’ Pension Plan | 38 | 1,778,267 | 0 | | FedEx Corporation Retirement Parity Pension Plan | 38 | 15,242,168 | 0 | T.M. Glenn | FedEx Corporation Employees’ Pension Plan | 33 | 1,577,154 | 0 | | FedEx Corporation Retirement Parity Pension Plan | 33 | 10,339,905 | 0 | R.B. Carter | FedEx Corporation Employees’ Pension Plan | 21 | 888,943 | 0 | | FedEx Corporation Retirement Parity Pension Plan | 21 | 5,071,039 | 0 |
| | | | | | | | | | | | | | | Name | | Plan Name | | Number of Years Credited Service (#) | | | Present Value of Accumulated Benefit ($)(1) | | | Payments During Fiscal 2017 ($) | | F.W. Smith | | FedEx Corporation Employees’ Pension Plan | | | 45 | | | | 1,184,169 | | | | 108,191 | (2) | | | FedEx Corporation Retirement Parity Pension Plan | | | 45 | | | | 25,489,858 | | | | 0 | | A.B. Graf, Jr. | | FedEx Corporation Employees’ Pension Plan | | | 37 | | | | 1,743,390 | | | | 0 | | | | FedEx Corporation Retirement Parity Pension Plan | | | 37 | | | | 13,772,358 | | | | 0 | | D.J. Bronczek | | FedEx Corporation Employees’ Pension Plan | | | 41 | | | | 1,898,261 | | | | 0 | | | | FedEx Corporation Retirement Parity Pension Plan | | | 41 | | | | 17,782,141 | | | | 0 | | R.B. Carter | | FedEx Corporation Employees’ Pension Plan | | | 24 | | | | 1,203,545 | | | | 0 | | | | FedEx Corporation Retirement Parity Pension Plan | | | 24 | | | | 6,834,685 | | | | 0 | | C.P. Richards | | FedEx Corporation Employees’ Pension Plan | | | 33 | | | | 1,821,757 | | | | 0 | | | | FedEx Corporation Retirement Parity Pension Plan | | | 33 | | | | 7,139,155 | | | | 0 | | T.M. Glenn | | FedEx Corporation Employees’ Pension Plan | | | 36 | | | | 1,646,552 | | | | 279,480 | (3) | | | FedEx Corporation Retirement Parity Pension Plan | | | 36 | | | | 13,163,757 | | | | 0 | |
(1) | These amounts 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 Form10-K for the fiscal year ended May 31, 2014.2017. The benefits are expressed as lump sum amounts, even though the benefits using the traditional pension benefit formula under the Pension Plan (as defined below) are generally not payable as a lump sum distribution (only $1,000 or less may be distributed as a lump sum under the traditional pension benefit formula under the Pension Plan). The benefits using the Portable Pension Account formula under the Pension Plan may be paid as a lump sum. |
| The present value of the Pension Plan traditional pension benefit is equal to the single life annuity payable at the normal retirement date (age 60), or June 1, 2014,2017, if the officer is past normal retirement age, converted based on an interest rate of 4.596%4.081% and the RP2000 Combined No Collar Mortality Table projected to 2029RP2014 mortality table with the MP2016 generational mortality improvement scale (as adjusted for purposes of the Pension Plan and Parity Plan (as defined below)) discounted to May 31, 2014,2017, using an interest rate of 4.596%4.081%. The present value of the Parity Plan (as defined below) traditional pension benefit is equal to the single life annuity payable at the normal retirement age, or June 1, 2014,2017, if the officer is past normal retirement age, converted based on an interest rate of 5%3% for lump sums paid through May 31, 2018, 3.5% for lump sums paid between June 1, 2018 and May 31, 2019, and 4% for lump sums paid on and after June 1, 2019, and the 1994 Group Annuity Reserving Table and discounted to May 31, 2014,2017, using an interest rate of 4.596%4.081%. The present value of the Portable Pension Account (discussed below) is equal to the officer’s account balance at May 31, 2014,2017, projected to the normal retirement date, if applicable, based on an interest rate of 4% (compounded quarterly) and discounted to May 31, 2014,2017, using an interest rate of 4.596%4.081%. |
Overview(2) | In accordance with the terms of the Pension PlansPlan, Mr. Smith was required to commence receiving his Pension Plan benefits during fiscal 2016. |
(3) | Mr. Glenn retired on December 31, 2016, and began receiving payments under the Pension Plan during fiscal 2017. |
Overview of Pension Plans FedEx maintains atax-qualified, defined benefit pension plan called the FedEx Corporation Employees’ Pension Plan (the “Pension Plan”). For fiscal 2014,2017, the maximum compensation limit under atax-qualified pension plan was $255,000.$265,000. The Internal Revenue Code also limits the maximum annual benefits that may be accrued under atax-qualified, defined benefit pension plan. In order to provide 100% of the benefits that would otherwise be denied certain management-level participants in the Pension Plan due to these limitations, FedEx also maintains a supplemental,non-tax-qualified plan called the FedEx Corporation Retirement Parity Pension Plan (the “Parity Plan”). Benefits under the Parity Plan are general, unsecured obligations of FedEx. Effective May 31, 2003, FedEx amended the Pension Plan and the Parity Plan to add a cash balance feature, which is called the Portable Pension Account. Eligible employees as of May 31, 2003, had the option to make aone-time election to accrue future pension benefits under either the cash balance formula or the traditional pension benefit formula. In either case, employees retained all benefits previously accruedunderaccrued under the traditional pension benefit formula and continued to receive the benefit of future compensation increases on benefits accrued as of May 31, 2003. Eligible employees hired after May 31, 2003, accrue benefits exclusively under the Portable Pension Account.
EXECUTIVE COMPENSATION Beginning June 1, 2008, eligible employees who participate in the Pension Plan and the Parity Plan, including the named executive officers, accrue all future pension benefits under the Portable Pension Account. In addition, benefits previously accrued under the Pension Plan and the Parity Plan using the traditional pension benefit formula were capped as of May 31, 2008, and those benefits will be payable beginning at retirement. Effective June 1, 2008, each participant in the Pension Plan and the Parity Plan who was age 40 or older on that date and who has an accrued traditional pension benefit will receive a transition compensation credit, as described in more detail below. Employees who elected in 2003 to accrue future benefits under the Portable Pension Account will continue to accrue benefits under that formula. 46 2014 Proxy Statement
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The named executive officers also participate in the 401(k) Plan. Beginning January 1, 2008, theThe annual matching company contribution under the 401(k) Plan is a maximum of 3.5% of eligible earnings. Effective February 1, 2009, however, 401(k) company-matching contributions were suspended for all participants, including the named executive officers. We reinstated these contributions at 50% of previous levels (a maximum of 1.75% of eligible earnings) effective January 1, 2010, and fully restored these contributions effective January 1, 2011. In order to provide 100% of the benefits that would otherwise be limited due to certain limitations imposed by United States tax laws, effective June 1, 2008, Parity Plan participants, including the named executive officers, receivedreceive additional Portable Pension Account compensation credits equal to 3.5% of any eligible earnings above the maximum compensation limit fortax-qualified plans. Effective June 1, 2009, however, the additional compensation credit under the Parity Plan was suspended for all participants, including the named executive officers. We reinstated 50% of the additional Portable Pension Account compensation credit benefit effective June 1, 2010, and fully reinstated the benefit effective June 1, 2011 (such full credit was made as of May 31, 2012). Normal retirement age for the majority of participants, including the named executive officers, under the Pension Plan and the Parity Plan is age 60. However, for benefits accrued after January 31, 2016, the normal retirement age is age 62. The traditional pension benefit under the Pension Plan for a participant who retires between the ages of 55 and 60 will be reduced by 3% for each year the participant receives his or her benefit prior to age 60.
Traditional Pension Benefit |
Traditional Pension Benefit Under the traditional pension benefit formula, the Pension Plan and the Parity Plan provide 2% of the average of the five calendar years (three calendar years for the Parity Plan) of highest earnings during employment multiplied by years of credited service for benefit accrual up to 25 years. Eligible compensation for the traditional pension benefit under the Pension Plan and the Parity Plan for the named executive officers includes salary and annual incentive compensation. A named executive officer’s capped accrued traditional pension benefit was calculated using his or her years of credited service as of either May 31, 2003 or May 31, 2008, depending on whether he or she chose to accrue future benefits under the cash balance formula or the traditional pension benefit formula in 2003, and his or her eligible earnings history as of May 31, 2008.
Portable Pension Account The benefit under the Portable Pension Account is expressed as a notional cash balance account. For each plan year in which a participant is credited with a year of service, compensation credits are added based on the participant’s age and years of service as of the end of the prior plan year and the participant’s eligible compensation for the prior calendar year based on the following table:
| | | | | Age + Service on May 31 | | Compensation Credit | | Less than 55 | | | 5% | | 55-6455 – 64 | | | 6% | | 65-7465 – 74 | | | 7% | | 75 or over | | | 8% | |
On May 31, 2013,2016, the sum of age plus years of service for the named executive officers was as follows: Mr. Smith — 109;115; Mr. Graf — 92;98; Mr. Bronczek — 95;101; Mr. Carter — 79; Ms. Richards — 93; and Mr. Glenn — 89; and Mr. Carter — 73.95. Eligible compensation under the Portable Pension Account feature for the named executive officers includes salary and annual incentive compensation. Messrs. Smith, Graf and Bronczek elected the Portable PensionAccountPension Account feature on June 1, 2003. Messrs. Glenn and Carter and Ms. Richards began accruing benefits under the Portable Pension Account on June 1, 2008. Transition compensation credits are an additional compensation credit percentage to be granted to participants in the Pension Plan and the Parity Plan who were age 40 or older on June 1, 2008, and who have an accrued benefit under the traditional pension benefit formula. For each plan year in which an eligible participant is credited with a year of service, transition compensation credits will be added based on the participant’s age and years of service as of the end of the prior plan year and the participant’s eligible compensation for the prior calendar year based on the following table:
| | | | | Age + Service on May 31 | | Transition Compensation Credit * | | Less than 55 | | | 2% | | 55-6455 – 64 | | | 3% | | 65-7465 – 74 | | | 4% | | 75 or over | | | 5% | |
* | For years of credited service over 25, transition compensation credits are 2% per year. | |
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An eligible participant will receive transition compensation credits for five years (through May 31, 2013) or until he or she has 25 years of credited service, whichever is longer. For participants with 25 or more years of service, transition compensation credits are 2% per year and ceased as of May 31, 2013. An eligible participant’s first transition compensation credit was added to his or her Portable Pension Account as of May 31, 2009. Interest credits are added to a participant’s Portable Pension Account benefit as of the end of each fiscal quarter (August 31, November 30, February 28 and May 31) after a participant accrues his or her first compensation credit. The May 31 interest credit is added prior to the May 31 compensation credit or transition compensation credit (or additional compensation credit under the Parity Plan). Interest credits are based on thePortablethe Portable Pension Account notional balance and a quarterly interest-crediting rate,factor, which is equal to the greater of (a) 1/4 of theone-year Treasury constant maturities rate for April of the preceding plan year plus 0.25% and (b) 1% (1/4 of 4%). The quarterly interest crediting rate, when compounded quarterly, cannot produce an annual rate greater than the average 30-year Treasury rate for April of the preceding plan year (or, if larger, such other rate as may be required for certain tax law purposes). In no event, however, will the quarterly interest crediting rate be less than 0.765%. Interest credits will continue to be added until the last day of the month before plan benefits are distributed. The quarterly interest-crediting ratefactor for the plan year ended May 31, 2013,2016, was 1%. The quarterly interest-crediting ratefactor for the plan year ended May 31, 2014,2017, was 1%.
Lump Sum Distribution Upon a participant’s retirement, the vested traditional pension benefit under the Pension Plan is payable as a monthly annuity. Upon a participant’s retirement or other termination of employment, an amount equal to the vested Portable Pension Account notional balance under the Pension Plan is payable to the participant in the form of a lump sum payment or an annuity. All Parity Plan benefits are paid as a single lump sum distribution as follows: For the portion of the benefit accrued under the Portable Pension Account formula, the lump sum benefit will be paid six months following the date of the participant’s termination of employment; and For the portion of the benefit accrued under the traditional pension benefit formula, the lump sum benefit will be paid the later of the date the participant turns age 55 or six months following the date of the participant’s termination of employment.
Potential Payments Upon Termination or Change of Control This section provides information regarding payments and benefits to the named executive officers that would be triggered by termination of the officer’s employment (including resignation, or voluntary termination; severance, or involuntary termination; and retirement) or a change of control of FedEx. Each of the named executive officers, other than Mr. Glenn who retired on December 31, 2016, is anat-will employee and, as such, does not have an employment contract. In addition, if the officer’s employment terminates for any reason other than retirement, death or permanent disability, any unvested stock options are automatically terminated and any unvested shares of restricted stock are automatically forfeited. Accordingly, there are no payments or benefits that are triggered by any termination event (including resignation and severance) other than retirement, death or permanent disability, or in connection with a change of control of FedEx.
Benefits Triggered by Retirement, Death or Permanent Disability — Stock Option and Restricted Stock Plans |
Benefits Triggered by Retirement, Death or Permanent Disability — Stock Option and Restricted Stock Plans Retirement.When an employee retires: if retirement occurs at or after age 60, all restrictions applicable to the restricted shares held by the employee lapse on the date of retirement; if retirement occurs at or after age 55, but before age 60, the restrictions applicable to restricted shares held by the employee continue until the earlier of the specified expiration of the restriction period, the employee’s permanent disability or the employee’s death; and all of the employee’s unvested stock options terminate. 48 2014 Proxy Statement
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For information regarding retirement benefits under our pension plans, see “— Fiscal 20142017 Pension Benefits” above.
EXECUTIVE COMPENSATION Death or Permanent Disability.When an employee dies or becomes permanently disabled: all restrictions applicable to the restricted shares held by the employee immediately lapse; and all of the employee’s unvested stock options immediately vest. The following table quantifies for each named executive officer (other than Mr. Glenn) the value of his or her unvested restricted shares and stock options, the vesting of which would be accelerated upon death or permanent disability (assuming the officer died or became permanently disabled on May 31, 2014)2017): Benefits Triggered by Death or Permanent Disability |
| Name | | Value of Unvested Restricted Shares ($)(1) | | Value of Unvested Stock Options ($)(2) | | Total ($) | | | F.W. Smith | | 0 | | 26,486,909 | | 26,486,909 | | | A.B. Graf, Jr. | | 2,405,165 | | 3,207,387 | | 5,612,552 | | | D.J. Bronczek | | 3,096,845 | | 4,252,577 | | 7,349,422 | | | T.M. Glenn | | 2,405,165 | | 3,207,387 | | 5,612,552 | | | R.B. Carter | | 2,405,165 | | 3,207,387 | | 5,612,552 | |
Benefits Triggered by Death or Permanent Disability | | | | | | | | | | | | | Name | | Value of Unvested Restricted Shares ($) (1) | | | Value of Unvested Stock Options ($) (2) | | | Total ($) | | F.W. Smith | | | 0 | | | | 15,090,758 | | | | 15,090,758 | | A.B. Graf, Jr. | | | 1,869,781 | | | | 1,839,140 | | | | 3,708,921 | | D.J. Bronczek | | | 2,410,400 | | | | 2,422,600 | | | | 4,833,000 | | R.B. Carter | | | 1,869,781 | | | | 1,839,140 | | | | 3,708,921 | | C.P. Richards | | | 1,869,781 | | | | 1,839,140 | | | | 3,708,921 | |
(1) | Computed by multiplying the closing market price per share of FedEx’s common stock on May 30, 201431, 2017 (which was $144.16)$193.84) by the number of unvested shares of restricted stock held by the officer as of May 31, 2014.2017. |
(2) | Represents the difference between the closing market price per share of FedEx’s common stock on May 30, 201431, 2017 (which was $144.16)$193.84) and the exercise price of each unvested option (if the exercise price of the option was less than such market price) held by the officer as of May 31, 2014.2017. |
In addition, FedEx provides each named executive officer with: $1,500,000 of group term life insurance coverage; $500,000 of business travel accident insurance coverage fordeathfor death or certain injuries suffered as a result of an accidentwhileaccident while traveling on company business; and A supplemental long-term disability program, with a monthlybenefitmonthly benefit equal to 60% of the officer’s basic monthly earnings(providedearnings (provided the officer continues to meet the definition ofdisability,of disability, these benefits generally continue until age 65). Benefits Triggered by Change of Control or Termination after Change of Control — Stock Option and Restricted Stock Plans and Management Retention Agreements |
Benefits Triggered by Change of Control or Termination after Change of Control — Stock Option and Restricted Stock Plans and Management Retention Agreements Stock Option and Restricted Stock Plans.Our stock option plans provide2010 Omnibus Stock Incentive Plan provides that, in the event of a change of control (as defined in the plans)plan), each holder of an unexpired option under any of the plans has the right to exercise such option without regard to the date such option would first be exercisable. Except with respect to stock options granted under FedEx’s 2010 Omnibus Stock Incentive Plan, this right continues, with respect to holders whose employment with FedEx terminates following a change of control, for a period of twelve months after such termination or until the option’s expiration date, whichever is sooner. Our restricted stock plans provideThe plan also provides that, in the event of a change of control (as defined in the plans)plan), depending on the change of control event, either (i) the restricted shares will be canceled and FedEx shall make a cash payment to each holder in an amountequalamount equal to the product of the highest price per share received by the holders of FedEx’s common stock in connection with the change of control multiplied by the number of restricted shares held or (ii) the restrictions applicable to any such shares will immediately lapse.
Under FedEx’s 2010 Omnibus Stock Incentive Plan, our Compensation Committee may exercise its discretion to provide for a treatment different than described above with respect to any particular stock option or restricted stock award, as set forth in the related award agreement. To date, such discretion has not been exercised. 2014 Proxy Statement 49
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The following table quantifies for each named executive officer (other than Mr. Glenn) the value of his or her unvested restricted shares and stock options, the vesting of which would be accelerated upon a change of control (assuming that the change of control occurred on May 31, 2014,2017, and that the highest price per share received by FedEx’s stockholders in connection with the change of control was the closing market price on May 30, 2014,31, 2017, which was $144.16)$193.84): Benefits Triggered by Change of Control(1) |
Name | | Value of Unvested Restricted Shares ($)(2) | | Value of Unvested Stock Options ($)(3) | | Total ($) | F.W. Smith | | 0 | | 26,486,909 | | 26,486,909 | A.B. Graf, Jr. | | 2,405,165 | | 3,207,387 | | 5,612,552 | D.J. Bronczek | | 3,096,845 | | 4,252,577 | | 7,349,422 | T.M. Glenn | | 2,405,165 | | 3,207,387 | | 5,612,552 | R.B. Carter | | 2,405,165 | | 3,207,387 | | 5,612,552 |
Benefits Triggered by Change of Control (1) | | | | | | | | | | | | | Name | | Value of Unvested Restricted Shares ($) (2) | | | Value of Unvested Stock Options ($) (3) | | | Total ($) | | F.W. Smith | | | 0 | | | | 15,090,758 | | | | 15,090,758 | | A.B. Graf, Jr. | | | 1,869,781 | | | | 1,839,140 | | | | 3,708,921 | | D.J. Bronczek | | | 2,410,400 | | | | 2,422,600 | | | | 4,833,000 | | R.B. Carter | | | 1,869,781 | | | | 1,839,140 | | | | 3,708,921 | | C.P. Richards | | | 1,869,781 | | | | 1,839,140 | | | | 3,708,921 | |
(1) | As discussed below, the officer is also entitled under his or her MRA (as defined below) to atwo-year employment agreement upon a change of control and certain guaranteed compensation and benefits during the term of thetwo-year employment period. |
(2) | Computed by multiplying the closing market price per share of FedEx’s common stock on May 30, 201431, 2017 (which was $144.16)$193.84) by the number of unvested shares of restricted stock held by the officer as of May 31, 2014.2017. |
(3) | Represents the difference between the closing market price per share of FedEx’s common stock on May 30, 201431, 2017 (which was $144.16)$193.84) and the exercise price of each unvested option (if the exercise price of the option was less than such market price) held by the officer as of May 31, 2014.2017. |
Management Retention Agreements.FedEx has entered into Management Retention Agreements (“MRAs”) with each of its executive officers, including the named executive officers.officers (other than Mr. Glenn, who has retired). The purpose of the MRAs is to secure the executives’ continued services in the event of any threat or occurrence of a change of control (as defined in the MRAs; such term has the same meaning as used in FedEx’s equity compensation plans). The terms and conditions of the MRAs with the named executive officers are summarized below. Term.Each MRA renews annually for consecutiveone-year terms, unless FedEx gives at least thirty days’, but not more than ninety days’, prior notice that the agreement will not be extended. Thenon-extension notice may not be given at any time when the Board of Directors has knowledge that any person has taken steps reasonably calculated to effect a change of control of FedEx. Employment Period.Upon a change of control, the MRA immediately establishes atwo-year employment agreement with the executive officer. During the employment period, the officer’s position (including status, offices, titles and reporting relationships), authority, duties and responsibilities may not be materially diminished. Compensation.During thetwo-year employment period, the executive officer receives base salary (no less than his or her highest base salary over the twelve-month period prior to the change of control) and is guaranteed the same annual incentive compensation opportunities as in effect during the90-day period immediately prior to the change of control. The executive officer also receives incentive (including long-term performance bonus) and retirement plan benefits, expense reimbursement, fringe benefits, office and staff support,welfare plan benefits and vacation benefits. These benefits must be no less than the benefits the officer had during the90-day period immediately prior to the change of control. Termination.The MRA terminates immediately upon the executive officer’s death, voluntary termination or retirement. FedEx may terminate the MRA for disability, as determined in accordance with the procedures under FedEx’s long-term disability benefits plan. Once disability is established, he or she receives 180 days’ prior notice of termination. During the employment period, FedEx also may terminate the officer’s employment for “cause” (which includes any act of dishonesty by the officer intended to result in substantial personal enrichment, the conviction of the officer of a felony and certain material violations by the officer of his or her obligations under the MRA). Benefits for Qualifying Termination.A “qualifying termination” is a termination of the executive’s employment by FedEx other than for cause, disability or death or by the officer for “good reason” (principally relating to a material diminution in the officer’s authority, duties or responsibilities or a material failure by FedEx to compensate the officer as provided in the MRA). In the event of a qualifying termination, the executive officer will receive a lump sum cash payment equal to two times his or her base salary (the highest annual rate in effect during the twelve-month period prior to the date of termination)plus two times target annual incentive compensation. The payments
EXECUTIVE COMPENSATION will be made to the officer on the date that is six months after his or her date of termination (or, if earlier than the end of suchsix-month period, within 30 days following the date 50 2014 Proxy Statement
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EXECUTIVE COMPENSATION
of the executive’s death). In addition, the executive officer will receive 18 months of continued coverage of medical, dental and vision benefits. An executive officer’s benefits under the MRA will be reduced to the largest amount that would result in none of the MRA payments being subject to any excise tax. If the Internal Revenue Service otherwise determines that any MRA benefits are subject to excise taxes, the executive officer is required to repay FedEx the minimum amount necessary so that no excise taxes are payable. In exchange for these benefits, the executive officer has agreed that, for theone-year period following his or her termination, he or she will not own, manage, operate, control or be employed by any enterprise that competes with FedEx or any of its affiliates. The following table quantifies for each named executive officer (other than Mr. Glenn) the payments and benefits under his or her MRA triggered by a qualifying termination of the officer immediately following a change of control (assuming that the change of control and qualifying termination occurred on May 31, 2014,2017, and that the highest price per share received by FedEx’s stockholders in connection with the change of control was the closing market price of FedEx’s common stock on May 30, 2014,31, 2017, which was $144.16)$193.84): Payments and Benefits Triggered by Qualifying Termination after Change of Control | | | | | | | | | | | | | Name | | Lump Sum Cash Payment — 2x Base Salary and 2x Target Annual Bonus ($) | | | Health Benefits ($) | | | Total ($) | | F.W. Smith | | | 6,321,822 | | | | 61,376 | | | | 6,383,198 | | A.B. Graf, Jr. | | | 3,812,472 | | | | 42,065 | | | | 3,854,537 | | D.J. Bronczek | | | 4,524,582 | | | | 41,637 | | | | 4,566,219 | | R.B. Carter | | | 3,221,976 | | | | 33,853 | | | | 3,255,829 | | C.P. Richards | | | 2,929,312 | | | | 39,137 | | | | 2,968,449 | |
Retirements of T. Michael Glenn and Christine P. Richards T. Michael Glenn.Mr. Glenn retired as FedEx’s Executive Vice President — Market Development & Corporate Communications, effective December 31, 2016, after having led the company’s marketing, sales, customer service and communications groups for over twenty years. Following his retirement, Mr. Glenn’s responsibilities were divided between two new executive officers. In order to continue benefiting from Mr. Glenn’s strategic marketing and communications expertise during a period of transition following his retirement, on December 21, 2016, FedEx entered into a consulting agreement with Mr. Glenn. The key terms of this agreement are summarized below. Term.The term of the agreement begins on January 1, 2017 and ends on December 31, 2021. The agreement may be terminated earlier by either party upon 90 days’ prior written notice. Services Provided.Mr. Glenn will provide strategic marketing and communications advice as determined by, and upon the request of, FedEx’s Chairman and Chief Executive Officer. Mr. Glenn’s services will be limited to no more than 30 hours per month. Payment for Services. On January 31, 2017, Mr. Glenn received a payment of $884,112. In addition, on the last day of each calendar quarter during the term of the agreement, beginning on March 31, 2017, Mr. Glenn will receive a payment of $54,800. During the term of the agreement, FedEx will also provide Mr. Glenn: Reasonable administrative assistance in connection with his performance of consulting services; Reimbursement for any required travel expenses on terms consistent with FedEx’s expense reimbursement policies and procedures; Computer and communications equipment, systems and support on a basis similar to that provided to FedEx executive management; Access to FedEx email on a basis consistent with that afforded to FedEx executive management; and Home security monitoring services on a basis comparable to such services provided to Mr. Glenn at the time of the agreement and to those provided to FedEx executive management. Payments and Benefits Triggered by Qualifying Termination after Change of Control | | | | | | | 2017 Proxy Statement | | 55 |
Name | | Lump Sum Cash Payment – 2x Base Salary and 2x Target Annual Bonus ($) | | Health Benefits ($) | | Total ($) | F.W. Smith | | 5,828,016 | | 48,703 | | 5,876,719 | A.B. Graf, Jr. | | 3,430,580 | | 34,173 | | 3,464,753 | D.J. Bronczek | | 3,768,384 | | 32,819 | | 3,801,203 | T.M. Glenn | | 3,166,784 | | 30,780 | | 3,197,564 | R.B. Carter | | 2,899,248 | | 26,636 | | 2,925,884 |
EXECUTIVE COMPENSATION FedEx agreed to reimburse Mr. Glenn for the costs of preparing and filing his 2016 income tax returns in accordance with FedEx’s generally applicable policies for reimbursing officers for such costs, provided that Mr. Glenn submit such request for reimbursement in writing no later than August 31, 2017. In addition, Mr. Glenn will be reimbursed for reasonable and necessaryout-of-pocket expenses incurred in the performance of his consulting services on a basis consistent with that of FedEx executive management. 2014 Proxy Statement Non-Compete Agreement.During the term of the agreement, Mr. Glenn has agreed that he will not engage as a principal, employee, agent, consultant, or independent contractor for, or act in any other capacity with, the United States Postal Service, United Parcel Service, Amazon.com or DHL, except with the prior written consent of FedEx.
Christine P. Richards.On July 20, 2017, FedEx announced that Ms. Richards will retire as Executive Vice President, General Counsel and Secretary effective September 30, 2017. On July 19, 2017, Ms. Richards and FedEx entered into a separation and release agreement. The key terms of this agreement are summarized below. Separation Date.Ms. Richards will retire from her position as an employee of FedEx on September 30, 2017 (the “separation date”). Ms. Richards will continue to perform her duties as Executive Vice President, General Counsel and Secretary of FedEx until the separation date. Separation Payments and Benefits. On or before October 31, 2017, Ms. Richards will receive a cash payment of $753,900. FedEx will also provide Ms. Richards home security monitoring services through December 31, 2017. In addition, FedEx has agreed to reimburse Ms. Richards for the costs of preparing and filing her 2017 income tax returns in accordance with FedEx’s generally applicable policies for reimbursing officers for such costs, provided that Ms. Richards submits such request for reimbursement in writing no later than May 31, 2018. Mutual Release of Claims.The agreement contains a general release of claims that Ms. Richards may have against FedEx and its subsidiaries, and their respective affiliates and related parties. The agreement also contains a general release by FedEx of claims, liabilities or causes of action against Ms. Richards arising as a result of her employment. 51Non-Compete Agreement.Ms. Richards has agreed that for one year following the separation date, she will not engage as a principal, employee, agent, consultant, or independent contractor for, or act in any other capacity with, the United States Postal Service, United Parcel Service, Amazon.com or DHL.
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PROPOSAL 2 — ADVISORY VOTE TO APPROVE NAMED
EXECUTIVE OFFICER COMPENSATION
We are asking stockholders to approve, on anon-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. 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 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 20:21: Annual and long-term incentive payments and stock options represent a significant portion of our executive compensation program. This variable compensation is “at risk” and directly dependent upon the achievement ofpre-established corporate goals or stock price appreciation. In fiscal 2014,2017, 90% of the Chairman President and Chief Executive Officer’s target total direct compensation consisted of variable,at-risk components. With respect to the other named executive officers, 57%-59%59%-61% of their fiscal 20142017 target total direct compensation consisted of variable,at-risk components. Annual bonus payments for fiscal 20142017 were tied to meeting aggressive business plan goals for FedEx Express segment adjusted operating income and adjusted consolidated operating income. Because the corporatetarget objectives for FedEx Express segment adjusted operating income and adjusted consolidated operating income for fiscal 20142017 were not achieved, (even though consolidated operating income increased by 35% year-over-year), the named executive officers received below-target annual bonus payouts for fiscal 2014. - payouts.
Long-term incentive payouts are tied to meeting aggregateearnings-per-share goals over a three-fiscal-year period. Based upon above-target adjustedearnings-per-share performance over the last three fiscal years, there were above-targetmaximum long-term incentive payouts for fiscal 2014. FedEx’s stock price increased by 49.6% during fiscal 2014, which significantly exceeds the year-over-year increase in the Chairman, President and Chief Executive Officer’s fiscal 2014 compensation (as set forth in the Summary Compensation Table on page 37).- 2017.
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. Our stock ownership goal effectively promotes meaningful and significant stock ownership by our named executive officers and further aligns their interests with those of our stockholders. As of August 4, 2014,July 31, 2017, each namedof our executive officerofficers exceeded the stock ownership goal. 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 3721 through 51,56, which provides detailed information on our compensation philosophy, policies and practices and the compensation of our named executive officers. Effect of the Proposal
This advisory resolution, commonly referred to as a “say-on-pay”“say-on-pay” resolution, is not binding on FedEx, the Board of Directors or the Compensation 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 DirectorsorDirectors or the Compensation Committee. Because we highly value the opinions of our stockholders, however, the Board of Directors and the Compensation Committee will consider the results of this advisory vote when making future executive compensation decisions. 52 2014 Proxy Statement
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PROPOSAL 2 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
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. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL. 2014 Proxy Statement 53
Table of ContentsPROPOSAL 3 — ADVISORY VOTE ON THE FREQUENCY
OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION In addition to providing our stockholders with the opportunity to cast an advisory vote on the compensation of our named executive officers, we also are seeking anon-binding, advisory vote on how frequently the advisory vote on executive compensation should be presented to stockholders, as required by SEC rules. You may vote to have the advisory vote on executive compensation held every year, every two years or every three years, or you may abstain from voting. When this advisory vote was last held in 2011, our stockholders indicated a strong preference (91.5% of the voted shares) to hold the advisory vote to approve executive compensation each year, and the Board implemented this standard. The Board of Directors recommends holding the advisory vote on executive compensation every year. An annual vote provides us with timely feedback from our stockholders on executive compensation matters. An annual advisory vote is also consistent with our Compensation Committee’s practice of conducting anin-depth review of executive compensation philosophy and practices each year. Effect of the Proposal The vote on this proposal is advisory andnon-binding, and the final decision with respect to the frequency of future advisory votes on executive compensation remains with the Board of Directors. Although the vote on this proposal isnon-binding, the Board of Directors and the Compensation Committee highly value the opinions of our stockholders and, accordingly, will take into account the outcome of this vote in considering the frequency of future advisory votes on executive compensation. In accordance with SEC rules, stockholders will continue to have the opportunity at least every six years to recommend the frequency of future advisory votes on executive compensation. Vote Required for Approval Stockholders will be able to specify one of four choices for this proposal on the proxy card: holding the advisory vote on named executive officer compensation every year, every two years or every three years, or abstaining. Stockholders are not voting to approve or disapprove the Board’s recommendation. The option of one year, two years or three years that receives the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote will be the frequency for the advisory vote on executive compensation selected by our stockholders. In the absence of a majority of votes cast in support of any one frequency, the option of one year, two years or three years that receives the greatest number of votes will be considered the frequency selected by our stockholders. YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONDUCTING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATIONEVERY YEAR.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Overview of Proposed Amendment Our stockholders originally approved FedEx’s 2010 Omnibus Stock Incentive Plan (as amended to the date hereof, the “Plan”) at the 2010 annual meeting of stockholders. At the 2013 annual meeting of stockholders, our stockholders approved an amendment to the Plan to increase the number of shares authorized for issuance under the Plan. The Plan currently provides that the maximum number of shares of FedEx common stock that may be issued pursuant to awards granted under the Plan is 19,600,000 shares, of which no more than 3,000,000 shares may be issued as full-value awards (i.e., awards other than stock options or stock appreciation rights). On July 16, 2017, our Compensation Committee approved amendments to the Plan to add a minimum vesting requirement of at least one year for all awards under the Plan (which aligns with our current grant practices). In addition, on July 17, 2017, the Board of Directors, upon the recommendation of the Compensation Committee, approved an amendment to the Plan, subject to approval by the stockholders at the annual meeting, to increase the number of shares authorized for issuance under the Plan. If approved by our stockholders, the amendment would authorize an additional 10,000,000 shares for issuance under the Plan. However, none of the additional shares will be issuable as full-value awards. The amendment would not make any other changes to the Plan. The Board of Directors recommends that our stockholders approve the amendment to the Plan. Absent an increase in the number of authorized shares under the Plan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for fiscal 2020 (which begins on June 1, 2019). We currently plan to seek stockholder approval of a new equity incentive plan at the annual meeting of stockholders to be held in September 2019. We believe that increasing the number of shares issuable under the Plan is necessary in order to allow FedEx to continue to utilize equity awards (namely, stock options and restricted shares) 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. FedEx relies on equity awards to retain and attract key employees andnon-employee Board members and believes that equity incentives are necessary for FedEx to remain competitive with regard to retaining and attracting highly qualified individuals upon whom, in large measure, the future growth and success of FedEx depend. The Plan amendment would further these objectives by allowing FedEx to grant awards under the Plan through June 30, 2020 (at which time no further awards may be made under the Plan). The following factors were taken into account by the Compensation Committee and the Board of Directors in approving the proposed amendment to increase the number of authorized shares under the Plan: FedEx’s historical burn rate; the number of shares remaining available under the Plan for future awards; the number of outstanding stock options and unvested restricted shares; dilution resulting from the proposed increase in authorized shares; the shareholder value transfer resulting from the proposed increase; and the remaining term of the Plan in which awards may be granted. A summary of the Plan is set forth below. This summary is, however, qualified by and subject to the full text of the Plan, as proposed to be amended, which is attached asAppendix C. Capitalized terms used in this summary that are not otherwise defined have the respective meanings given such terms in the Plan.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Number of Shares That May Be Awarded Under the Plan and Outstanding Awards Under All Plans The Plan is the sole FedEx equity compensation plan under which awards can be made. The Plan currently provides that the maximum number of shares of FedEx common stock that may be issued pursuant to awards granted under the Plan is 19,600,000 shares, of which no more than 3,000,000 shares may be issued as full-value awards. The following table sets forth as of July 31, 2017, the total number of shares available for awards (stock option, stock appreciation right or full-value awards) under the Plan (both before and after the requested increase in authorized shares), together with the equity dilution represented by such shares as a percentage of the shares of FedEx common stock outstanding as of July 31, 2017, and the number of shares available only for full-value awards under the Plan (both before and after the requested increase in authorized shares): | | | | | | | | | | | | | | | Total Number of Shares Available for Future Awards | | | Percentage of Outstanding Shares | | | Shares Available Only for Full- Value Awards (1) | | Shares available for future awards under the Plan | | | 6,156,726 | | | | 2.30 | % | | | 1,890,029 | | Requested increase in authorized shares under the Plan | | | 10,000,000 | | | | 3.73 | % | | | — | | Shares available for future awards under the Plan after approval of proposed amendment | | | 16,156,726 | | | | 6.02 | % | | | 1,890,029 | |
(1) | These share amounts are included in “Total Number of Shares Available for Future Awards.” |
The number of shares that may be issued under the Plan is subject to adjustment in the event of certain equity restructuring events and corporate reorganizations, as discussed below. To the extent that an award is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued or forfeited shares subject to the awards will be available again for issuance pursuant to awards granted under the Plan. As of July 31, 2017, there were 14,404,776 shares of FedEx common stock issuable pursuant to the exercise of outstanding stock options with a weighted-average exercise price of $138.48 and a weighted-average remaining contractual term of 6.7 years, and 355,261 unvested shares of restricted stock. None of the exercisable stock options outstanding on July 31, 2017 had an exercise price below the closing trading price on that date. On July 31, 2017, the closing price of FedEx common stock on the New York Stock Exchange was $208.03 per share. Stock options held by employees generally vest ratably over three or four years beginning on the first anniversary of the grant date. Stock options granted to non-employee Board members generally fully vest on the one-year anniversary of the grant date. Restricted shares generally vest ratably over four years beginning on the first anniversary of the grant date. Stock options and unvested restricted shares held by the named executive officers as of May 31, 2017, are set forth in the “Outstanding Equity Awards at End of Fiscal 2017” table earlier in this proxy statement. The following table sets forth information regarding stock option and restricted stock awards and the run rate of our equity compensation program for each of, as well as the averages over, the last three fiscal years. The run rate represents all awards granted in a fiscal year divided by the number of common shares outstanding at the end of that fiscal year. | | | | | | | | | | | | | | | | | | | Fiscal 2015 | | | Fiscal 2016 | | | Fiscal 2017 | | | 3-Year Average | | Stock options granted | | | 2,445,146 | | | | 2,229,582 | | | | 2,783,968 | | | | 2,486,232 | | Restricted shares granted | | | 154,115 | | | | 139,838 | | | | 153,984 | | | | 149,312 | | Common shares outstanding at fiscal year-end | | | 282,886,739 | | | | 266,637,204 | | | | 267,152,812 | | | | 272,225,585 | | Run rate | | | 0.92% | | | | 0.89% | | | | 1.10% | | | | 0.97% | |
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Plan Highlights While the Plan affords flexibility in designing long-term equity incentives that are responsive to evolving regulatory changes and compensation best practices and incorporate tailored, performance-based measures, the Plan also contains a number of restrictive features that are designed to protect stockholder interests and ensure that awards are granted through a disciplined and thoughtful process — including the following: • | | No Discount Stock Options.The Plan prohibits the grant of stock options with an exercise price less than the fair market value of FedEx common stock on the date of grant. |
• | | No Repricing of Awards Without Prior Stockholder Approval.The Plan prohibits the repricing of stock options and stock appreciation rights either by amendment of an award agreement or by substitution of a new award at a lower price. |
• | | No Grants of “Reload” Awards.The Plan does not provide for “reload” awards (the automatic substitution of a new award of like kind and amount upon the exercise of a previously granted award). |
• | | No Annual “Evergreen” Provision.The Plan provides a specific maximum share limitation (29,600,000, if the requested increase in authorized shares is approved) and does not contain an annual or automatic increase in the number of shares available for awards under the Plan. |
• | | Cap on Full-Value Awards.The Plan includes a limit on the number of shares (3,000,000) that may be issued as full-value awards (i.e., awards other than stock options or stock appreciation rights). If the amendment is approved, none of the additional shares authorized for issuance under the Plan would be issuable as full-value awards. |
• | | Prohibition of Certain Share Recycling, or “Liberal Share Counting,” Practices.The Plan does not allow shares to be added back to the maximum share limitation under the Plan if they were withheld, deducted or delivered for tax payments relating to stock options or stock appreciation rights; used to pay the exercise price of a stock option; repurchased on the open market with proceeds of a stock option exercise; or not issued upon exercise for any reason (including as a result of the net settlement or net exercise) of an outstanding stock option or share-settled stock appreciation right. |
• | | No Dividends Paid Out on Unearned Performance Awards.The Plan provides that dividend equivalents payable on performance awards may be paid only when the underlying award is paid or settled. |
• | | No “Liberal Change in Control” Definition.The Plan’s definition of “change of control” for purposes of accelerating vesting of awards is not considered “liberal.” As an example, mergers, consolidations, reorganizations, asset sales and asset dispositions are required to be consummated (with existing stockholders owning less than 60% of voting power after the transaction), rather than merely approved by stockholders. Likewise, the definition does not include the mere commencement or announcement of a tender or exchange offer for FedEx stock or the acquisition of any less than 30% of voting power by third parties. |
• | | Minimum Vesting Requirement. Subject to the terms of the Plan, all awards made under the Plan have a minimum vesting period of at least one year. |
• | | Ten-Year Plan Term.The Plan prohibits the making of awards after June 30, 2020, and limits the exercise term of stock options and stock appreciation rights to ten years from the grant date. |
• | | Independent Committee Administration.The Plan is administered by our Compensation Committee, which is comprised solely of independent, outside,non-employee directors. |
In addition, under FedEx’s current equity grant practices, equity awards to employees generally vest ratably over a period of three or four years, and the Plan provides that awards tied to performance criteria cannot be earned within less than one year from the date of grant. Finally, the company’s gross run rate, or burn rate, has averaged only 0.97% over the past three years, and we estimate that upon approval of the amendment, the maximum level of equity dilution caused by FedEx’s equity compensation program will be only 10.2% on a fully diluted basis. Purpose of the Plan The purpose of the Plan is to aid FedEx and its subsidiaries and affiliates in retaining, attracting and rewardingnon-employee directors and designated key employees of outstanding ability and to motivate them to exert their best efforts to achieve the company’s long-term goals. The Board of Directors believes that increased ownership of FedEx common stock by employees and directors, and compensation that is otherwise linked to the value of FedEx common stock, will further align their interests with those of FedEx’s other stockholders and will promote the company’s long-term success and the creation of long-term stockholder value.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Administration of the Plan The Plan is administered by those members, not less than two, of the Compensation Committee of the Board of Directors or such successor committee or subcommittee of the Board of Directors that is designated by the Board to administer the Plan (the “Committee”) who qualify as (a) “independent directors” under Section 303A of the New York Stock Exchange Listed Company Manual, (b) “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and(c) “non-employee directors” as defined inRule 16b-3 under the Securities Exchange Act of 1934, as amended. Each member of the Compensation Committee currently meets these qualifications. Subject to the express provisions of the Plan, the Committee has full and exclusive power, authority and discretion to take any and all actions necessary, appropriate or advisable for the administration of the Plan, including the following: Designate participants in the Plan; Determine the type or types of awards to be granted to each participant and the number, terms and conditions of each award; provided, that any award granted under the Plan is subject to a minimum vesting period of one year; Establish, adopt or revise rules, guidelines and policies for the administration of the Plan; and Construe and interpret the Plan, any award agreement and other documents and instruments relating to the Plan or any award. Awards made under the Plan tonon-employee directors are approved by the Board of Directors upon the recommendation of the Committee. The Committee retains full independent authority under the Plan with respect to all other aspects of such awards. The Committee may delegate to one or more officers the authority to grant awards under the Plan within specified parameters, other than awards to certain senior officers. Shares Awarded Under the Plan The number of shares that may be issued under the Plan and the limitations on individual awards are subject to adjustment in the event of certain equity restructuring events and corporate reorganizations, as discussed below. The Plan provides for the use of authorized but unissued shares or treasury shares. To the extent that an award is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued or forfeited shares subject to the awards will be available again for issuance pursuant to awards granted under the Plan. To the extent that the full number of shares subject to a performance award or qualified performance-based award (other than a stock option or stock appreciation right for which the relevant performance condition is appreciation in market price) is not issued because of a failure to achieve maximum performance goals, the number of shares not issued will be available again for issuance pursuant to awards granted under the Plan. Any shares related to awards that are settled in cash or other consideration in lieu of shares and any shares that are withheld or deducted from an award or delivered by a participant to satisfy tax withholding requirements relating to full-value awards (i.e., awards other than stock options or stock appreciation rights) will be available again for issuance pursuant to awards granted under the Plan. However, shares will not be added back to the maximum share limitation under the Plan if: the shares are withheld or deducted from an award or delivered by a participant to satisfy tax withholding requirements relating to stock options or stock appreciation rights; the shares are used for payment of the exercise price of a stock option; or the shares are repurchased on the open market with proceeds of a stock option exercise. In addition, to the extent that the full number of shares subject to a stock option or share-settled stock appreciation right is not issued upon exercise for any reason, including by reason of a net settlement or net exercise, then all shares that were covered by the exercised stock option or stock appreciation right will not be available for issuance pursuant to awards granted under the Plan.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Eligibility to Receive Awards The Plan permits awards to be made to any of the following individuals, as designated by the Committee: non-employee directors of FedEx (currently, FedEx has 11non-employee directors, each of whom is standing for reelection at the annual meeting); employees of FedEx and its subsidiaries and affiliates (currently, FedEx and its subsidiaries and affiliates have approximately 400,000 employees); and anyone to whom an offer of employment with FedEx or any of its subsidiaries or affiliates has been made, though prospective employees to whom an award has been made may not receive any payment or exercise any right with respect to such award until employment has commenced. As of July 31, 2017, the stock option and restricted stock awards outstanding under our existing equity compensation plans were held by a total of 7,582 current and former employees andnon-employee directors (6,119 current and former employees andnon-employee directors held outstanding awards granted under the Plan). Types of Awards The Plan authorizes the granting of awards in any of the following forms: options to purchase shares of FedEx common stock at a price not less than the fair market value of the shares as of the grant date — stock options may be designated under the Code asnon-qualified stock options (which may be granted to all participants) or incentive stock options (which may be granted to employees, but not tonon-employee directors or prospective employees); restricted shares, which are shares of FedEx common stock that are subject to restrictions on transferability and subject to forfeiture on terms set by the Committee; restricted stock units, which represent the right to receive shares of FedEx common stock (or an equivalent value in cash or any combination of cash and FedEx common stock, as specified in the award agreement) at a designated time in the future and which right is subject to restrictions on transferability and subject to forfeiture on terms set by the Committee; stock appreciation rights, which give the holder the right to receive the difference (payable in any combination of cash, FedEx common stock or other form of consideration, as specified in the award agreement) between the fair market value per share of FedEx common stock on the date of exercise over the exercise price of the award (which cannot be less than the fair market value of the underlying stock as of the grant date); performance awards, which are awards payable in cash or FedEx common stock (or any combination thereof) upon the attainment of specified performance goals (any award that may be granted under the Plan also may be granted in the form of a performance award); qualified performance-based awards, which are awards other than stock options and stock appreciation rights that are intended to qualify as exempt from the $1,000,000 deduction limit imposed by Code Section 162(m) (all stock options and stock appreciation rights granted under the Plan are already intended to qualify for this exemption) — see “— Performance Goals” below; dividend equivalents with respect to full-value awards, which entitle the participant to payments equal to any dividends paid on all or a portion of the number of shares of FedEx common stock underlying such full-value award, as determined by the Committee (with respect to dividend equivalents payable on performance awards, such dividend equivalents may be paid only to the extent and at the time the underlying award is paid or settled); and other stock-based awards in the discretion of the Committee, including unrestricted shares of FedEx common stock — for example, stock awarded purely as a bonus or issued in lieu of other rights to cash compensation. Unless otherwise determined by the Committee and set forth in the applicable award agreement, awards under the Plan shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Term of the Plan Unless the Plan is earlier terminated in accordance with its provisions, no awards will be made under the Plan after June 30, 2020, but awards granted on or prior to such date will continue to be governed by the terms and conditions of the Plan and the applicable award agreement. Exercise Term of Stock Options and Stock Appreciation Rights The Committee determines the period during which a stock option or stock appreciation right granted under the Plan may be exercised, but no such option or right will be exercisable for more than ten years from the grant date of such award. Limitations on Individual Awards The maximum number of shares of FedEx common stock subject to stock options granted under the Plan to any one participant during any FedEx fiscal year is 1,000,000. The maximum number of shares of FedEx common stock subject to stock appreciation rights granted under the Plan to any one participant during any FedEx fiscal year is 1,000,000. The maximum number of restricted shares granted under the Plan to any one participant during any FedEx fiscal year is 500,000. The maximum number of shares of FedEx common stock underlying awards of restricted stock units granted under the Plan to any one participant during any FedEx fiscal year is 500,000. The maximum number of shares of FedEx common stock underlying other stock-based awards granted under the Plan to any one participant during any FedEx fiscal year is 500,000. These same individual award limitations apply to the extent the awards are granted in the form of performance awards or qualified performance-based awards. Performance Goals All stock options and stock appreciation rights granted under the Plan are intended to be exempt from the $1,000,000 deduction limit imposed by Code Section 162(m). Our stockholders have not approved all material terms specified in Code Section 162(m), including the below list of qualified performance criteria for the purpose of future qualified performance based-awards, within the past five years, and such approval is not requested as part of this proposal. As a result, no awards under the Plan (other than stock options and stock appreciation rights) can currently be designated as a qualified performance based-award in order to make the award fully deductible by FedEx without regard to the $1,000,000 deduction limit imposed by Code Section 162(m). If and when such stockholder approval is obtained, the Committee may designate any other award granted under the Plan as a qualified performance-based award in order to make the award fully deductible by FedEx without regard to the $1,000,000 deduction limit imposed by Code Section 162(m). If an award is so designated, the Committee must establish one or more objectively determinable performance goals for the award based on one or more of the following qualified performance criteria for FedEx, either on a consolidated basis or for a specified FedEx subsidiary, affiliate or other business unit, or a division, region, department or function within FedEx or a subsidiary or affiliate of FedEx: Profit (including net profit,pre-tax profit, gross profit, operating profit, economic profit, profit margins or other corporate profit measures); Earnings (including earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, earnings per share (basic or diluted) or other corporate earnings measures); Income (including net income (before or after taxes), operating income or other corporate income measures); Cash (including cash flow, free cash flow, operating cash flow, net cash provided by operations, cash flow in excess of cost of capital or other cash measures);
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Return measures (including return on assets (gross or net), return on equity, return on income, return on invested capital, return on operating capital, return on sales, and cash flow return on assets, capital, investments, equity or sales); Operating margin or profit margin; Contribution margin by business segment; Share price or performance; Total stockholder return; Economic value increased; Expenses (including expense management, expense ratio, expense efficiency ratios, expense reduction measures or other expense measures); Operating efficiency or productivity measures or ratios; Internal rate of return or increase in net present value; and Strategic business criteria consisting of one or more goals regarding, among other things, acquisitions and divestitures, successfully integrating acquisitions, customer satisfaction, employee satisfaction, safety standards, strategic plan development and implementation, agency ratings of financial strength, completion of financing transactions and new product development. The Committee must establish the applicable performance goals no later than the earlier of (a) the date 90 days after the beginning of the period for which the performance goal relates or (b) the date on which 25% of such period has elapsed, and, in any event, at a time when the outcome of the performance goals remains substantially uncertain. The Committee may, for any reason, decrease (but may not increase) any award, regardless of FedEx’s achievement of the specified performance goal. The Committee may provide, at the time the performance goals are established, that any evaluation of performance will exclude or otherwise objectively adjust for any specified events that occur during a performance period. These events may include by way of example, but are not limited to any of the following: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) accruals and charges for reorganization and restructuring programs; (e) acquisitions or divestitures; (f) foreign exchange gains and losses; (g) extraordinary nonrecurring items as described in Finance Accounting Standards Board Accounting Standards Codification Topic 225.20, “Income Statement — Extraordinary and Unusual Items”; and (h) extraordinary nonrecurring items as described in management’s discussion and analysis of financial condition and results of operations appearing in FedEx’s annual report to stockholders for the applicable year. To the extent such inclusions or exclusions affect awards to any “covered employee” within the meaning of Code Section 162(m)(3), they will be utilized in a manner that meets the requirements of Code Section 162(m) for deductibility. Retainers and Meeting Fees forNon-Employee Directors Upon such terms and conditions as may be established by the Board of Directors, eachnon-employee director may elect to have all or part of his or her retainer and meeting fees paid in shares under the Plan. Limitations on Transfer; Beneficiaries A participant may not assign or transfer an award under the Plan, other than by will or by the laws of descent and distribution, unless otherwise determined by the Committee and set forth in the applicable award agreement, except that the Committee will not permit any participant to transfer an award to a third party for value. A participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant’s death.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Termination of Participant Service; Acceleration Upon Certain Events Unless otherwise determined by the Committee and set forth in the applicable award, if a participant’s service terminates for any reason other than death, permanent disability or eligible retirement (attainment of the age of 55 and cessation of service, or as otherwise determined by the Committee in its sole discretion), the participant’s awards will thereupon terminate and be forfeited. Unless otherwise determined by the Committee and set forth in the applicable award agreement: • | | If a participant’s service terminates by reason of death, (a) all of the participant’s outstanding service-based (i.e., not performance awards) stock options and stock appreciation rights will become fully vested and may be exercised by the participant’s legal representative for a period of twelve months from the date of death or until the expiration of the stated period of the award, whichever period is shorter, (b) all vesting restrictions and conditions applicable to the participant’s outstanding service-based restricted shares will immediately lapse and such shares will be fully vested, and (c) the applicable award agreement will set forth the treatment of any other outstanding awards of the participant. |
If a participant’s service terminates by reason of permanent disability, (a) all of the participant’s outstanding service-based stock options and stock appreciation rights will become fully vested and may be exercised for a period of twenty-four months after such termination date or until the expiration of the stated period of the award, whichever period is shorter, provided, however, that if such participant dies within the twenty-four month period following such termination date, the options and stock appreciation rights may be exercised by the participant’s legal representative, to the extent to which they were exercisable at the time of death, for a period of twelve months from the date of death or until the expiration of the stated period of the award, whichever period is shorter, (b) all vesting restrictions and conditions applicable to the participant’s outstanding service-based restricted shares will immediately lapse and such shares will be fully vested, and (c) the applicable award agreement will set forth the treatment of any other outstanding awards of the participant. If a participant’s service terminates by reason of eligible retirement, (a) all of the participant’s outstanding service-based stock options and stock appreciation rights will cease vesting and may be exercised solely to the extent exercisable at the time of the participant’s retirement until the expiration of the stated period of the award, provided, however, that if the participant dies after such termination date, the options and stock appreciation rights may be exercised by the participant’s legal representative, to the extent to which they were exercisable at the time of death, for a period of twelve months from the date of death or until the expiration of the stated period of the award, whichever period is shorter, (b) if the participant has attained the age of 60 at such termination date, all vesting restrictions and conditions applicable to the participant’s outstanding service-based restricted shares will immediately lapse and such shares will be fully vested, (c) if the participant has not yet attained the age of 60 at such termination date, all time-based vesting restrictions and conditions applicable to the participant’s outstanding service-based restricted shares will continue in accordance with their terms, or until the participant’s death or permanent disability, and (d) the applicable award agreement will set forth the treatment of any other outstanding awards of the participant. Upon a “change of control” (as defined by the Plan), (a) all outstanding service-based stock options and stock appreciation rights will become fully vested and immediately exercisable, (b) with respect to outstanding service-based restricted shares, either (i) such shares will be canceled and a cash payment will be made to each such participant in an amount equal to the highest price per share received by FedEx stockholders in connection with such change of control multiplied by the number of such unvested restricted shares then held by such participant, or (ii) all vesting restrictions and conditions applicable to such shares will immediately lapse and such shares will be fully vested, and (c) the rights of participants in connection with such change of control with respect to all other awards will be as set forth in the applicable award agreement. In addition, the Committee may, in its discretion, accelerate the vesting or payment of awards at any time. The Committee may differentiate among participants or among awards in exercising such discretion. The Committee may not accelerate payment of any award if such acceleration would subject such payment to tax under Code Section 409A.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Adjustments In the event of an equity restructuring transaction that causes theper-share value of FedEx common stock to change (including any stock dividend, stock split,spin-off, rights offering, or large nonrecurring cash dividend), the share authorization limits under the Plan will be adjusted proportionately, and the Committee will make such adjustments to the Plan and outstanding awards as it deems necessary or appropriate, in its sole discretion, to prevent dilution or enlargement of benefits or potential benefits intended to be made available under the Plan. In the event of a stock split, a stock dividend, or a combination or consolidation of the outstanding common stock into a lesser number of shares, the authorization limits under the Plan will automatically be adjusted proportionately, and the shares then subject to each outstanding award will automatically be adjusted proportionately without any change in the aggregate exercise price for such award. The Plan permits the Committee to make certain discretionary adjustments to outstanding awards upon the occurrence or in anticipation of any transaction described above or any share combination, exchange or reclassification, recapitalization, merger, consolidation or other corporate reorganization affecting FedEx common stock. Amendment and Termination of the Plan and of Outstanding Awards The Board of Directors or the Committee may amend, modify, suspend, discontinue or terminate the Plan at any time. However, any such amendment or modification will be subject to stockholder approval if it would (a) increase the total number of shares available for issuance pursuant to awards granted under the Plan (with the exception of certain adjustments for changes in capitalization, as discussed above), (b) delete or limit the repricing prohibition discussed below, or (c) require stockholder approval under applicable law, regulation or securities exchange rule or listing requirement. Under these rules, stockholder approval will not necessarily be required for all amendments that might increase the cost of the Plan or broaden its eligibility requirements. In addition, the Board of Directors or the Committee may condition any amendment or modification on the approval of stockholders for any other reason. No amendment, modification, suspension, discontinuance or termination of the Plan will impair the rights of any participant under any award previously granted under the Plan without such participant’s written consent, unless the Committee determines in its sole discretion that such action is not reasonably likely to significantly reduce or diminish the benefits provided to the participant under such award. The Committee may waive any conditions or restrictions under, amend or modify the terms and conditions of, or cancel or terminate any outstanding award at any time. However, with the exception of actions taken to comply with law and subject to the provisions of the applicable award agreement, no such amendment, modification, cancellation or termination shall impair the rights of a participant under an award without such participant’s written consent, unless the Committee determines in its sole discretion that such action is not reasonably likely to significantly reduce or diminish the benefits provided to the participant under such award. Repricing Prohibited As indicated above, outstanding stock options and stock appreciation rights cannot be repriced, directly or indirectly, without the prior consent of FedEx’s stockholders. The exchange of an “underwater” option (i.e., an option having an exercise price in excess of the current market value of the underlying stock) for another award or cash would be considered an indirect repricing and would, therefore, require the prior consent of FedEx’s stockholders.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Loans Prohibited FedEx will not loan funds to any participant for the purpose of paying the exercise price associated with a stock option or stock appreciation right granted under the Plan or for the purpose of paying any taxes associated with the grant, exercise, lapse of restriction, vesting, distribution, payment or other taxable event involving any award under the Plan. New Plan Benefits The benefits that will be awarded or paid under the Plan are not currently determinable. Any future awards granted to eligible participants under the Plan will be made at the discretion of the Committee, the Board of Directors or under delegated authority, and no such determination as to future awards or who might receive them has been made. Existing Plan Benefits to Named Executive Officers and Others The following table sets forth with respect to each named executive officer listed in the Summary Compensation Table on page 40 and each group listed below (i) the number of shares of common stock issuable pursuant to stock options granted under the Plan and (ii) the number of restricted shares of common stock awarded under the Plan, in each case since the Plan’s inception on September 27, 2010 through July 31, 2017 (without regard to whether any grants were subsequently forfeited, terminated or canceled). It does not include any grants made during this same period under any of FedEx’s other stock option or restricted stock plans. In addition, Mr. Smith’s son, who currently serves as President and CEO of FedEx Trade Networks, has been granted 17,245 option shares and 715 restricted shares under the Plan since its inception. | | | | | | | | | | | Option Shares Granted Since Adoption of Plan | | | Restricted Shares Granted Since Adoption of Plan | | F.W. Smith | | | 791,075 | | | | 0 | | A.B. Graf, Jr. | | | 96,545 | | | | 35,935 | | D.J. Bronczek | | | 134,105 | | | | 44,715 | | R.B. Carter | | | 96,545 | | | | 34,150 | | C.P. Richards | | | 96,545 | | | | 34,150 | | T.M. Glenn | | | 79,285 | | | | 31,075 | | All current executive officers as a group | | | 1,558,680 | | | | 256,345 | | All currentnon-employee directors as a group | | | 227,600 | | | | 0 | | All employees, excluding current executive officers but including all current officers who are not executive officers, as a group | | | 10,092,797 | | | | 696,131 | |
Foreign Jurisdictions In order to foster and promote achievement of the material purposes of the Plan in foreign jurisdictions and to fairly accommodate for differences in local law, tax policy or custom, the Committee may grant awards with terms that are inconsistent with the terms of the Plan or provide additional terms. These inconsistent or additional terms may be reflected insub-plans, supplements or alternative versions of the Plan, but will not include any provisions that are inconsistent with the Plan then in effect unless the Plan could have been amended to eliminate such inconsistency without further approval by the stockholders. Expenses All expenses of the Plan are paid for by FedEx.
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES Federal Income Tax Consequences The following is a brief description of the material United States federal income tax consequences associated with awards under the Plan. It is based on existing United States laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. Tax consequences in other countries may vary. This information is not intended as tax advice to anyone, including participants in the Plan. Stock Options.Neither incentive stock option grants nornon-qualified stock option grants cause any tax consequences to the participant or FedEx at the time of grant. Upon the exercise of anon-qualified stock option, the excess of the market value of the shares acquired over their exercise price is ordinary income to the participant and is deductible by FedEx. The participant’s tax basis for the shares is the market value thereof at the time of exercise. Any gain or loss realized upon a subsequent disposition of the stock will generally constitute capital gain, in connection with which FedEx will not be entitled to a tax deduction. Upon the exercise of an incentive stock option, the participant will not realize taxable income, but the excess of the fair market value of the stock over the exercise price may give rise to alternative minimum tax. When the stock acquired upon exercise of an incentive stock option is subsequently sold, the participant will recognize income equal to the difference between the sales price and the exercise price of the option. If the sale occurs after the expiration of two years from the grant date and one year from the exercise date, the income will constitute long-term capital gain. If the sale occurs prior to that time, the participant will recognize ordinary income to the extent of the lesser of the gain realized upon the sale or the difference between the fair market value of the acquired stock at the time of exercise and the exercise price; any additional gain will constitute capital gain. FedEx will be entitled to a deduction in an amount equal to the ordinary income recognized by the participant, but no deduction in connection with any capital gain recognized by the participant. If the participant exercises an incentive stock option more than three months after his or her termination of employment due to retirement or more than twelve months after his or her termination of employment due to permanent disability, he or she is deemed to have exercised anon-qualified stock option. Compensation realized by participants on the exercise ofnon-qualified stock options or the disposition of shares acquired upon exercise of any incentive stock options should qualify as performance-based compensation under the Code and thus not be subject to the $1,000,000 deductibility limit of Code Section 162(m). Stock Appreciation Rights.A participant granted a stock appreciation right under the Plan will not recognize income, and FedEx will not be allowed a tax deduction, at the time the award is granted. When the participant exercises the stock appreciation right, the amount of cash and the fair market value of any shares of stock or other consideration received will be ordinary income to the participant and FedEx will be allowed a corresponding federal income tax deduction at that time. Compensation realized by the participant on the exercise of the stock appreciation right should qualify as performance-based compensation under the Code and thus not be subject to the $1,000,000 deductibility limit of Code Section 162(m). Restricted Stock.Restricted stock is not taxable to a participant at the time of grant, but instead is included in ordinary income (at its then fair market value) when the restrictions lapse. A participant may elect, however, to recognize income at the time of grant, in which case the fair market value of the restricted shares at the time of grant is included in ordinary income and there is no further income recognition when the restrictions lapse. If a participant makes such an election and thereafter forfeits the restricted shares, he or she will be entitled to no tax deduction, capital loss or other tax benefit. FedEx is entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant, subject to any applicable limitations under Code Section 162(m). A participant’s tax basis for restricted shares will be equal to the amount of ordinary income recognized by the participant. The participant will recognize capital gain (or loss) on a sale of the restricted stock if the sale price exceeds (or is lower than) such basis. The holding period for restricted shares for purposes of characterizing gain or loss on the sale of any shares as long- or short-term commences at the time the participant recognizes ordinary income pursuant to an award. FedEx is not entitled to a tax deduction corresponding to any capital gain or loss of the participant. Restricted Stock Units.A participant will not recognize income, and FedEx will not be allowed a tax deduction, at the time a restricted stock unit award is granted. Upon receipt of shares of stock (or the equivalent value in cash or any combination of cash and FedEx common stock) in settlement of a restricted stock unit award, a participant will recognize ordinary income equal to the fair market value of the stock and cash received as of that date (less any amount he or she paid for the stock and cash), and FedEx will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Code Section 162(m). Performance Awards.A participant will not recognize income, and FedEx will not be allowed a tax deduction, at the time a performance award is granted (for example, when the performance goals are established). Upon receipt of stock or cash (or a combination thereof) in settlement of a performance award, the participant will recognize ordinary
PROPOSAL 4 — AMENDMENT TO 2010 OMNIBUS STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES income equal to the fair market value of the stock and cash received, and FedEx will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Code Section 162(m). Code Section 409A. If an award is subject to Code Section 409A (which relates to nonqualified deferred compensation plans), and if the requirements of Section 409A are not met, the taxable events as described above could apply earlier than described, and could result in the imposition of additional taxes and penalties. All awards that comply with the terms of the Plan, however, are intended to be exempt from the application of Code Section 409A or meet the requirements of Section 409A in order to avoid such early taxation and penalties. Tax Withholding.FedEx has the right to deduct or withhold, or require a participant to remit to FedEx, an amount sufficient to satisfy federal, state and local taxes (including employment taxes) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. The Committee may, at the time the award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by delivery of, or withholding from the award, shares having a fair market value on the date of withholding equal to the amount required to be withheld for tax purposes. 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 the amendment to the Plan. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
EQUITY COMPENSATION PLANS
Equity Compensation Plans Approved by Stockholders Stockholders approved FedEx’s 1995, 1997, 1999 and 2002 Stock Incentive Plans, as amended, FedEx’s Incentive Stock Plan, as amended, and FedEx’s 2010 Omnibus Stock Incentive Plan, asamended.as amended. Although options arewere still outstanding under the 1995, 1997, 1999 and 2002 plans and the Incentive Stock Plan as of May 31, 2017, no shares are available under these plans for future grants.
Equity Compensation Plans Not Approved by Stockholders FedEx’s 2001 Restricted Stock Plan, as amended, was approved by the Board of Directors, but was not approved by the stockholders. The 2001 Restricted Stock Plan was terminated in September 2010, and no further grants may be made under this plan, although, as of May 31, 2014, there were still unvested restricted share awards outstanding under the plan (all such shares have subsequently vested). Under the terms of this plan, key employees received restricted shares of common stock as determined by the Compensation Committee. Only treasury shares were issued under this plan. Holders of restricted shares were entitled to vote such shares and to receive any dividends paid on FedEx common stock.
In connection with its acquisition of Caliber System, Inc. in January 1998, FedEx assumed Caliber’s officers’ deferred compensation plan. This plan was approved by Caliber’s boardofboard of directors, but not by Caliber’s or FedEx’s stockholders. Following FedEx’s acquisition of Caliber, Caliber stock units under the plan were converted to FedEx common stock equivalent units. In addition, the employer’s 50% matching contribution on compensation deferred under the plan was made in FedEx common stock equivalent units. Subject to the provisions of the plan, distributions to participants with respect to their stock units may be paid in shares of FedEx common stock on aone-for-one basis. Effective January 1, 2003, no further deferrals or employer matching contributions will be made under the plan. Participants may continue to acquire FedEx common stock equivalent units under the plan, however, pursuant to dividend equivalent rights.
Summary Table The following table sets forth certain information as of May 31, 2014,2017, with respect to compensation plans under which shares of FedEx common stock may be issued. Equity Compensation Plan Information |
| Plan Category | | Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in the First Column) | | | | Equity compensation plans approved by stockholders | | 15,634,856 | (1) | | | $91.71 | | 15,540,209 | (2) | | | Equity compensation plans not approved by stockholders | | 1,561 | (3) | | | N/A | | – | | | | Total | | 15,636,417 | | | | $91.71 | | 15,540,209 | | |
Equity Compensation Plan Information | | | | | | | | | | | | | Plan Category | | Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | | Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in the First Column) | Equity compensation plans approved by stockholders | | | 13,598,699 | (1) | | | $125.66 | | | | 8,304,621 | (2) | Equity compensation plans not approved by stockholders | | | 1,286 | (3) | | | N/A | | | | — | | Total | | | 13,599,985 | | | | $125.66 | | | | 8,304,621 | (2) |
(1) | Represents shares of common stock issuable upon exercise of outstanding options granted under FedEx’s stock option plans. This number does not include: (a) 2,160include 1,520 shares of common stock issuable under a retirement plan assumed by FedEx for formernon-employee directors of Caliber System, Inc.; and (b) 123 shares of common stock issuable under stock credit plans assumed by FedEx in the Caliber acquisition. | | FedEx cannot make any additional awards under these assumed plans, but additional FedEx common stock equivalent units may be issued to current participants under the assumed stock credit plans pursuant to dividend equivalent rights. |
(2) | Shares available for equity grants under FedEx’s 2010 Omnibus Stock Incentive Plan, as amended (no more than 2,431,3361,992,459 of the shares available under the 2010 Omnibus Stock Incentive Plan may be used for full-value awards). |
(3) | Represents shares of FedEx common stock issuable pursuant to the officers’ deferred compensation plan assumed by FedEx in the Caliber acquisition as described under “— Equity Compensation Plans Not Approved by Stockholders” above. |
54 2014 Proxy Statement
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee assists the Board of Directors in its oversight of FedEx’s financial reporting process. The Audit Committee’s responsibilities are more fully described in its charter, which is available on the Investor Relations page of the FedEx website athttp://investors.fedex.com in the Governance & Citizenship section under “Committee Charters.” Management has the primary responsibility for the financial statements and the financial reporting process, including internal control over financial reporting. FedEx’s independent registered public accounting firm is responsible for performing an audit of FedEx’s consolidated financial statements and expressing an opinion on the fair presentation of those financial statements in conformity with United States generally accepted accounting principles. The independent registered public accounting firm also is responsible for performing an audit of and expressing an opinion on the effectiveness of FedEx’s internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited consolidated financial statements for the fiscal year ended May 31, 2014,2017, including a discussion of, among other things: the acceptability and quality of the accounting principles; the reasonableness of significant accounting judgments and critical accounting policies and estimates; the clarity of disclosures in the financial statements; and the adequacy and effectiveness of FedEx’s financial reporting procedures, disclosure controls and procedures and internal control over financial reporting, including management’s assessment and report on internal control over financial reporting. The Audit Committee also discussedreviewed with the Chief Executive Officer and Chief Financial Officer of FedEx their respective certifications with respect to FedEx’s Annual Report onForm 10-K for the fiscal year ended May 31, 2014.2017. The Audit Committee reviewed and discussed with the independent registered public accounting firm the audited consolidated financial statements for the fiscal year ended May 31, 2014,2017, the firm’s judgments as to the acceptability and quality of FedEx’s accounting principles and such other matters as are required to be discussed with the Audit CommitteeunderCommittee under the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), including those matters required to be discussed by Auditing Standard No. 16,1301,Communications with Audit Committees. The Audit Committee also reviewed and discussed with the independent registered public accounting firm its audit of the effectiveness of FedEx’s internal control over financial reporting. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the firm’s communications with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm the firm’s independence. The Audit Committee discussed with FedEx’s senior internal audit executive and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the senior internal audit executive and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of FedEx’s internal controls and the overall quality of FedEx’s financial reporting. In reliance on the reviews and discussions referred to above, and the receipt of unqualified opinions from Ernst & Young LLP dated July 14, 2014,17, 2017, with respect to the consolidated financial statements of FedEx as of and for the fiscal year ended May 31, 2014,2017, and with respect to the effectiveness of FedEx’s internal control over financial reporting, the Audit Committee recommended to the Board of Directors, and the Board approved, that the audited consolidated financial statements be included in FedEx’s Annual Report onForm 10-K for the fiscal year ended May 31, 2014,2017, for filing with the Securities and Exchange Commission. Audit Committee Members John A. Edwardson –—Chairman
Gary W. Loveman
Kimberly A. Jabal Shirley Ann Jackson R. Brad Martin
Joshua Cooper Ramo 2014 Proxy Statement 55
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AUDIT ANDNON-AUDIT FEES
The following table sets forth fees for services Ernst & Young LLP provided to FedEx during fiscal 20142017 and 2013,2016, which were preapproved by FedEx’s Audit Committee in accordance with the Policy on Engagement of Independent Auditor (discussed on the following page): | | 2014 | | 2013 | Audit fees | | | $14,253,000 | | | $13,633,000 | Audit-related fees | | | 824,000 | | | 1,034,000 | Tax fees | | | 377,000 | | | 571,000 | All other fees | | | 817,000 | | | 1,090,000 | Total | | | $16,271,000 | | | $16,328,000 |
Audit Fees.Represents fees for professional services provided for the audit of FedEx’s annual financial statements, the audit of FedEx’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, the review of FedEx’s quarterly financial statements, audit services provided in connection with other statutory or regulatory filings, and consents and comfort letters in connection with registered securities offerings and registration statements.Audit-Related Fees.Represents fees for assurance and other services related to the audit of FedEx’s financial statements. The fees for fiscal 2014 and fiscal 2013 were for benefit plan audits, international accounting and reporting compliance, and due diligence related to mergers and acquisitions.Tax Fees.Represents fees for professional services provided primarily for domestic and international tax compliance and advice. Tax compliance and preparation fees totaled $149,000 and $192,000 in fiscal 2014 and 2013, respectively.All Other Fees.Represents fees for products and services provided to FedEx not otherwise included in the categories above. The fees for fiscal 2014 were for online technical resources and advisory services related to acquisition integration planning and information technology risk management. The fees for fiscal 2013 were primarily for information technology risk assessments, risk advisory services and training services and settlement system security assessments.
| | | | | | | | | | | 2017 | | | 2016 | | Audit fees | | $ | 31,267,000 | | | $ | 20,343,000 | | Audit-related fees | | | 713,000 | | | | 643,000 | | Tax fees | | | 1,835,000 | | | | 322,000 | | All other fees | | | 129,000 | | | | 1,888,000 | | Total | | $ | 33,944,000 | | | $ | 23,196,000 | |
| • | | Audit Fees.Represents fees for professional services provided for the audit of FedEx’s annual financial statements, the audit of FedEx’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, the review of FedEx’s quarterly financial statements, audit services provided in connection with other statutory or regulatory filings, and consents and comfort letters in connection with registered securities offerings and registration statements. The year-over-year increase in audit fees was due to the inclusion of TNT Express (which was acquired on May 25, 2016) and related statutory audits. |
| • | | Audit-Related Fees.Represents fees for assurance and other services related to the audit of FedEx’s financial statements. The fees for fiscal 2017 and fiscal 2016 were for benefit plan audits and international accounting and reporting compliance. |
| • | | Tax Fees.Represents fees for professional services provided primarily for domestic and international tax compliance and advice and expatriate/global mobility compliance services. Tax compliance and preparation fees totaled $482,000 and $115,000 in fiscal 2017 and 2016, respectively. |
| • | | All Other Fees.Represents fees for products and services provided to FedEx not otherwise included in the categories above. The fees for fiscal 2017 were for online technical resources, employee benefit plan compliance reviews, and acquisition integration planning advisory services. The fees for fiscal 2016 were for online technical resources, acquisition integration planning advisory services, and due diligence services in connection with the acquisition of TNT Express. |
FedEx’s Audit Committee has determined that the provision ofnon-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence.
PROPOSAL 35 — RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Appointment of Independent Registered Public Accounting Firm Ernst & Young LLP audited FedEx’s annual financial statements for the fiscal year ended May 31, 2014,2017, and FedEx’s internal control over financial reporting as of May 31, 2014.2017. The Audit Committee has appointed Ernst & Young to be FedEx’s independent registered public accounting firm for the fiscal year ending May 31, 2015.2018. Ernst & Young has been FedEx’s external auditor continuously since 2002. The members of the Audit Committee and the Board of Directors believe that the continued retention of Ernst& Young to serve as FedEx’s independent registered public accounting firm is in the best interests of the company and our stockholders. The stockholders are asked to ratify this appointment at the annual meeting. Representatives of Ernst & Young will be present at the meeting to respond to appropriate questions and to make a statement if they so desire. 56 2014 Proxy Statement
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PROPOSAL 3 — RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Policies Regarding Independent Auditor The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm, including the audit fee negotiations associated with the retention of the firm. Additionally, in conjunction with the mandated rotation of the independent registered public accounting firm’s lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of any new lead engagement partner. To help ensure the independence of the independent registered public accounting firm, the Audit Committee has adopted two policies: the Policy on Engagement of Independent Auditor; and the Policy on Hiring Certain Employees and Partners of the Independent Auditor. Pursuant to the Policy on Engagement of Independent Auditor, the Audit Committee preapproves all audit services andnon-audit services to be provided to FedEx by its independent registered public accounting firm. The Audit Committee may delegate to one or more of its members the authority to grant the required approvals, provided that any exercise of such authority is presentedreported at the next Audit Committee meeting. The Audit Committee may preapprove for up to one year in advance the provision of particular types of permissible routine and recurring audit-related, tax and othernon-audit services, in each case described in reasonable detail and subject to a specific annual monetary limit also approved by the Audit Committee.TheCommittee. The Audit Committee must be informed about each such service that is actually provided. In cases where a service is not covered by one of those approvals, the service must be specifically preapproved by the Audit Committee no earlier than one year prior to the commencement of the service. Each audit ornon-audit service that is approved by the Audit Committee (excluding tax services performed in the ordinary course of FedEx’s business and excluding other services for which the aggregate fees are expected to be less than $25,000)$50,000) will be reflected in a written engagement letter or writing specifying the services to be performed and the cost of such services, which will be signed by either a member of the Audit Committee or by an officer of FedEx authorized by the Audit Committee to sign on behalf of FedEx. The Audit Committee will not approve any prohibitednon-audit service or anynon-audit service that individually or in the aggregate may impair, in the Audit Committee’s opinion, the independence of the independent registered public accounting firm. In addition, the policy provides that FedEx’s independent registered public accounting firm may not provide any services, including financial counseling and tax services, to any FedEx officer, Audit Committee member or FedEx managing director (or its equivalent) in the Finance department or to any immediate family member of any such person. The Policy on Engagement of Independent Auditor is available in the Governance & Citizenship section under “Policies and Guidelines” of the Investor Relations page of our website athttp://investors.fedex.com. Pursuant to the Policy on Hiring Certain Employees and Partners of the Independent Auditor, FedEx will not hire a person who is concurrently a partner or other professional
PROPOSAL 5 — RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM employee of the independent registered public accounting firm or, in certain cases, an immediate family member of such a person. Additionally, FedEx will not hire a former partner or professional employee of the independent registered public accounting firm in an accounting role or a financial reporting oversight role if he or she remains in a position to influence the independent registered public accounting firm’s operations or policies, has capital balances in the independent registered public accounting firm or maintains certain other financial arrangements with the independent registered public accounting firm. FedEx will not hire a former member of the independent registered public accounting firm’s audit engagement team (with certain exceptions) in a financial reporting oversight role without waiting for a required “cooling-off”“cooling-off” period to elapse. FedEx’s Executive Vice President and Chief Financial Officer will approvemust preapprove any hire who was employed during the preceding three years by the independent registered public accounting firm, and willreport at least annually report all such hires to the Audit Committee.
Vote Required For Ratification The Audit Committee is responsible for selecting FedEx’s independent registered public accounting firm. Accordingly, stockholder approval is not required to appoint Ernst & Young as FedEx’s independent registered public accounting firm for fiscal year 2015.2018. The Board of Directors believes, however, that submitting the appointment of Ernst & Young to the stockholders for ratification is a matter of good corporate governance. If the stockholders do not ratify the appointment, the Audit Committee will review its future selection of the independent registered public accounting firm. The ratification of the appointment of Ernst & Young as FedEx’s independent registered public accounting firm requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL. 2014 Proxy Statement57
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PROPOSAL 46 — STOCKHOLDER PROPOSAL:
SHAREHOLDER PROXY ACCESS FOR SHAREHOLDERSREVISIONS
FedEx is not responsible for the content of this stockholder proposal or supporting statement. FedEx has been notified that Myra K. Young, 9295 Yorkship Court, Elk Grove, California 95758, the beneficial owner of 50 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting: “RESOLVED: Shareholders of FedEx Corporation (the “Company”) ask the board of directors (the “Board”) to revise its “Nominations of Directors Included in the Corporation’s Proxy Materials” bylaw and other associated provisions, to ensure the following: The number of shareholder-nominated candidates eligible to appear in proxy materials should be one quarter of the directors then serving or two, whichever is greater. There should be no limitation on the number of shareholders that can aggregate their shares to achieve the 3% “Minimum Number” of shares required to nominate. Supporting Statement: Research suggests three women may constitute a critical mass for reframing the decision-making culture of boards. (https://www.wcwonline.org/pdf/CriticalMassExecSummary.pdf) Similarly, having up to three shareholder-nominated directors (given the current FedEx Board size) may help ensure not only participation on each of the four committees but a critical mass for bringing a shareholder perspective to Board decisions. Our Company’s current limitation of twenty participants in nominating groups arguably provides proxy access in name only. For example, although 71 funds held an average of 0.15% or more of FedEx shares at the end of 2016, only 46 held that amount during each reporting quarter for the full“Proposal 43-year period required by the bylaws. The largest mainstream fund owners of FedEx have never even submitted shareholder proposals. They are highly unlikely to invoke proxy access, which would require considerably more effort. A study(http://www.cii.org/files/publications/misc/08_05_15_Best%20Practices%20-%20Proxy%20Access.pdf) by the Council of Institutional Investors (CII), “highlights the most troublesome provisions” in proxy access bylaws, such as the fact that even if the 20 largest public pension fund members were able to aggregate their shares, they would not meet the required 3% holding criteria. CII is a nonprofit, association of corporate, public and union pensions and endowments – the types of funds most likely to invoke proxy access. The SEC vacated its universal proxy access Rule14a-11(https://www.sec.gov/rules/final/2010/33-9136.pdf) after a court decision primarily focused on its cost-benefit analysis. That rule specified a 25% limitation on shareholder nominated candidates and no limitation on the number of shareholders that could form nominating groups. Based on that rule,Proxy Access in the United States:Revisiting the Proposed SEC Rule (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1) by CFA Institute, found proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by up to $140.3 billion.Public Versus Private Provision of Governance: The Case of Proxy Access (http://ssrn.com/abstract=2635695) found a 0.5 percent average increase in shareholder value for Shareholdersproxy access targeted firms. WHEREAS,Many corporate boards have adopted proxy access bylaws that significantly impair the ability of shareholders to form viable nominating groups and unnecessarily limit shareholder voice on the Board. Amendment of FedEx Board is too comfortable and stretched:
Same combined CEO/Chairman 40 yearsSix directors on three to five boards,Six over 60 years oldFive served 10 or more yearsBetween 2 and 9% of shares voted against six in 2013
PwC’s 2013 Survey found 35% of directors (half who served less than one year) believe at least one member of their board should be replaced (compared to 31% in 2012 and less than 25% who served more than 10 years). Top three reasons:
Diminished performance because of aging,Lack of expertise, andPoor meeting preparation.
Other issues specific to FedEx include related party transactions, use of corporate jet and settlements regarding:
Improper deliveries and delivery charges, andDiscrimination.
RESOLVED, Shareowners ask our board, tobylaws, as requested above, would ease the fullest extent permitted by law, to amend our governing documents to allow shareowners to make board nominations as follows:
1. The Company proxy statement, formformation of proxy access nominating groups and voting instruction forms shall include, listed with the board’s nominees, alphabetically by last name, nominees of:
a. Any party of one orwould ensure more shareowners that has collectively held, continuouslyhealthy competition for three years, at least three percent of the Company’s securities eligible to vote for the election of directors, and/or
b. Any party of shareowners of whom 25 or more have each held continuously for three years a number of shares of the Company’s stock that, at some point within the preceding 60 days, was worth at least $2,000 and collectively at least three percent of the Company’s securities eligible to vote for the election of directors.
2. For any board election, no shareowner may be a member of more than one such nominating party. Board members and officers of the Company may not be members of any such nominating party of shareowners.
3. Parties nominating under 1(a) may collectively, and parties nominating under 1(b) may collectively, make nominations numbering up to 24% of the company’s board of directors. If either group should exceed its 24% limit, opportunities to nominate shall be distributed among parties in that group as evenly as possible.
4. If necessary, preference among 1(a) nominators will be shown to those holding the greatest number of the Company’s shares for at least two years, and preference among 1(b) nominators will be shown to those with the greatest number who have each held continuously for one year a number of shares of the Company’s stock that, at some point within the preceding 60 days, was worth at least $2,000.
5. Nominees may include in the proxy statement a 500 word supporting statement.
6. Each proxy statement or special meeting notice to elect board members shall include instructions for nominating under these provisions, fully explaining all legal requirements for nominators and nominees under federal law, state law and the company’s governing documents.Increase Shareholder Value
Vote to enhance shareholder value: for Shareholder Proxy Access for ShareholdersEnhancement – Proposal 4”6” 582014 Proxy Statement
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PROPOSAL 46 — STOCKHOLDER PROPOSAL: SHAREHOLDER PROXY ACCESS FOR SHAREHOLDERSREVISIONS
Board of Directors’ Statement in Opposition The Board of Directors and its Nominating & Governance Committee have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders. ProxyOur stockholders already have meaningful and appropriate proxy access would bypassrights. The requested changes are unnecessary and potentially disruptive. In March 2016, our independent Nominating& Governance Committee’s process for identifying and recommending director nominees.An effective board of directors is composed of individuals with a diverse and complementary blend of experiences, skills and perspectives. Our independent Nominating & Governance Committee and Board of Directors are best situatedapproved amendments to assessour Bylaws to implement a proxy access framework that strikes the particular qualificationsright balance between promoting stockholder nomination rights and protecting the interests of potentialall our stockholders.
Specifically, our proxy access bylaw permits a stockholder, or a group of up to 20 stockholders, owning at least 3% of FedEx’s outstanding shares of common stock continuously for at least three years, to nominate and include in FedEx’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater, provided that the stockholder(s) and determine whetherthe nominee(s) satisfy the requirements specified in the Bylaws. Prior to the Board’s adoption of the proxy access bylaw, we consulted with many of our largest institutional stockholders in order to understand their views and policies regarding proxy access, including the specific provisions they will contribute to an effective and well-rounded Boardconsidered important. We spoke with, or otherwise received feedback from, representatives of stockholders owning nearly half of our then-outstanding shares. We also spoke with a representative of the proponent of the proxy access stockholder proposal that operates openly and collaboratively. Allowingwas approved at our 2015 annual meeting of stockholders. Substantially all of these stockholders to nominate directorsindicated their support for a proxy access bylaw with terms consistent with those now included in our proxy statement would seriously undercutBylaws (as described above). Based on the rolefeedback from our stockholders, and the Board’s assessment of the Nominating & Governance Committeerelative merits of the various proxy access formulations, our Board of Directors adopted a proxy access regime that provides stockholders with meaningful proxy access rights, while protecting the interests of all our stockholders by mitigating the risk of misuse of proxy access, including utilization by stockholders pursuing objectives that are not broadly supported by other stockholders. The terms adopted by the Board were and remain consistent with the prevailing practices of other large U.S. public companies with proxy access rights. The changes to our proxy access bylaw requested by the proposal are not necessary to provide for a meaningful proxy access process and may be potentially disruptive to the effective functioning of our Board, as discussed below. Our current limit on the number of director nominees is meaningful and mitigates the risk of disrupting the Board’seffectiveness. The maximum number of director nominees who can be nominated under our proxy access bylaw is two individuals or 20% of the Board, whichever is greater. This limit strikes the appropriate balance between allowing a sufficient number of stockholder-selected nominees to have a meaningful effect on the Board, while mitigating the risk of excessive disruption of the Board’s continuity and operations and the balance of director experience, skills and other attributes the Board in oneseeks to achieve through the regular nomination process. The proposal’s director nominee limit ofone-quarter of the most crucial elementsBoard or two individuals, whichever is greater, exacerbates the risk that excessive director turnover would disrupt the Board’s effectiveness. We also believe that raising the director nominee limit could have unintended consequences that could have an adverse impact on long-term stockholder value, including laying the groundwork for effecting a change of control and encouraging the pursuit of special interests at the expense of a holistic, long-term strategic view. The absence of a limit on the number of stockholders who can form a group could result in an excessive administrative burden and expense for the company. Our proxy access bylaw includes a stockholder group aggregation limit of 20 eligible holders. We treat the following as a single eligible holder: (1) funds under common management and investment control; (2) funds under common management and funded primarily by the same employer; and (3) a “family of investment companies” or a “group of investment companies” (each as defined in the Investment Company Act of 1940, as amended). Counting such funds and investment companies as a single eligible holder provides our stockholders with a greater ability to reach the 3% ownership threshold with up to 20 eligible holders. We believe that a reasonable stockholder group aggregation limit — such as the one contained in our Bylaws — is appropriate in order to reduce potential administrative costs for the company and help reduce the risk of abuse of proxy access rights. In the absence of such a limit, we could be required to make burdensome and time-consuming inquiries into the nature and duration of the share ownership of an unlimited number of stockholders participating in a proxy access nomination in order to verify their required share ownership. Our corporate governance the election of directors. Our Nominating & Governance Committee has developed criteria and a process for identifying and recommending director candidates for election by our stockholders, which are set forth in our Corporate Governance Guidelines and discussed above under “Corporate Governance Matters – Nomination of Director Candidates” and “Proposal 1 – Election of Directors – Experience, Qualifications, Attributes and Skills.” In undertaking this responsibility, the Nominating & Governance Committee has a fiduciary duty to act in good faith for the best interests of FedEx and all of our stockholders. This process is designed to identify and nominate director candidates who possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee our business and who can contribute to the overall effectiveness of our Board. With this process, we believe that our Nominating & Governance Committee and Board achieve the optimal balance of directors that best serve FedEx and our stockholders.
Our stockholders can recommend prospective director candidates for the Nominating & Governance Committee’s consideration.As discussed above under “Corporate Governance Matters – Nomination of Director Candidates,” our Nominating & Governance Committee considers director nominees proposed by our stockholders. Nominees proposed by stockholders for the Committee’s consideration are evaluated and considered in the same manner as a nominee recommended by a Board member, management, search firm or other source.
FedEx’s corporate governance policies, including proxy access, ensure that the Board of Directors is held accountable and provide stockholders with access to the Board. Our Board of Directors is composed of independent, active and effective directors. Five of the Board’s eleven independent directors
PROPOSAL 6 — STOCKHOLDER PROPOSAL: SHAREHOLDER PROXY ACCESS REVISIONS have been added since 2011. The Board is accountable to FedEx’s stockholders through the protectionsshareholder rights, including a meaningful proxy access right, that are embedded in our governing documents. For example: All directors are elected annually; Our Bylaws require that we use a majority-voting standard in uncontested director elections and include a resignation requirement for directors who fail to receive the required majority vote. The Bylaws also prohibit the Board from changing back to a plurality-voting standard without the approval of our stockholders; All supermajority stockholder voting requirements in our Certificate of Incorporation and Bylaws have been eliminated; Our Bylaws require stockholder approval for any future “poison pill” prior to or within twelve months after adoption of the poison pill; and Stockholders are allowed to call a special stockholders’ meeting, subject to the conditions set forth in our Bylaws. In addition to proxy access, our stockholders currently have the right to:
FedEx is not responsible for the content of this stockholder proposal or supporting statement. FedEx has been notified that Investor Voice, SPC, 10033 12th Avenue NW, Seattle, Washington 98177, as representative of the Equality Network Foundation, the beneficial owner of 30 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting:
“RESOLVED:Shareholders of FedEx Corporation (“FedEx” or “Company”) hereby request the Board of Directors to take or initiate the steps necessary to amend the Company’s governing documents to provide that all matters presented to shareholders, other than the election of directors, shall be decided by a simple majority of the shares voted FOR and AGAINST an item. This policy shall apply to all such matters unless shareholders have approved higher thresholds, or applicable laws or stock exchange regulations dictate otherwise.
SUPPORTINGSTATEMENT:
Vote Calculation Methodologies a report prepared for CalPERS by GMI Ratings, studied companies in the S&P 500 and Russell 1000, and found that 48% employ the simple majority vote-counting standard requested by this Proposal. See http://www.calpers-governance.org/docs-sof/provyvoting/calpers-russell-1000-vote-calculation-methodology-final-v2.pdf
Cardinal Health, Inc., an Ohio corporation and the 19th largest company in America, adopted and implemented this Proposal. Plum Creek Timber Company, Inc., a Delaware corporation and the largest private landowner in the nation, has adopted and implemented this Proposal.
FedEx is regulated by the Securities and Exchange Commission (“SEC”). An SEC Rule dictates a specific vote-counting formula for the purpose of establishing eligibility for resubmission of shareholder-sponsored proposals. This formula – which for the purpose of this proposal will be called the “Simple Majority Vote” – is the votes cast FOR, divided bytwo categories of vote, the:
FedEx does not uniformly follow theSimple Majority Vote. Its proxy states (for shareholder-sponsored proposals) that abstentions “will have the same practical effect as votes against the proposal.”
This means that results are determined by the votes cast FOR a proposal, divided by not two, butthree different categories of vote:
FOR votes,AGAINST votes, plusABSTAIN votes.
We note, for Management-sponsored Proposal 1 (in uncontested director elections), that FedEx embraces theSimple Majority Voteandexcludes abstentions, saying they “will have no effect.”
However, the Company then applies a more restrictive vote-counting formula to all shareholder-sponsored items and other management-sponsored ones, using a formula thatincludes abstentions.
The outcome is that these practices advantage management’s uncontested slate of director nominees by boosting the appearance of support on Management-sponsored Proposal 1, relative to other items, while they depress the calculated level of support for all other items – including every shareholder-sponsored proposal – by subjecting them to a higher threshold.
As well, in regard to shareholder-sponsored items, abstaining voters have not followed the Board’s recommendation to cast their vote AGAINST. Despite this, FedEx counts all abstentions as if every abstaining voter, without exception, has chosen to follow the Board’s recommendation to vote AGAINST.
In our view FedEx’s use of these two different vote-counting formulas is internally inconsistent, is confusing, does not fully honor voter intent, and harms shareholder best-interest.
Therefore, please vote FOR this widely accepted and common-sense governance Proposalthat calls for a fair and consistentSimple Majority Voteacross-the-board (while allowing flexibility for different thresholds where required).”
2014 Proxy Statement 61
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PROPOSAL 5 — STOCKHOLDER PROPOSAL: SIMPLE MAJORITY VOTE-COUNTING
Board of Directors’ Statement in Opposition
The Board of Directors and its Nominating & Governance Committee have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders.
FedEx’s stockholder approval standard and vote counting methodology of including abstentions adheres to Delaware law and is the standard used by a majority of Delaware companies.FedEx is incorporated in the State of Delaware and, therefore, Delaware law governs the voting standards for action by FedEx’s stockholders.
The required vote for action by FedEx’s stockholders follows the default approval standard for stockholder action under Delaware law. Under FedEx’s Bylaws, when a quorum is present, the vote of the holders of the majority of the shares present, in person or by proxy, and entitled to vote is required to approve any matter brought before a stockholder meeting, other than the election of directors. We believe the majority of Delaware corporations adhere to the same default voting standard.
Delaware law governs the way abstentions are counted, and under such law, abstention votes are considered shares “entitled to vote.” In the vote tabulation for matters that require the affirmative vote of the majority of the shares present and entitled to vote, abstentions are included in the denominator as shares entitled to vote and have the same practical effect as a vote “against” a proposal.
FedEx’s vote counting methodology of including abstentions applies identically to management-sponsored proposalsand stockholder proposals.In its supporting statement, the proponent focuses on the effect that counting abstentions as “against” votes has on stockholder proposals. However, abstentions are also counted as “against” management-sponsored proposals, other than the election of directors. At the annual meeting, our stockholders are being asked to adopt an advisory resolution to approve named executive officer compensation and to ratify the appointment of FedEx’s independent registered public accounting firm – both of which the Board recommends that stockholders support. Abstention votes for each of these management-sponsored proposals have the same practical effect as a vote against them, as with stockholder proposals. Our vote count standard does not favor these management-sponsored proposals over the stockholder proposals. Both are treated equally.
The Board of Directors believes that since stockholders are made aware of the treatment and effect of abstentions, counting abstention votes effectively honors the intent of our stockholders.Stockholders typically have three voting choices for a particular proposal: for, against and abstain. In the proxy statement for the annual meeting, we disclose the vote required to approve each proposal. We also describehow abstentions will be counted in the vote tabulation and the effect of abstentions on the outcome of a matter, on a proposal-by-proposal basis. Our stockholders are, therefore, informed that if they vote “abstain” on a proposal other than the election of directors, their vote will have the same practical effect as an “against” vote.
The Board of Directors believes that counting abstention votes effectively honors the intent of our stockholders. If a stockholder elects to abstain on a matter, the Board believes that the stockholder recognizes the impact of the vote and expects it to be included in the vote count.
The Board of Directors believes that lowering the approval standard for proposals would be poor corporate governance.Except with respect to the election of directors and matters that require, statutorily or otherwise, a different vote, the Board of Directors believes that a proposal – whether management-sponsored or stockholder-sponsored – should receive more “for” votes than the sum of “against” and “abstain” votes in order to constitute approval by our stockholders.
The proponent requests that abstentions be ignored for all matters presented to FedEx stockholders. Ignoring abstention votes would lower the approval standard (that is, make approval easier). We believe the proponent of a proposal, whether management or a stockholder, should be able to persuade a majority of stockholders to affirmatively vote “for” an item to consider it approved. An abstention indicates that stockholders are not in favor of the proposal. The Board of Directors does not believe that this would be in our stockholders’ best interest or effective corporate governance to disregard these views.
The SEC does not have a standard to determine whether a proposal has been approved by stockholders.The proponent’s argument of using the SEC “vote-counting formula” of excluding abstentions in vote tabulations is misguided. The SEC does not have a standard governing whether a proposal has been approved, because this is a matter of state law (in our case, Delaware state law). Because the SEC regulates proxy statements, the so-called vote-counting rules are simply for determining whether a proponent may resubmit a proposal for inclusion in a company’s proxy statement.
In sum, the Board believes that FedEx’s current vote counting methodology of including abstentions on matters other than the election of directors best reflects and honors the intent of our stockholders who vote to abstain on a proposal. This standard applies to both management-sponsored proposals and stockholder proposals and ensures that a matter has the requisite affirmative support to constitute approval by our stockholders. Accordingly, we recommend that you vote against this proposal.
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PROPOSAL 5 — STOCKHOLDER PROPOSAL: SIMPLE MAJORITY VOTE-COUNTING
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
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PROPOSAL 6 — STOCKHOLDER PROPOSAL:
HEDGING AND PLEDGING POLICY
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that Amalgamated Bank’s LongView LargeCap 500 Index Fund, 275 Seventh Avenue, New York, New York 10001, the beneficial owner of 44,227 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting:
“RESOLVED: The shareholders of FedEx Corporation urge the board of directors to adopt a policy (the “Policy”) that equity-based compensation plans should prohibit directors and senior executives who are compensated under such plans from engaging in hedging or pledging transactions involving FedEx shares issued pursuant to those plans. “Hedging or pledging transactions” include trading in puts, calls or other derivative products whose underlying asset is FedEx’s stock; engaging in hedging or monetization transactions such as prepaid forward contracts; holding shares in a margin account; or pledging shares as collateral for a loan. The board may, in its discretion, supplement the definition of “hedging or pledging transactions” to include other transactions involving FedEx shares that, in the board’s judgment, undermine a director’s or senior executive’s alignment of interest with the shareholders’ interest and the incentive effects of equity-based compensation.
The Policy should operate prospectively to equity-based compensation plans adopted after the date on which the board adopts the Policy (as well as to future amendments of existing plans) and should be applied so as not to violate any contractual obligations of FedEx.
SUPPORTING STATEMENT
As shareholders, we support executive compensation policies that reward long-term performance and align the interests of senior executives and directors with those of shareholders. We are concerned that this may not be happening at FedEx.
A FedEx company manual generally bars hedging and pledging transactions, but allows FedEx’s general counsel to grant exceptions. The general counsel has done so for Chair and CEO Fred W. Smith, who (according to last year’s proxy) has pledged 24% of his holdings to collateralize loans that fund his outside business ventures (about which FedEx does not disclose information regarding the identity, financial health, risks, or potential conflicts of interest). A 2012Wall Street Journal survey noted that the value of Smith’s pledged shares was the largest amount disclosed among the companies reporting that their executives had pledged shares.
We support a prohibition covering directors and senior executives that appears not simply in an internal manual, but in the text of equity-compensation plans that are presented to and approved by shareholders. A similar proposal received a nearly 30% “yes” vote last year; we believe that the need for a strong policy remains.
We believe that making this requirement a condition of being compensated under such plans could more closely align the interest of directors and senior executives with the interests of shareholders. For example, if a senior executive’s pledged shares are subject to a margin call, a significant number of shares may be suddenly dumped on the market, which can depress a stock price that is already declining. Similarly, if holdings in company shares are hedged, senior executives and directors may be better protected against price drops than other shareholders.
Proxy advisor Institutional Shareholder Services considers hedging and pledging a failure of risk oversight sufficient to warrant possible votes against directors, a committee or the entire board.
We urge shareholders to vote for this proposal.”
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Board of Directors’ Statement in Opposition
The Board of Directors and its Compensation and Nominating & Governance Committees have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders.
FedEx prohibits its officers and directors from engaging in hedging or similar transactions involving FedEx shares.We already satisfy an essential element of the proposal by prohibiting our directors and officers from engaging in transactions that signal a lack of confidence in FedEx’s prospects or that shift or hedge any economic risk associated with owning FedEx shares, including the following:
Publicly traded (or exchange-traded) options, such as puts,calls and other derivative securities;Short sales, including “sales against the box”; andHedging or monetization transactions, such as zero-costcollars and forward sales contracts.
We recognize that these transactions could weaken the incentives created by our executive compensation program and result in a disconnect between the interests of our officers and directors and the interests of our stockholders. Therefore, in 2013 we amended our policy to prohibit hedging and monetization transactions in all circumstances.
FedEx’s current pledging policy is reasonable and effectively balances the interests of management and our stockholders.An officer’s and director’s ability to manage his or her financial affairs must be appropriately balanced against the potential adverse impact to stockholders and the company that could result from the pledging of a significant number of company shares by executives and directors. FedEx’s current policy on margin accounts and pledges of FedEx shares strikes this balance.
FedEx generally prohibits our officers and directors from holding FedEx shares in a margin account or pledging FedEx shares as collateral for a loan. In the past, our General Counsel was permitted to grant an exception to this policy on a case-by-case basis for an officer or director who clearly demonstrated the financial capacity to repay the loan without resorting to the pledged shares. In an effort to more effectively balance the interests of management and our stockholders, we recently amended our policy to provide that our General Counsel, together with our Lead Independent Director, may grant such exceptions for any FedEx director or the Chairman, President and Chief Executive Officer. The General Counsel is still permitted to grant case-by-case exceptions for other FedEx officers.
We believe that our pledging policy effectively mitigates the risk that forced sales of pledged shares could prompt a broader sell-off or further depress a declining stock price, while providing our officers and directors with reasonable flexibility to use their FedEx shares as collateral for loans for needed liquidity and encouraging them to retain substantial ownership of their shares.
A complete prohibition of all pledging transactions could discourage our Board members and senior officers from holding significant amounts of FedEx stock.As discussed above under “Corporate Governance Matters – Stock Ownership Goal for Directors and Senior Officers,” the Board of Directors has established a stock ownership goal for directors and senior officers. This goal has been highly effective in promoting meaningful and significant stock ownership by our executives and Board members and aligning their interests with the interests of our stockholders. Academic research has shown a direct correlation between executive stock ownership and favorable stockholder returns. A complete ban on pledging, however, could discourage our executives and directors from owning significant levels of FedEx stock, which we believe would negatively affect stockholders.
Reasonable amounts of share pledging, when used as an alternative to selling the shares outright, do not raise the same concerns as hedging transactions designed to protect against drops in stock price. Pledging in this context is simply a way for the executive to achieve liquidity without sacrificing stock ownership. It is not used to shift or hedge any economic risk or as a bet against FedEx shares and, therefore, does not create any misalignment of management and stockholder interests.
FedEx shares may constitute a significant portion of an executive’s or director’s personal assets. As a result, situations may arise in which usingFedEx shares as collateral for his or her financial obligations or held in margin accounts is an attractive means to obtain liquidity rather than achieving it through decreased share ownership. Absent the ability to pledge FedEx shares in this manner, an officer or director may be forced to sell shares.
An absolute prohibition on pledging could create a disincentive for our officers and directors to hold substantial amounts of FedEx shares for long periods. We believe stockholders are interested in requiring executives to hold significant levels of company shares as a form of good governance.
Only one FedEx executive officer or director has any pledged FedEx shares, and this particular situation does not present any meaningful risk to the company or our stockholders.Our policy as applied demonstrates that it has been implemented reasonably. Only Frederick W. Smith, FedEx’s founder and Chairman of the Board, President and Chief Executive Officer, has pledged shares. None of the shares pledged by Mr. Smith were acquired through a FedEx equity compensation plan. His pledged shares are not used to shift or hedge any economic risk in owning FedEx stock, but to collateralize loans used to fund outside personal business ventures and prior purchases of FedEx shares. In accordance with our policy, Mr. Smith has established his financial capacity to repay the loan without resorting to the pledged shares.
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PROPOSAL 6 — STOCKHOLDER PROPOSAL: HEDGING AND PLEDGING POLICY
The Board of Directors does not believe that this transaction presents any meaningful risk to FedEx or our stockholders. No other FedEx executive officer or Board member currently holds FedEx shares that are pledged pursuant to a margin account, loan or otherwise.
Including the pledging and hedging prohibition in an equity compensation plan is unnecessary and would not benefit our stockholders.We have adopted comprehensive and detailed policies – the FedEx Securities Manual – that regulate trading in FedEx stock by our employees, including our executive officers, and Board members. The Securities Manual also includes our policy on hedging and pledging transactions. A violation of the Securities Manual could result in termination of employment.
The proponent asserts that including the hedging and pledging prohibition in an equity compensation plan could more closely align the interest of directors and senior executives with stockholder interests. We disagree. All FedEx officers and directors are required to comply with the policies set forth in the Securities Manual, and our General Counsel oversees compliance with and enforcement of these policies. The inclusion of our policy on pledging and hedging in the Securities Manual is arguably stronger than the placement of the policy in an equity compensation plan, since violations of the Securities Manual could lead to termination of employment while violating a provision of the equity compensation plan would only affect the terms of equity compensation granted under the plan. The proposal’s request, therefore, in no way enhances the efficacy of the policy or provides any discernible benefit to our stockholders.
For these reasons, we believe that this proposal is unnecessary and not in the best interests of our stockholders. Accordingly, we recommend that you vote against this proposal.
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
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PROPOSAL 7 — STOCKHOLDER PROPOSAL:
TAX PAYMENTS ON RESTRICTED STOCK AWARDS
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that the International Brotherhood of Teamsters General Fund, 25 Louisiana Avenue, N.W., Washington, D.C. 20001, the beneficial owner of 176 shares of FedEx common stock, intendsand Investor Voice, SPC, 111 Queen Anne Avenue North, Suite 500, Seattle, Washington 98109, as representative of the Equality Network Foundation, the beneficial owner of 21 shares of FedEx common stock, intend to present the following proposal for consideration at the annual meeting: “RESOLVED:Whereas,The we believe full disclosure of FedEx’s direct and indirect lobbying activities and expenditures is required to assess whether FedEx’s lobbying is consistent with its expressed goals and in the best interests of stockholders. Resolved, the stockholders of FedEx Corporation (the “Company”) urgerequest the compensation committeepreparation of a report, updated annually, disclosing: | 1. | Company 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 anytax-exempt organization that writes and endorses model legislation. |
| 4. | Description of management’s and the Board’s decision making process and oversight for making payments described in section 2 and 3 above. |
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which FedEx is a member. Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels. Neither “lobbying” nor “grassroots lobbying communications” include efforts to participate or intervene in any political campaign or to influence the general public or any segment thereof with respect to an election or referendum. The report shall be presented to the Audit Committee or other relevant oversight committees and posted on FedEx’s website. Supporting Statement: As stockholders, we encourage transparency and accountability in FedEx’s use of corporate funds to influence legislation and regulation. FedEx spent $24.94 million in 2015 and 2016 on federal lobbying. These figures do not include state lobbying expenditures where FedEx also lobbies but disclosure is uneven or absent. For example, FedEx spent over $492,000 lobbying in California for 2015 and 2016. FedEx’s lobbying on transportation infrastructure has drawn media attention (“US Shippers, Truckers Flex Lobbying Muscle,”Journal of Commerce, January 17, 2017), as has its lobbying on truck safety rules (“Trucks Are Getting More Dangerous and Drivers Are Falling Asleep at the Wheel. Thank Congress.”Huffington Post, April 16, 2016). FedEx sits on the board of directorsthe Chamber of Commerce, which has spent more than $1.3 billion on lobbying since 1998. FedEx does not disclose its memberships in, or payments to, adopt a policy that the Company will not pay the personal taxes owned on restricted stock awards on behalf of named executive officers. This policy should be forward-looking and become effective when the Company next adopts or amends its equity compensation plans after the 2014 annual shareholder meeting. This policy should be implemented without violating the Company’s existing contractual obligationstrade associations or the termsamounts used for lobbying. Absent a system of any existing compensation or benefit plan.accountability, company assets could be used for objectives contrary to FedEx’s long-term interests. SUPPORTING STATEMENT:Our Company has a policy under which it pays the taxes on restricted stock awards received by named executive officers.And FedEx determines the total target value of the awarddoes not disclose its membership intax-exempt organizations that write and provides that value in two components: restricted shares and cash payment of taxes due. The number of shares delivered to the officers is reduced by the amount of taxes owed.
Last year’s proxy statement reports that four officers received a total of 31,235 shares of restricted stock on June 4, 2012. To alleviate the officers from the tax burden on these awards, FedEx paid $1,527,368 on their behalf. Similar tax payments were higherendorse model legislation, such as, its membership in the two previous years. In 2012, FedEx paid $1,533,734 on behalf of officers in receipt of restricted stock awardsAmerican Legislative Exchange Council (ALEC). Over 100 companies, including 3M, Deere, McDonald’s, Medtronic, Pepsi and in 2011, it paid $1,537,579.Sprint have publicly left ALEC.
We do not believe covering officers’ taxes is an effective use of corporate resources. Our Company’s primary competitor in the United States, United Parcel Service, does not pay its officers’ taxes on restricted stock awards. FedEx officers are among the most highly compensated employees at our firm and therefore are better equipped than many of our workers to pay their own taxes. The officers can choose to pay the taxes out of pocket or sell shares in an amount equal to the tax obligation. The Securities and Exchange Commission required FedEx to include the taxes paid on behalf of officers in the Summary Compensation Table of its 2013 proxy statement as “other compensation.” In that reporting, FedEx acknowledged the requirement but argued, “we do not believe these payments are ‘tax gross-ups’ in the traditional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients.”
A difference in how the tax payments are calculated and reported, however, does not excuse the Company’s decision to continue with the outdated and much criticized practice of paying officers’ personal taxes. Such a practice sends a signal that the board is either unaware of or disregards investor concerns about executive payments that are untied to performance.
We urge our fellow shareholders to vote in favor ofsupport for this proposal.”
PROPOSAL 7 — STOCKHOLDER PROPOSAL: LOBBYING ACTIVITY AND EXPENDITURE REPORT Board of Directors’ Statement in Opposition The Board of Directors and its Compensation and Nominating & Governance Committees have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders.
FedEx’s restricted stock program has been in place for over 20 years and has encouraged FedEx executives to own and retain company stock. By facilitating the ownership of FedEx shares by our executives, we strengthen the alignment of their interests with those of our investors. When granting restricted stock, the Compensation Committee 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. The total target value of the award is the same as it would be if the company did not provide taxpayments. 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 of each award 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. 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
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PROPOSAL 7 — STOCKHOLDER PROPOSAL: TAX PAYMENTS ON RESTRICTED STOCK AWARDS
not believe these payments are “tax gross-ups” in the traditional 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 2014 restricted stock awards granted to FedEx Corporation executive vice presidents (as in previous years, Frederick W. Smith, FedEx’s Chairman of the Board, President and Chief Executive Officer, did not receive a restricted stock award in fiscal 2014):
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.
In sum, we strongly believe that our restricted stock program is effectively designed and is aligned with the best interests of our stockholders. Accordingly, we recommend that you vote against this proposal.
Vote Required for Approval
If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
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PROPOSAL 8 — STOCKHOLDER PROPOSAL:
POLITICAL DISCLOSURE AND ACCOUNTABILITY
FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that the Comptroller of the City of New York, 1 Centre Street, New York, New York 10007-2341, as custodian and a trustee of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Police Pension Fund, and custodian of the New York City Board of Education Retirement System, the beneficial owner of 669,548 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting:
“Resolved,that the shareholders ofFedEx(“Company”) hereby request that the Company provide a report, updated semiannually, disclosing the Company’s:
(a) Policies and procedures for making political contributions and expenditures (both direct and indirect) with corporate funds, including the board’s role (if any) in that process, and
(b) Monetary and non-monetary political contributions or expenditures that could not be deducted as an “ordinary and necessary” business expense under section 162(e) of the Internal Revenue Code; this would include (but not be limited to) contributions to or expenditures on behalf of political candidates, political parties, political committees and other entities organized and operating under sections 501(c)(4) of the Internal Revenue Code, as well as the portion of any dues or payments that are made to any tax-exempt organization (such as a trade association) and that are used for an expenditure or contribution that, if made directly by the Company, would not be deductible under section 162(e) of the Internal Revenue Code.
The report shall identify all recipients and the amount paid to each recipient from Company funds.
Stockholder Supporting Statement
As long-term shareholders of FedEx, we support transparency and accountability in corporate spending on political activities. Disclosure is in the best interest of the company and its shareholders and critical for compliance with federal ethics laws.
We recognize that our Company offers a brief policy on corporate political spending on its website that states that the company does not contribute corporate funds directly to candidates or ballot issue campaigns. This policy leaves significant gaps, however, since it does not address certain avenues of spending, including:
A list of trade associations to which it belongs and how much of the company’s payments were used for political purposesPayments to any other third-party organization, including those organized under the section 501(c)(4) of the InternalRevenue Service codes, used for political purposes, andIndependent expenditures that advocate the election or defeat of a candidate.
Meanwhile, publicly available records show that FedEx contributed at least $4.2 million in corporate funds since 2003. (CQ:http://moneyline.cq.com and National Institute on Money in State Politics:http://www.followthemoney.org) In addition, FedEx scored just 42.9 out of 100 points in the2013 CPA-Zicklin Index of Corporate Political Accountability and Disclosure, placing it near the bottom of a ranking of the 196 largest U.S. companies. This is in comparison with our Company’s peer, UPS, which scored 94.3 and placed in the top tier of the group.
The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax exempt organizations used for political purposes. This would bring our Company in line with a growing number of leading companies, including UPS, Merck and Microsoft that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge your support for this critical governance reform.”
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Board of Directors’ Statement in Opposition
The Board of Directors and its Nominating & Governance Committee have considered this proposal and concluded that its adoption wouldis unnecessary and not be in the best interests of our stockholders. The Board believes it is in the best interests of our stockholders for FedEx to be an effective participant in the political process. 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 regarding political contributions (which is available in the Governance & Citizenship section of the Investor Relations page of our website athttp://investors.fedex.com), we actively participate in the political process with the ultimate goal of promoting and protecting the economic future of FedEx and our stockholders and employees. Our independent Nominating & Governance Committee assists the Board of Directors in oversight of FedEx’s political activities. The Committee reviews and discusses with FedEx’s Executive Vice President, General Counsel and Secretary, at least annually, the company’s political activities, including political spending and lobbying activities and expenditures. The Committee also periodically reviews and discusses with management our policy on political contributions, and approves any changes to this policy. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures — but only where permitted by applicable law. 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. Political contributions of all types are subject to extensive governmental regulation and public disclosure requirements, and FedEx is fully committed to complying with all applicable campaign finance laws. For example, corporate contributions are subject to certain limitations at theunder U.S. federal level, andlaw, FedEx cannot directly support candidates for federal office, so we make none.do not. While some states allow corporate contributions to state and local candidates or political parties,ballot issue campaigns, it is FedEx’sour policy not to make such contributions. FedEx also does not make corporate contributions to groups organized under section 501(c)(4) or section 527 of the Internal Revenue Code, other than membership dues, event sponsorships, and contributions to the organizational committees of the Democratic and Republican national party conventions and the annual conferences of the Democratic and Republican Governors Associations. None of these expenditures are used to directly support any election-related activity or ballot initiatives at the federal, state or local level. These limited corporate expenditures are approved by the Corporate Vice President of Government Affairs, in consultation with appropriate members of FedEx senior management. The Executive Vice President FedEx is already subject to extensive federal, state and General Counsel provides periodic updates to the Board of Directors on FedEx’s political activities.local lobbying registration and public disclosure requirements. For example, FedEx files quarterly reports with the United States House of Representatives and Senate that disclose a list of our lobbying activities, and these reports are publicly available athttp://lobbyingdisclosure.house.gov/. As a result of these policies and mandatory public disclosure requirements, the Board has concluded that ample public information exists regarding FedEx’s political contributions and lobbying expenditures to alleviate the concerns cited in this proposal. FedEx also provides an opportunity for its employees to participate in the political process by joining FedEx’snon-partisan political action committee (“FedExPAC”). FedExPAC allows our employees to pool their financial resources to support federal, state and local candidates, political party committeescampaigns and political action committees. The political contributions made by FedExPAC are funded entirely by the voluntary contributions of our employees. No corporate funds are used. Appropriate members of FedEx senior management decide which candidates, campaigns and committees FedExPAC will support based on a nonpartisan effort to advance and protect the best interests of FedExthe company and our stockholders and employees. All contributions are made without regard to the personal political preferences of individual FedEx Board members, officers and employees. Moreover, FedExPAC’s activities are subject to comprehensive regulation by the federal, government,state and local governments, including detailed disclosure requirements, which include monthly reports with the Federal Election Commission. These reports are publicly available athttp://fec.gov/www.fec.gov and include an itemization of FedExPAC’s receipts and disbursements, including any political contributions.contributions, over a certain amount. Our participation in the political process is designed to promote and protect the economic future of FedEx and our stockholders and employees, and we make political contributions, including lobbying expenditures, and maintain memberships with a variety of trade associations expressly for that purpose. Participation as a member of these associations comes with the understanding that we may not always agree
PROPOSAL 7 — STOCKHOLDER PROPOSAL: LOBBYING ACTIVITY AND EXPENDITURE REPORT with all of the positions of the organizations or other members, but that wemembers. We believe that the associations, however, take many positions and address many issues in a meaningful and influentialcollective industry manner and in a wayoften advance positions consistent with company interests that will work to continue tohelp us provide strong financial returns.returns and enhance long-term stockholder value. We have in place effective reporting and compliance procedures designed to ensure that our political contributions are made in accordance with applicable law, and we closely monitor the appropriateness and effectiveness of the political activities undertaken by the most significant trade associations in which we are a member. For example, we have policies that govern FedEx employee involvement in trade associations and accounting procedures that allow us to record and monitor these expenditures. Finally, the Board believes that the expanded disclosure requested in this proposal could place FedEx at a competitive disadvantage by revealing itsour strategies and priorities. Because parties with interests adverse to FedEx also participate in the political process to their business advantage, any unilateral expanded disclosure, above what is required by law and equally applicable to all similar parties engaged in public debate, could 70 2014 Proxy Statement
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benefit those parties while harming the interests of FedEx and our stockholders. The Board believes that any reporting requirements that go beyond those required under existing law should be applicable to all participants in the process, rather than FedEx alone (as the proponent requests)proponents request). In short, we believe that this proposal is duplicative and unnecessary, as a comprehensive system of reporting and accountability for political contributions and lobbying expenditures already exists. If adopted, the proposal would apply only to FedEx and to no other company and would cause FedEx to incur undue cost and administrative burden, as well as competitive harm, without commensurate benefit to our stockholders. Accordingly, we recommend that you vote against this proposal.
Vote Required for Approval If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL. 2014 Proxy Statement 71
Table of ContentsPROPOSAL 8 — STOCKHOLDER PROPOSAL:
EXECUTIVE PAY CONFIDENTIAL VOTING FedEx is not responsible for the content of this stockholder proposal or supporting statement. FedEx has been notified that John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, the beneficial owner of 100 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting: “Proposal 8 – Executive Pay Confidential Voting Shareholders request our Board of Directors to take the steps necessary to adopt a bylaw that prior to the Annual Meeting, the outcome of votes cast by proxy on certain executive pay matters, including a running tally of votes for and against, shall not be available to management or the Board and shall not be used to solicit votes. Certain maters include the topics of say on executive pay and management-sponsored or board-sponsored resolutions seeking approval of executive pay plans. This proposal would not prohibit management access to shareholder comments submitted along with shareholder meeting ballots. This proposal is limited to executive pay items. Shareholders could still waive the confidentiality of their ballots on executive pay items – for instance by checking a box on the ballot. Our management can now monitor incoming votes and then use shareholder money to blast shareholders with costly solicitations on matters where they have a direct self-interest such as such as the ratification of lucrative stock options and to obtain artificially high votes for their lucrative executive pay. Our management can now do an end run on the effectiveness of say on pay votes. Instead of improving executive pay practices in response to disapproving shareholder votes, our management can efficiently manipulate the say on pay vote to a higher percentage. Without executive pay confidential voting our management can simply blast shareholders by using multiple professional proxy solicitor firms at shareholder expense (no timely disclosure of the cost) withone-way communication by mail and electronic mail (right up to the deadline) to artificially boost the vote for their self-interested executive pay ballot items. It is important for shareholders that the company get executive pay right in order to give management the best-focused incentive for long-term shareholder value. Executive pay is not ordinary business. Please vote to enhance shareholder value: Executive Pay Confidential Voting – Proposal 8” Board of Directors’ Statement in Opposition The Board of Directors and its Nominating & Governance Committee have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders. The proposal, if implemented, would obstruct constructive communications with our stockholders. The proposal seeks to prevent our Board and management from viewing preliminary voting results for executive compensation matters prior to an annual meeting. Our ability to view such voting results is an important part of our communications with stockholders. By viewing the results, we are able to determine if stockholders have any concerns with any of the proposals on which they are being asked to vote. This enables us to focus our proxy solicitation and engagement efforts in the most productive areas and allows us to minimize redundant solicitations and their associated costs. We value the transparent and robust dialogue that we have fostered with our stockholders. We believe maintaining open and direct lines of communication with our stockholders is the best way to continue to receive their specific and accurate feedback, respond to their questions and concerns, and enable them to cast their votes in a fully informed manner. This proposal would significantly weaken our ability to engage in beneficial and productive dialogue with our stockholders by reducing transparency on the topic of executive compensation during the pivotal time leading up to an annual meeting. We do not engage in the practices that the proposal purports to remedy. Our management does not engage in the proxy solicitation process to further any personal agendas. Instead, our Board and management view the proxy solicitation process as a means of engaging with our stockholders to increase their participation in the governance of our company,
PROPOSAL 8 — STOCKHOLDER PROPOSAL: EXECUTIVE PAY CONFIDENTIAL VOTING to better understand their concerns, and to discuss with them matters that impact the ongoing success of our company. Our Board is charged with approving proposals from management or stockholders that it believes to be in the best interests of our company and stockholders, and opposing such proposals that it believes are not in the best interests of our company and stockholders. We can most efficiently advocate for or oppose proposals, or consider making changes to our corporate governance or executive compensation program, when we are aware of the preliminary voting results and are permitted to discuss them with our stockholders. The proposal would implement a costly and dialogue-stifling policy to address anon-existent problem. Our stockholders can vote their shares confidentially. We have a confidential voting policy requiring a stockholder’s vote to be kept confidential and not disclosed to FedEx unless required by law, expressly requested on his or her proxy or in the case of a proxy contest. Additionally, because nominee holders cannot reveal the names of beneficial owners without their permission, stockholders who beneficially hold shares through a broker, bank or other nominee have the ability to vote confidentially even in the absence of our confidential voting policy. The implementation of the proposal does not affect our stockholders’ ability to vote confidentially. Our current stockholder communications and proxy solicitation methods foster an open and constructive dialogue with our stockholders, while allowing for confidentiality for those stockholders who desire not to be identified or contacted. We believe this proposal would unduly and detrimentally limit our ability to communicate with our stockholders at a time when greater levels of stockholder communication are important, and would add unnecessary costs and not remedy any problem faced by our stockholders. Accordingly, we recommend that you vote against this proposal. Vote Required for Approval If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
PROPOSAL 9 — STOCKHOLDER PROPOSAL: APPLICATION OF COMPANYNON-DISCRIMINATION POLICIES IN STATES WITHPRO-DISCRIMINATION LAWS FedEx is not responsible for the content of this stockholder proposal or supporting statement. FedEx has been notified that the NorthStar Asset Management, Inc. Funded Pension Plan, P.O. Box 301840, Boston, Massachusetts 02130, the beneficial owner of 268 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting: “WHEREAS: FedEx has policies on equal opportunity and anti-harassment which state that the Company will not tolerate “harassment, violence, intimidation, bullying and discrimination of any kind involving gender, sexual orientation, gender identity, gender expression …”; FedEx has an affinity group for LGBT (lesbian, gay, bisexual, and transgender) employees, and a high rating on the Human Rights Campaign’s Corporate Equality Index; Our Company operates in and employs individuals in all fifty states, including states where policies have been recently established that are outright attacks on LGBT rights and equality; In 2016, Mississippi adopted a state policy which legalizes discrimination against LGBT individuals in employment, housing, retail establishments, and healthcare; In Tennessee, a law was passed which some describe as: “allow[ing] those with religious objections to undermine professional standards that apply equally to everyone. For instance, a high school guidance counselor could refuse to counsel a gay teenager, citing their sincerely held religious beliefs”; Sixty-eight companies — including Apple, Nike, American Airlines, IBM, General Electric, and Morgan Stanley — filed a court brief against North Carolina in an attempt to block HB2, the law which required transgender people to endanger themselves by using public restrooms aligned with the biological sex on their birth certificate; In April 2017, North Carolina repealed HB2 “hoping to bring back businesses…that boycotted the Southern state because they saw theyear-old measure as discriminatory”; AdWeek reported “nothing could be more valuable to a brand than having clarity about what they stand for.” RESOLVED: Shareholders request that the Company issue a public report to shareholders, employees, customers, and public policy leaders, omitting confidential information and at a reasonable expense, by April 1, 2018, detailing the known and potential risks and costs to the Company caused by any enacted or proposed state policies supporting discrimination against LGBT people, and detailing strategies above and beyond litigation or legal compliance that the Company may deploy to defend the Company’s LGBT employees and their families against discrimination and harassment that is encouraged or enabled by the policies. SUPPORTING STATEMENT: Shareholders recommend that the report evaluate risks and costs including, but not limited to, negative effects on employee hiring and retention, challenges in securing safe housing for employees, risks to employees’ LGBT children, risks to LGBT employees who need to use public facilities such as at their children’s schools, and litigation risks to the Company from conflicting state and company anti-discrimination policies. Strategies evaluated should include public policy advocacy, human resources and educational strategies, and the potential to relocate operations or employees out of states with discriminatory policies (evaluating the costs to the Company and resulting economic losses topro-discriminatory states).”
PROPOSAL 9 — STOCKHOLDER PROPOSAL: APPLICATION OF COMPANY NON-DISCRIMINATION POLICIES IN STATES WITHPRO-DISCRIMINATION LAWS Board of Directors’ Statement in Opposition The Board of Directors and its Nominating & Governance Committee have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders or employees. FedEx is one of the world’s most admired companies and is strongly committed to diversity and inclusion. Our greatest asset is our people. We are committed to providing a workplace where each individual feels respected, satisfied and appreciated, and our policies are designed to promote fairness and respect for each person. We are proud that FedEx is consistently recognized as one of the world’s most admired companies and as one of the best places for minorities and others to work. For example: • | | FedEx was ranked 11th onFORTUNE magazine’s 2017 “World’s Most Admired Companies” list — the 17th consecutive year we have been ranked in the top 20 on the list, with 13 of those years ranking among the top 10; |
• | | FedEx was ranked 3rd onFORTUNE’s 2016 “10 Best Workplaces for African-Americans” list; |
• | | FedEx was named toBlack Enterprise magazine’s 2016 list of “40 Best Companies for Diversity”; and |
• | | In 2017, FedEx was again included in theForbes’ “America’s Most Reputable Companies” list andFORTUNE’s “100 Best Companies to Work For” list. |
These accolades flow from the consistent application of progressive personnel policies that promote diversity and inclusion at all levels of the enterprise. As stated in our Code of Business Conduct and Ethics (which is available in the Governance & Citizenship section of the Investor Relations page of our website athttp://investors.fedex.com), FedEx is committed to protecting and advancing human rights in all our operations. We strive to treat others with respect and dignity, encourage diversity and diverse opinions, provide safe working conditions and promote equal opportunity for all. Diversity is a core FedEx value. Our company was founded on a people-first philosophy, and respect for each individual has always been an everyday business practice. Our commitment to diversity and inclusion is further demonstrated by our participation in the “Tennessee Thrives” business coalition. This coalition provides an opportunity for Tennessee businesses of all sizes to show their support of tolerance and equality for all people, regardless of race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, or gender identity. In short, we believe supporting diversity is a smart business practice and, more important, the right thing to do for our employees and stockholders. For additional information regarding our commitment to diversity and inclusion, see our 2017 Global Citizenship Report, which can be found athttp://csr.fedex.com. FedEx’s existing policies and practices promote dignity and respect in the workplace for all employees. Our employment policies and practices are designed to promote fairness and respect for each individual. We hire, evaluate and promote employees, and engage contractors, based on their skills and performance. As stated in our Code of Business Conduct and Ethics and Equal Employment Opportunity Statement, we expect everyone to treat others with dignity and respect and will not tolerate certain behaviors (as noted by the proponent). These include harassment, retaliation, violence, intimidation, bullying and discrimination of any kind involving race, color, religion, national origin, gender, sexual orientation, gender identity, gender expression, age, disability, veteran status, or any other characteristic protected under applicable law. We are fully committed to attract and retain a diverse workforce that reflects our increasingly diverse customer base. We see the diversity of backgrounds, perspectives and experiences that our team members bring to the company as essential to fostering exceptional business results. To support an inclusive workplace culture, we are committed to the education, recruitment, development and advancement of diverse team members worldwide. To ensure we maintain progress, each of our operating companies has a Diversity and Inclusion team to help embed multicultural and inclusion practices in our workplace culture. All Diversity and Inclusion teams participate in a Diversity & Inclusion Corporate Council that meets monthly to share best practices and collaborate on company-wide initiatives. We also have employee affinity groups, including African-American, Hispanic, Asian, Women, Cancer Support, Multifaith, LGBT (Lesbian, Gay, Bisexual, and Transgender) and Friends, and U.S. Military Veterans. These groups support workplace inclusion initiatives and promote diversity and cultural education. We actively collaborate with these affinity groups to help us monitor and appropriately address workplace issues and concerns that are important to our employees and their well-being. We believe our established policies and practices provide a comprehensive and effective framework that promotes diversity and inclusion, dignity and respect in the workplace, and equal and fair employment, and monitors our employees’ concerns with respect to these matters.
PROPOSAL 9 — STOCKHOLDER PROPOSAL: APPLICATION OF COMPANY NON-DISCRIMINATION POLICIES IN STATES WITHPRO-DISCRIMINATION LAWS The requested report would impose an unnecessary burden and expense on FedEx with limited, if any, benefit to ourstockholders or employees. As discussed above, we are already actively promoting diversity, inclusion and equal opportunity for all our team members. Furthermore, the report requested by the proponent would impose an unnecessary administrative burden and expense on FedEx with limited, if any, benefit to our stockholders or employees. The proponent’s request that the company evaluate the potential risks and costs of possibly hundreds of laws, proposed bills, legislation in committee, and state agency administrative policies around the country, and report on strategies it might take to mitigate their impact, by April 1, 2018, is simply unreasonable. Any report produced in such a short time frame would necessarily be heavily based on speculation and, therefore, would be of little or no utility to stockholders and employees. Moreover, the preparation of such a report would divert resources that could otherwise be used to advance important company matters for the benefit of our stockholders and employees. For these reasons, adoption of this proposal is unnecessary and not in the best interests of our stockholders or employees. Accordingly, we recommend that you vote against this proposal. Vote Required for Approval If this proposal is properly presented at the meeting, approval requires the affirmative vote of a majority of the shares present at the meeting, in person or represented by proxy, and entitled to vote. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
INFORMATION ABOUT THE ANNUAL MEETING
Who is entitled to vote at the annual meeting? The record date for the meeting is August 4, 2014.July 31, 2017. Only stockholders of record at the close of business on that date are entitled to vote at the meeting. The only class of stock entitled to be voted at the meeting is FedEx common stock. EachoutstandingEach outstanding share of common stock is entitled to one vote for all matters before the meeting. At the close of business on the record date there were 283,957,730268,259,262 shares of FedEx common stock outstanding.
What is the difference between holding shares as a stockholder of record and as a beneficial owner? Am I entitled to vote if my shares are held in “street name”? If your shares are registered in your name with FedEx’s transfer agent, Computershare Trust Company, N.A., you are the “stockholder of record” (or “registered stockholder”) of those shares, and these proxy materials have been provided directly to you by FedEx. If your shares are held by a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, these proxy materials are being forwarded to you by your bank, brokerage firm or other nominee (the “bank or broker”), along with a voting instruction form. As the beneficial owner, you have the right to direct your bank or broker how to vote your shares by using the voting instruction form or by following its instructions for voting by telephone or on the Internet (if made available by your bank or broker with respect to any shares you hold in street name), and the bank or broker is required to vote your shares in accordance with your instructions. If you do not give voting instructions, your broker will nevertheless be entitled to vote your shares in its discretion on the ratification of the appointment of the independent registered public accounting firm (Proposal 3)5). Absent your instructions, the broker will not be permitted, however, to vote your shares on the election of directors (Proposal 1), the advisory vote to approve named executive officer compensation (Proposal 2), the advisory vote on the frequency of future advisory votes on executive compensation (Proposal 3), the amendment to FedEx’s 2010 Omnibus Stock Incentive Plan to increase the number of authorized shares (Proposal 4) or the adoption of the fivefour stockholder proposals (Proposals 46 through 8)9), and your shares will be considered “brokernon-votes” on those proposals. See “How will brokernon-votes be treated?” below. As the beneficial owner of shares, you are invited to attend the annual meeting. If you are a beneficial owner, however, you may not vote your shares in person at the meeting unless you obtain a legal proxy, executed in your favor, from your bank or broker.
What does it mean if I receive more than one proxy card or voting instruction form? If you receive more than one proxy card or voting instruction form that means your shares are registered differently and are held in more than one account. To ensure that all your shares are voted, please sign and return by mail all proxy cards andvotingand voting instruction forms or vote each account over the Internet or by telephone (if made available by the bank or broker with respect to any shares you hold in street name).
INFORMATION ABOUT THE ANNUAL MEETING How many shares must be present to hold the meeting? A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or represented by proxy, of the holders of a majority of the shares of common stock outstanding on the record datewilldate will constitute a quorum. Proxies received but marked as abstentions or treated as brokernon-votes will be included in the calculation of the number of shares considered to be present at the meeting. 72 2014 Proxy Statement
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What if a quorum is not present at the meeting? If a quorum is not present at the meeting, the holders of a majority of the shares entitled to vote at the meeting who are present, in person or represented by proxy, or the chairman of the meeting, may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given.
How do I vote? 1. | YOU MAY VOTE BY MAIL. If you properly complete, sign and date the accompanying proxy card or voting instruction form and return it in the enclosed envelope, it will be voted in accordance with your instructions. The enclosed envelope requires no additional postage if mailed in the United States. |
2. | YOU MAY VOTE BY TELEPHONE OR ON THE INTERNET. If you are a registered stockholder, you may vote by telephone or on the Internet by following the instructions included on the proxy card. If you vote by telephone or on the Internet, you do not have to mail in your proxy card. If you wish to attend the meeting in person, however, you will need to bring yourregister in advance to obtain an admission ticket. For more information on how to register to attend the annual meeting and obtain an admission ticket, please see “Do I have to register in advance to attend the meeting?” and “Who can attend the meeting?” on page 90. Internet and telephone voting are available 24 hours a day. Votes submitted through the Internet or by telephone must be received by 11:59 p.m. Eastern time on September 28, 2014.24, 2017. |
If you are the beneficial owner of shares held in street name, you still may be able to vote your shares electronically by telephone or on the Internet. The availability of telephone and Internet voting will depend on the voting process of your bank or broker. We recommend that you follow the instructions set forth on the voting instruction form provided to you. NOTE: If you vote on the Internet, you may elect to have next year’s proxy statement and annual report to stockholders delivered to you electronically. We strongly encourage you to enroll in electronic delivery. It is a cost-effective way for us to provide you with proxy materials and annual reports. 3. | YOU MAY VOTE IN PERSON AT THE MEETING. If you are a registered stockholder and attend the meeting, you may deliver your completed proxy card in person. Additionally, we will pass out ballots to registered stockholders who wish to vote in person at the meeting. If you are a beneficial owner of shares held in street name who wishes to vote at the meeting, you will need to obtain a legal proxy from your bank or broker, bring it with you to the meeting, and hand it in with a signed ballot that will be provided to you at the meeting. Beneficial owners will not be able to vote their shares at the meeting without a legal proxy. To attend the annual meeting in person, you must register in advance to obtain an admission ticket. For more information on registering to attend the annual meeting and obtaining an admission ticket, please see “Do I have to register in advance to attend the meeting?” and “Who can attend the meeting?” on page 90. |
INFORMATION ABOUT THE ANNUAL MEETING How do I vote my shares held in thea FedEx employee stock purchase plan or in any FedEx benefit plan? If you own shares of FedEx common stock through thea FedEx or subsidiary employee stock purchase plan or any FedEx or subsidiary benefit plan (a “FedEx benefit plan holder”), you can direct the record holder or the plan trustee to vote the shares held in your account in accordance with your instructions by completing the proxy or voting instruction card and returning it in the enclosed envelope or by registering your instructions via the Internet or telephone as directed on the proxy card. If you register your voting instructions by telephone or on the Internet, you do not have to mail in the proxy card. If you wishtowish to attend the meeting in person, however, you will need to bringregister in advance to obtain an admission ticket. For more information on how to register to attend the annual meeting and obtain an admission ticket, attachedplease see “Do I have to register in advance to attend the proxy card with you.meeting?” and “Who can attend the meeting?” below. In order to instruct a record holder or plan trustee on the voting of shares held in your account, your instructions must be received by Wednesday, September 24, 2014.20, 2017. If your voting instructions are not received by that date, each plan trustee will vote your shares in the same proportion as the plan shares for which voting instructions have been received. 2014 Proxy Statement 73
Table of ContentsDo I have to register in advance to attend the meeting?
The meeting will be held in the auditorium at the FedEx Express World Headquarters, 3670 Hacks Cross Road, Building G, Memphis, Tennessee 38125, on Monday, September 25, 2017, at 8:00 a.m. local time. If you plan to attend the meeting in person, you must be a stockholder as of July 31, 2017, the record date. In addition,you must register by 11:59 p.m. Eastern time on Thursday, September 21, 2017 to attend the meeting in person. See the following question “Who can attend the meeting?” for details on how to register in advance. INFORMATION ABOUT THE ANNUAL MEETING
Who can attend the meeting? Only stockholders eligible to vote or their authorized representatives will be admittedare entitled to attend the meeting. If you plan to attend the meeting detachin person, you must be a holder of FedEx shares as of the record date and bring withregister in advance in order to obtain an admission ticket. The procedure for obtaining an admission ticket depends on whether you are a stockholder of record (or a FedEx benefit plan holder who receives a proxy card) or a beneficial owner of shares held in street name. In order to be admitted to the stub portion of your proxy card, which is marked “Admission Ticket.” You alsomeeting, you must bringpresent both an admission ticket and a valid government-issued photo identification, such as a driver’s license or a passport. If you received yourare a stockholder of record (or a FedEx benefit plan holder who receives a proxy materials throughcard with a 15-digit control number) you may register to attend the meeting by accessing www.investorvote.com/FEDX. On this website, stockholders of record (and applicable FedEx benefit plan holders) will find instructions to register and print out the admission ticket. If you do not have access to the Internet, you should followmay register by calling FedEx Investor Relations at 1-901-818-7200. You will need the instructions provided15-digit control number included on your proxy card to print a paper admission ticket.register. If your shares are held in street name and you must bringreceive the “Admission Ticket” that either accompanies or isproxy materials and voter instruction form from Broadridge, you may register to attend the stub portion ofmeeting by accessing www.ProxyVote.com/register. On this website, these street-name holders will find instructions to register and print out the admission ticket. If you do not have access to the Internet, you may register by calling FedEx Investor Relations at 1-901-818-7200. You will need the 16-digit control number included on your voting instruction form. Alternatively, youform to register. Street-name holders who do not receive their proxy materials from Broadridge (and FedEx benefit plan holders who receive a voting instruction card without a control number) may bringregister to attend the meeting by contacting FedEx Investor Relations at 1-901-818-7200 or ir@fedex.com. These other street-name holders and FedEx benefit plan holders will be required to provide proof of ownership, such as a brokerage account statement, which clearly shows your ownership of FedEx common stock as of the record date. In addition,Please note that you will not be able to vote your shares at the meeting without a legal proxy. If you wish to attend the meeting in person, you must bring a valid government-issued photo identification, such as a driver’s licenseregister by 11:59 p.m. Eastern time on Thursday, September 21, 2017, in order to obtain an admission ticket. If you have any questions regarding admission to the meeting or a passport.the registration process, please contact FedEx Investor Relations at 1-901-818-7200 or ir@fedex.com.
INFORMATION ABOUT THE ANNUAL MEETING Security measures will be in place at the meeting to help ensure the safety of attendees. Metal detectors similar to those used in airports will be located at the entrance to the meeting room, and briefcases, handbags and packages will be inspected. No cameras or recording devices of any kind, or signs, placards, banners or similar materials, may be brought into the meeting. Anyone who refuses to comply with these requirements will not be admitted.
Can I change my vote after I submit my proxy? Yes, if you are a registered stockholder you may revoke your proxy and change your vote prior to the completion of voting at the meeting by: submitting a valid, later-dated proxy card or a later-dated vote by telephone or on the Internet in a timely manner (the latest-dated, properly completed proxy that you submit in a timely manner, whether by mail, by telephone or on the Internet, will count as your vote); or giving written notice of such revocation to the Secretary of FedEx prior to or at the meeting or by voting in person at the meeting. Your attendance at the meeting itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote in person at the meeting. If your shares are held in street name, you should contact your bank or broker and follow its procedures for changing your voting instructions. You also may vote in person at the meeting if you obtain a legal proxy from your bank or broker.
Will my vote be kept confidential? Yes, your vote will be kept confidential and not disclosed to FedEx unless: you expressly request disclosure on your proxy; or there is a proxy contest.
Who will count the votes? FedEx’s transfer agent, Computershare Trust Company, N.A., will tabulate and certify the votes. A representative of the transfer agent will serve as the inspector of election. 74 2014 Proxy Statement
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What if I am a registered stockholder and do not specify how my shares are to be voted on my proxy card? If you sign and properly submit a proxy but do not indicate any voting instructions, your shares will be voted: FOR the election of each of the twelve nominees named in this proxy statement to the Board of Directors; FOR the advisory proposal to approve named executive officer compensation; for future advisory votes on executive compensation to be held EVERY YEAR; FOR the adoption of the amendment to FedEx’s 2010 Omnibus Stock Incentive Plan to increase the number of authorized shares; FOR the ratification of the appointment of Ernst & Young LLP as FedEx’s independent registered public accounting firm; and AGAINST each of the stockholder proposals.
INFORMATION ABOUT THE ANNUAL MEETING Will any other business be conducted at the meeting? Certain stockholders have notified us
We know of their intentno other business to propose a resolutionbe conducted at the meeting requesting that the Board of Directors take the steps necessarymeeting. FedEx’s Bylaws require stockholders to drop or distance ties with the NFL Washington Redskins team, logos and/or stadium sponsorship until the franchise changes the team’s name (the “Floor Proposal”). We have not receivedgive advance notice of and are not aware of, any businessproposal intended to come before the meeting other than the agenda items referred to in this proxy statement and the possible submission of the Floor Proposal. The Floor Proposal is not included in this proxy statement. If the Floor Proposal isbe presented at the meeting, the proxy holders will have discretionary voting authority under Rule 14a-4(c) under the Securities Exchange Act of 1934 with respect to the Floor Proposalmeeting. The deadline for this notice has passed and intend to exercisewe did not receive any such discretion to vote AGAINST such proposal.notice. If any other matter properly comes before the stockholders for a vote at the meeting, the proxy holders will vote your shares in accordance with their best judgment.
What happens if a director nominee does not receive the required majority vote? Each nominee is a current director who is standing for reelection. Accordingly, each nominee has tendered an irrevocable resignation from the Board of Directors that will take effect if the nominee does not receive the required majority vote and the Board accepts the resignation. If the Board accepts the resignation, the nominee will no longerservelonger serve on the Board of Directors, and if the Board rejects the resignation, the nominee will continue to serve until his or her successor has been duly elected and qualified or until his or her earlier disqualification, death, resignation or removal. See “Corporate Governance Matters — Majority-Voting Standard for Director Elections” above.
What happens if a director nominee is unable to stand for election? If a director nominee named in this proxy statement 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.
What happens if a stockholder proposal is approved? Approval of a stockholder proposal would merely serve as a recommendation to the Board to take the necessary steps to implement such proposal. 2014 Proxy Statement 75
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How will abstentions be treated? Abstentions will have no effect on the election of directors (Proposal 1). For each of the other proposals (Proposals 2 through 9), abstentions will be treated as shares present for quorum purposes and entitled to vote, so they will have the same practical effect as votes against the proposal.proposal (including having the effect of a vote against each frequency option with respect to the advisory vote on the frequency of future advisory votes on executive compensation).
INFORMATION ABOUT THE ANNUAL MEETING How will brokernon-votes be treated? If your shares are held in street name, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank or broker by the deadline provided in the materials you receive from your bank or broker. If you hold your shares in street name and you do not instruct your broker how to vote your shares, your broker may vote your shares in its discretion on the ratification of the appointment of the independent registered public accounting firm (Proposal 3)5). Your shares will be treated as brokernon-votes on all the other proposals, including the election of directors (Proposal 1). Brokernon-votes will be treated as shares present for quorum purposes, but not entitled to vote. Thus, absent voting instructions from you, your broker may not vote your shares on the election of directors (Proposal 1), the advisory vote to approve named executive officer compensation (Proposal 2), the advisory vote on the frequency of future advisory votes on executive compensation (Proposal 3), the amendment to FedEx’s 2010 Omnibus Stock Incentive Plan to increase the number of authorized shares (Proposal 4) or the adoption of the fivefour stockholder proposals (Proposals 46 through 8)9). A brokernon-vote with respect to these proposals will not affect their outcome.
Will the meeting be webcast? Yes, you are invited to visit the News & Events section of the Investor Relations page of our website (
http://investors.fedex.com) at 8:00 a.m. Central time on September 29, 2014,25, 2017, to access the live webcast of the meeting. An archived copy of the webcast will be available on our website for at least one year.month. The information on FedEx’s website, however, is not incorporated by reference in, and does not form part of, this proxy statement.76 2014 Proxy Statement
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ADDITIONAL INFORMATION
Proxy Solicitation FedEx will bear all costs of this proxy solicitation. In addition to soliciting proxies by this mailing, our directors, officers and regular employees may solicit proxies personally or by mail, telephone, facsimile or other electronic means, for which solicitation they will not receive any additional compensation. FedEx will reimburse brokerage firms, custodians, fiduciariesandfiduciaries and other nominees for theirout-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request. FedEx has retained Morrow & Co.,Sodali LLC, 470 West Ave., Stamford, CT 06902, to assist in the solicitation of proxies for a fee of $12,500 plus reimbursement of certain disbursements and expenses.
Householding We have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name and do not participate in electronic delivery will receive only one copy of this proxy statement and the 20142017 Annual Report to Stockholders, unless contrary instructions have been received from one or more of these stockholders. This procedure will reduce our printing costs and postage fees. Stockholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings. If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of our annual report and proxy statement, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of our annual report and proxy statement for your household, please contact our transfer agent at Computershare Investor ServicesTrust Company, N.A. (for overnight mail delivery: 211 Quality Circle,462 South 4th Street, Suite 210, College Station, Texas 77845;1600, Louisville, Kentucky 40202; for regular mail delivery: P.O. Box 30170, College Station, Texas 77842;505000, Louisville, Kentucky 40233-5000; by telephone: in the U.S. or Canada,1-800-446-2617; outside the U.S. or Canada,1-781-575-2723). If you participate in householding and wish to receive a separate copy of this proxy statement and the 20142017 Annual Report to Stockholders, or if you do not wish to participate in householding and prefer to receive separate copies of future annual reports and proxy statements, please contact Computershare as indicated above. A separate copy of this proxy statement and the 20142017 Annual Report to Stockholders will be delivered promptly upon request. Beneficial owners of shares held in street name can request information about householding from their banks, brokerage firms or other holders of record. 2014 Proxy Statement 77
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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR
2015 2018 ANNUAL MEETING Stockholder Proposals for 2018 Annual Meeting
Stockholder proposals (other than director nominations) intended to be presented at FedEx’s 20152018 annual meeting must be received by FedEx no later than April 20, 2015,16, 2018, to be eligible for inclusion in FedEx’s proxy statement and form of proxy for next year’s meeting. Proposals should be addressed to FedEx Corporation, Attention: Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120. For any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph)paragraph or in the proxy access director nominations section below), but is instead sought to be presented directly at the 20152018 annual meeting, including nominations of director candidates,nominations, FedEx’s Bylaws require stockholders to give advance notice of such proposals. The required notice, which must include the information and documents set forth in the Bylaws, must be given no more than 120 days and no less than 90 days in advance of the anniversary date of the immediately preceding annual meeting. Accordingly, with respect to our 20152018 annual meeting of stockholders, our Bylaws require notice to be provided to FedEx Corporation, Attention:the Corporate Secretary 942 South Shady Grove Road, Memphis, Tennessee 38120,at the address listed above, as early as June 1, 2015,May 28, 2018, but no later than July 1, 2015. June 27, 2018. Proxy Access Director Nominations Our proxy access bylaw permits up to 20 stockholders owning 3% or more of FedEx’s outstanding voting stock continuously for at least three years to nominate and include in FedEx’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws. FedEx’s Bylaws require stockholders to give advance notice of any proxy access director nomination. The required notice, which must include the information and documents set forth in the Bylaws, must be given no more than 150 days and no less than 120 days prior to the anniversary of the date that FedEx mailed its proxy statement for the prior year’s annual meeting of stockholders. Accordingly, with respect to our 2018 annual meeting of stockholders, our Bylaws require notice to be provided to the Corporate Secretary at the address listed above, as early as March 17, 2018, but no later than April 16, 2018. Additional Information Our Bylaws are available under “Policies and Guidelines” in the Governance & Citizenship section of the Investor Relations page of our website athttp://investors.fedex.com. Except as otherwise provided by law, the chairman of the meeting will declare out of order and disregard any nomination or other business proposed to be brought before the meeting by a stockholder that is not made in accordance with our Bylaws. By order of the Board of Directors,
Christine P. Richards
Executive Vice President, General Counsel and Secretary 78 2014 Proxy Statement
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APPENDIX A | | COMPANIES IN EXECUTIVE COMPENSATION COMPARISON SURVEY GROUP |
3M Company | Ericsson Television | 7-Eleven, Inc. | Express Scripts, Inc. | Abbott Laboratories | Fiat Industrial S.p.A. | 3M Company
ABB ASEA Brown Boveri Ltd.
Accenture plc | Fluor Corporation | Adecco S.A. | Fox Networks Group,
Alphabet Inc. | Alcoa Inc. | Freeport-McMoRan Copper & Gold Inc. | Alcon Laboratories, Inc. | General Dynamics Corporation |
Amazon.com, Inc. | GlaxoSmithKline plc | American Broadcasting
Archer-Daniels-Midland Company | The Goodyear Tire & Rubber Company | Arrow Electronics, Inc. | Google Inc. | Ascension Health | HCA Holdings, Inc. | AstraZeneca PLC | Healthcare Services Group, AT&T Inc. | BAE Systems plc | Hess Corporation | Avnet, Inc. BASF SE Bayer AG | Hoffman-La Roche Inc. | Bayer Business & Technology Services | Home Box Office, Inc. | Bayer CropScience | Honeywell International Inc. | Bayer HealthCare | Hyundai Motor America | Bayer MaterialScience | Iberdrola Renewables, LLC | Bechtel Systems & Infrastructure, Inc. | IKEA International A/S | Corporation Best Buy Co., Inc. | Intel Bridgestone Corporation | BG US Services, Inc. | International Paper Company | The Boeing Company | Johnson & Johnson | Bristol-Myers Squibb Company | Johnson Controls, Inc. | Bunge Limited | Kaiser Foundation Health Plan, Inc. | C & S&S Wholesale Grocers, | KDDI Corporation | Inc. Canon Inc. Caterpillar Inc. | Kimberly-Clark Corporation | Chrysler Group LLC | KPMG LLP | Centrica plc CHS Inc. | Kraft Foods Group, Inc. | Cisco Systems, Inc. | Lenovo Group Limited | The Coca-Cola Company | Lockheed Martin Corporation | CNH Industrial N.V. Comcast Corporation | L’oreal | Compass Group PLC | LSG Sky Chefs | ConocoPhillips | LyondellBasell | Continental Automotive Systems US, Inc. | Macy’s, Inc. | AG Deere & Company | Magna International Inc. | Delhaize America, LLC | ManpowerGroup Inc. | Group Dell Inc. | Mars, Incorporated | Delta Air Lines, Inc. | McDonald’s DENSO Corporation | The Deutsche Post AG DIRECTV, Group, Inc. | Merck & Co., Inc. | The Dow Chemical Company | Microsoft Corporation | LLC E. I. du Pont de Nemours and Company | Murphy Oil Corporation | Eli Lilly and Company | News Corporation | EMC Corporation | NIKE, Inc. | Emerson Electric Co. | Nokia Corporation | Energy Transfer Partners, L.P. ENGIE Enterprise Products Partners L.P. Exelon Corporation F.Hoffman-La Roche Ltd Furukawa Co., Ltd. General Dynamics Corporation GlaxoSmithKline plc Halliburton Company HCA Healthcare, Inc. Hitachi, Ltd. Honeywell International Inc. Iberdrola, S.A. INEOS Group Holdings S.A.
| Northrop Grumman | Intel Corporation International Business Machines Corporation Johnson & Johnson Johnson Controls, Inc. LM Ericsson Telephone Company Lockheed Martin Corporation L’Oréal S.A. Lowe’s Companies, Inc. LyondellBasell Industries N.V. Macy’s, Inc. Marathon Petroleum Corporation Mars, Incorporated McDonald’s Corporation Merck & Co., Inc. Microsoft Corporation Mondelez International, Inc. Nestlé S.A. News Corporation NIKE, Inc. Nissan Motor Co., Ltd. Novartis AG Panasonic Corporation PepsiCo, Inc. Pfizer Inc. Publix Super Markets, Inc. QUALCOMM Incorporated Rio Tinto plc Rite Aid Corporation Robert Bosch GmbH Royal Philips S&I Holdings Sabic Innovative Plastics US LLC Samsung Electronics Co., Ltd. Sanofi Schlumberger Limited Schneider Electric SE Sears Holdings Corporation Siemens AG Sony Corporation Sprint Corporation Statoil ASA Sysco Corporation Target Corporation Telefónica, S.A Tesoro Corporation The Boeing Company TheCoca-Cola Company The Dow Chemical Company
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2014 Proxy Statement A-1
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Appendix A Companies in Executive Compensation Comparison Survey Group | | Novartis Consumer Health, Inc. | SUPERVALU INC. | Occidental Petroleum Corporation | Sysco Corporation | Orange Business Services | Target Corporation | PepsiCo,The Home Depot, Inc. | Tech Data Corporation | Pfizer Inc. | Telvent | Philip Morris International Inc. | Tesoro Corporation | Philips International B.V. | Time Inc. | Publix Super Markets, Inc. | Time Warner Inc. | Raytheon The Kroger Co. The Procter & Gamble Company | The TJX Companies, Inc. | Ricoh Americas Corporation | The Walt Disney Company Time Warner Inc. T-Mobile US, Inc. | Rio Tinto plc Toshiba Corporation
| Turner Broadcasting System, Inc. | Rite Aid Corporation | TwentiethTwenty-First Century Fox, Film Corporation | Roche Diagnostics Corporation | Inc. Tyson Foods, Inc. | Safeway Inc. | Unilever United States, Inc. | Sandoz | N.V. Unilever PLC United Continental Holdings, Inc. | Sanofi | United Parcel Service, Inc. | Schlumberger Limited | U.S. Foodservice, Inc. | Siemens Corporation | United Technologies Corporation Veolia Environnement |
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APPENDIX B | RECONCILIATIONS OFNON-GAAP MEASURES |
Fiscal 2017 Reconciliations for Fiscal 2017 AIC Plan and FY2015–FY2017 and Active LTI Plans As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation Committee, designed or later adjusted the fiscal 2017 AIC plan and the FY2015–FY2017, FY2016–FY2018, FY2017–FY2019 and FY2018-FY2020 LTI plans to exclude from fiscal 2017 earnings the following items (as applicable to each plan), in order to ensure that payouts under the plans more accurately reflect core financial performance in fiscal 2017: (i) the annualmark-to-market (“MTM”) pension accounting adjustments; (ii) TNT Express integration and restructuring costs and TNT Express’s financial results (TNT Express’s fiscal 2017 financial results are only excluded from consolidated operating income pursuant to the fiscal 2017 AIC plan); (iii) expenses related to the settlement of and certain expected losses relating to independent contractor litigation matters involving FedEx Ground; and (iv) charges accrued in connection with pending U.S. Customs and Border Protection matters involving FedEx Trade Networks. Additionally, the Board approved adjustments to the FY15–FY17, FY16–FY18 and FY17–FY19 LTI plans to exclude the impact in fiscal 2017 of stock repurchase activity (net of interest expense on debt issued to fund a portion of the applicable stock repurchase program). The tables below present a reconciliation of our presented fiscal 2017non-GAAP measures to the most directly comparable GAAP measures. | | | | | | | | | | | | | | | | | Fiscal 2017 | | FedEx Corporation | | Dollars in millions, except EPS | | Operating Income | | | Income Taxes (1) | | | Net Income (2)(3) | | | Diluted Earnings Per Share (3) | | GAAP measure | | $ | 5,037 | | | $ | 1,582 | | | $ | 2,997 | | | $ | 11.07 | | MTM pension accounting adjustments(4) | | | (24 | ) | | | (18 | ) | | | (6 | ) | | | (0.02) | | TNT Express integration expenses(5) | | | 327 | | | | 82 | | | | 245 | | | | 0.91 | | FedEx Trade Networks legal matters | | | 39 | | | | 15 | | | | 24 | | | | 0.09 | | FedEx Ground legal matters | | | 22 | | | | 9 | | | | 13 | | | | 0.05 | | Non-GAAP measure for FY18-FY20 LTI plan(6) | | $ | 5,401 | | | $ | 1,670 | | | $ | 3,273 | | | $ | 12.09 | | EPS impact of stock repurchases | | | — | | | | — | | | | — | | | | (0.40) | | Interest expense(7) | | | — | | | | 52 | | | | 89 | | | | 0.33 | | Non-GAAP measure for FY15–FY17, FY16–FY18 LTI and FY17-FY19 LTI plans(8) | | $ | 5,401 | | | $ | 1,722 | | | $ | 3,361 | | | $ | 12.02 | | TNT Express financial results (GAAP measure) | | | (84 | ) | | | — | | | | — | | | | — | | TNT Express integration expenses recognized at TNT Express(9) | | | (89 | ) | | | — | | | | — | | | | — | | Non-GAAP measure for fiscal 2017 AIC plan(10) | | $ | 5,228 | | | | — | | | | — | | | | — | |
| | | | | Sprint Nextel CorporationFiscal 2017 | Warner Bros. Entertainment Inc. | FedEx Express Segment | | Staples, Inc.Dollars in millions | Wm. Wrigley Jr. Company | Operating Income | | Sunoco, Inc.GAAP measure | Xerox Corporation | $ | 2,678 | | TNT Express integration expenses recognized at FedEx Express | | | 117 | | Non-GAAP measure for fiscal 2017 AIC plan(11) | | $ | 2,795 | |
A-2 2014 Proxy Statement
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(1) | Annual Meeting Admission TicketIncome taxes are based on the company’s approximate statutory tax rates applicable to each transaction.
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(2) | Effect of “Total other (expense) income” on net income amount not shown. |
(3) | Does not sum to total due to rounding. |
(4) | MTM pension accounting adjustments reflect theyear-end noncash adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. |
(5) | These expenses, including restructuring charges at TNT Express, were recognized at FedEx Corporate ($121 million), FedEx Express ($117 million) and TNT Express ($89 million). |
(6) | Fiscal 2017 adjusted EPS of $12.09 is the base-year EPS for the FY18–FY20 LTI plan. |
(7) | Represents the income tax and net income impact of $141 million of interest expense on debt issued to fund a portion of the applicable stock repurchase program. |
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Appendix B Reconciliations of Non-GAAP Measures (8) | Fiscal 2017 adjusted EPS of mailing your proxy, you may choose one$12.02 (adjusted to reflect the stock repurchase impact) is used for purposes of calculating actual aggregate EPS under the FY15–FY17, FY16–FY18 and FY17-FY19 LTI plans. |
(9) | $89 million of TNT Express integration expenses were recognized at TNT Express and included in the $327 million of TNT Express integration expenses described in footnote 5. TNT Express’s fiscal 2017 financial results are excluded from adjusted consolidated operating income pursuant to the terms of the voting methods outlinedfiscal 2017 AIC plan. |
(10) | Adjusted consolidated operating income of $5,228 million is used for purposes of the fiscal 2017 AIC plan. |
(11) | FedEx Express segment adjusted operating income of $2,795 million is used for purposes of the fiscal 2017 AIC plan. |
Fiscal 2016 Reconciliations for FY2015–FY2017, FY2016–FY2018 and FY2017–FY2019 LTI Plans As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation Committee, designed or later adjusted the FY2015–FY2017, FY2016–FY2018 and FY2017–FY2019 LTI plans to exclude from fiscal 2016 earnings the following items (as applicable to each plan), in order to ensure that payouts under the plans more accurately reflect core financial performance in fiscal 2016: (i) the annual MTM pension accounting adjustments; (ii) expenses in connection with the settlement of and certain expected losses relating to independent contractor litigation matters involving FedEx Ground, net of recognized immaterial insurance recovery; (iii) expenses related to the settlement of a U.S. Customs and Border Protection matter involving FedEx Trade Networks, net of recognized immaterial insurance recovery; (iv) expenses associated with the acquisition, financing and integration of TNT Express, net of any tax impact, and TNT Express’s fiscal 2016 financial results; (v) the favorable tax impact from an internal corporate legal entity restructuring to facilitate the integration of FedEx Express and TNT Express; and (vi) the EPS impact of stock repurchase activity (net of interest expense on debt issued to fund a portion of the applicable stock repurchase program). The tables below present a reconciliation of our presented fiscal 2016non-GAAP measures to the most directly comparable GAAP measures. | | | | | | | | | | | | | | | | | Fiscal 2016 | | FedEx Corporation | | Dollars in millions, except EPS | | Operating Income (1) | | | Income Taxes (1)(2) | | | Net Income (3) | | | Diluted Earnings Per Share | | GAAP measure | | $ | 3,077 | | | $ | 920 | | | $ | 1,820 | | | $ | 6.51 | | MTM pension accounting adjustments(4) | | | 1,498 | | | | 552 | | | | 946 | | | | 3.39 | | TNT expenses and financial results(5) | | | 115 | | | | 6 | | | | 125 | | | | 0.45 | | Tax impact — legal entity restructuring for TNT integration | | | — | | | | 76 | | | | (76) | | | | (0.27) | | FedEx Ground legal matters(6) | | | 256 | | | | 97 | | | | 158 | | | | 0.57 | | FedEx Trade Networks legal matter(6) | | | 69 | | | | 26 | | | | 43 | | | | 0.15 | | Non-GAAP measure for FY17–FY19 LTI plan(7) | | $ | 5,014 | | | $ | 1,678 | | | $ | 3,016 | | | $ | 10.80 | | EPS impact of stock repurchases | | | — | | | | — | | | | — | | | | (0.32) | | Interest expense(8) | | | — | | | | 19 | | | | 32 | | | | 0.12 | | Non-GAAP measure for FY15–FY17 and FY16–FY18 LTI plans(9) | | $ | 5,014 | | | $ | 1,697 | | | $ | 3,048 | | | $ | 10.60 | |
(1) | Does not sum to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted bytotal due to rounding. |
(2) | Income taxes are based on the Internet or telephone must be received by 11:59 p.m. Easterncompany’s approximate statutory tax rates applicable to each transaction. |
(3) | Effect of “Total other (expense) income” on net income amount not shown. |
(4) | MTM pension accounting adjustments reflect theyear-end noncash adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. |
(5) | TNT Express’s financial results are immaterial from the time of acquisition (May 25, 2016). |
(6) | Net of recognized immaterial insurance recovery. |
(7) | Fiscal 2016 adjusted EPS of $10.80 is the base-year EPS for the FY17–FY19 LTI plan. |
(8) | Represents the income tax and net income impact of $51 million of interest expense on September 28, 2014.debt issued to fund a portion of the applicable stock repurchase program. |
(9) | Fiscal 2016 adjusted EPS of $10.60 (adjusted to reflect the stock repurchase impact) is used for purposes of calculating actual aggregate EPS under the FY15–FY17 and FY16–FY18 LTI plans. |
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Appendix B Reconciliations of Non-GAAP Measures Fiscal 2015 Reconciliations for FY2015–FY2017 and FY2016–FY2018 LTI Plans As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation Committee, designed or later adjusted the FY2015–FY2017 and FY2016–FY2018 LTI plans to exclude from fiscal 2015 earnings the following items, in order to ensure that payouts under the plans more accurately reflect core financial performance in fiscal 2015: (i) the net impact of the company’s adoption of MTM accounting for its defined benefit pension and other postretirement plans, including the impact of lowering the expected return on plan assets (“EROA”) assumption from 7.75% to 6.5% in the presentation of segment results for all prior periods; (ii) aircraft impairment and related charges; (iii) a charge to increase the legal reserve associated with the settlement of a legal matter at FedEx Ground to the amount of the settlement; and (iv) the EPS impact of stock repurchase activity (net of interest expense on debt issued to fund a portion of the applicable stock repurchase program). The table below presents a reconciliation of our presented fiscal 2015non-GAAP measures to the most directly comparable GAAP measures. | | | | | | | | | | | | | | | | | Fiscal 2015 | | FedEx Corporation | | Dollars in millions, except EPS | | Operating Income | | | Income Taxes (1)(2) | | | Net Income (3) | | | Diluted Earnings Per Share | | GAAP measure | | $ | 1,867 | | | $ | 577 | | | $ | 1,050 | | | $ | 3.65 | | Segment reporting change(4) | | | (266) | | | | (98) | | | | (168) | | | | (0.58) | | MTM pension accounting adjustments(5) | | | 2,190 | | | | 808 | | | | 1,382 | | | | 4.81 | | Aircraft impairment and related charges | | | 276 | | | | 101 | | | | 175 | | | | 0.61 | | FedEx Ground legal matter | | | 197 | | | | 64 | | | | 133 | | | | 0.46 | | Non-GAAP measure | | $ | 4,264 | | | $ | 1,451 | | | $ | 2,572 | | | $ | 8.95 | | Segment elimination of pension amortization expense and recast of EROA, net | | | (36) | | | | (13) | | | | (23) | | | | (0.08) | | Non-GAAP measure for FY15–FY17 and FY16-FY18 LTI plans(6) | | $ | 4,228 | | | $ | 1,438 | | | $ | 2,549 | | | $ | 8.87 | |
(1) | Does not sum towww.investorvote.com/FEDX Or scan the QR code with your smartphoneFollow the steps outlined total due to rounding. |
(2) | Income taxes are based on the secure websitecompany’s approximate statutory tax rates applicable to each transaction. |
(3) | Effect of “Total other (expense) income” on net income amount not shown. |
(4) | Represents the adjustment in “Corporate, eliminations and other” resulting from the change in recognizing EROA for our defined benefit pension and other postretirement plans at the segment level associated with the adoption of MTM accounting. |
(5) | MTM pension accounting adjustments reflect theyear-end noncash adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. |
(6) | Fiscal 2015 adjusted EPS of $8.87 is used for purposes of calculating actual aggregate EPS under the FY15–FY17 LTI plan and is the base-year EPS for the FY16–FY18 LTI plan. |
FedEx Corporation 2010 OMNIBUS STOCK INCENTIVE PLAN Section 1. Purpose The purpose of the FedEx Corporation 2010 Omnibus Stock Incentive Plan is to aid the Company and its Affiliates in retaining, attracting and rewardingNon-Management Directors and designated employees and to motivate them to exert their best efforts to achieve the long-term goals of the Company and its Affiliates. The Company believes that the ownership or increased ownership of Common Stock by employees and directors, or otherwise linking the compensation of employees and directors to the value of Common Stock, will further align their interests with those of the Company’s other stockholders and will promote the long-term success of the Company and the creation of long-term stockholder value. Accordingly, the Plan authorizes the grant of equity incentive awards to designated employees of the Company and its Affiliates and to directors of the Company. Section 2. Definitions and Rules of Construction 2.1 Definitions. The following capitalized terms used in the Plan shall have the respective meanings set forth below: “Affiliate”means (a) any Subsidiary and (b) any other entity that, directly or through one or more intermediaries, is controlled by the Company, as determined by the Committee. “Award”means any Stock Option, Stock Appreciation Right, Restricted Share, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based Award, together with any related right or interest, granted to a Participant under the Plan. “Award Agreement” means a written or electronic agreement between the Company and a Participant setting forth the terms, conditions, restrictions and other provisions of an Award granted to the Participant. “Board of Directors”means the Board of Directors of the Company. “Change of Control” has the meaning given such term in Section 20.1. “Code” means the Internal Revenue Code of 1986, as amended. For purposes of the Plan, references to sections of the Code shall be deemed to include references to any applicable regulations, including proposed regulations, and other guidance issued thereunder by the Department of Treasury or the Internal Revenue Service, and any successor provisions and regulations. “Committee”means those members, not less than two, of the Compensation Committee of the Board of Directors who are Independent Directors, or any successor committee or subcommittee of the Board of Directors designated by the Board of Directors, which committee or subcommittee shall be comprised of two or more members of the Board of Directors, each of whom is an Independent Director. “Common Stock” means the common stock, par value $0.10 per share, of the Company and such other securities of the Company as may be substituted for Common Stock pursuant to Section 19.1 or 19.2. “Company”means FedEx Corporation, a Delaware corporation. “Covered Employee” means an employee of the Company or an Affiliate who is a “covered employee” within the meaning of Code Section 162(m)(3). “Disability”means “permanent disability” as determined by the Committee in its sole discretion. “Dividend Equivalent” means the right granted to a Participant under Section 14 of the Plan to receive a payment in an amount equal to the dividends paid on one outstanding Share with respect to all or a portion of the Shares subject to a Full-Value Award held by such Participant. “Effective Date” has the meaning given such term in Section 3.1. “Eligible Person” means (a) any employee of the Company or an Affiliate, (b) any individual to whom an offer of employment with the Company or an Affiliate is made, as determined by the Committee (provided that such prospective employee may not receive any payment or exercise any right with respect to an Award until such person has commenced such employment), and (c) anyNon-Management Director. “Exchange Act”means the Securities Exchange Act of 1934, as amended. A reference to any provision of the Exchange Act or rule promulgated under the Exchange Act shall include reference to any successor provision or rule.
Appendix C 2010 Omnibus Stock Incentive Plan “Exercise Price” means (a) in the case of a Stock Option, the amount for which a Share may be purchased upon exercise of such Stock Option, as set forth in the applicable Award Agreement, and (b) in the case of a Stock Appreciation Right, the per Share amount, as specified in the applicable Award Agreement, which is subtracted from the Fair Market Value of a Share in determining the amount payable upon exercise of such SAR. “Fair Market Value” means, on any date, (a) the average of the high and low per Share sales prices as reported on the New York Stock Exchange composite tape on that date or (b) if such method is not practicable, the value of a Share as determined by the Committee using such other method as it deems appropriate. “Full-Value Award” means any Award other than in the form of a Stock Option or Stock Appreciation Right and which is settled by the issuance of Shares (or at the discretion of the Committee, settled in cash or other consideration by reference to the value of Shares). “Grant Date” means the date on which the Committee completes the corporate action authorizing the grant of an Award or such later date as is determined and specified by the Committee as part of that authorization process. “Incentive Stock Option” or“ISO” means a Stock Option or portion thereof that is intended to be and specifically designated as an “incentive stock option” within the meaning of Code Section 422 and meets the requirements thereof. “Independent Director” means a member of the Board of Directors who qualifies at any given time as (a) an “independent director” under Section 303A of the New York Stock Exchange Listed Company Manual, (b) an “outside director” within the meaning of Code Section 162(m), and (c) a“non-employee director” as defined inRule 16b-3. “Minimum Vesting Requirement” has the meaning given such term in Section 4.2(f). “Net Exercise” means a Participant’s ability (if authorized by the Committee) to exercise a Stock Option by directing the Company to deduct from the Shares issuable upon exercise of his or her Stock Option a number of Shares having an aggregate Fair Market Value equal to the sum of the aggregate Exercise Price therefor plus the amount of the Participant’s tax withholding (if any), whereupon the Company shall issue to the Participant the net remaining number of Shares after such deduction. “Non-Management Director”means a member of the Board of Directors who is not an employee of the Company or an Affiliate. “Non-Qualified Stock Option” or“NQSO” means a Stock Option or portion thereof that is not an Incentive Stock Option. “Other Stock-Based Award” means an Award granted to a Participant under Section 15 of the Plan. “Participant”means any Eligible Person who receives an Award under the Plan. “Performance Award” means an Award that includes performance conditions as specified by the Committee pursuant to Section 12 of the Plan. “Performance Period” has the meaning given such term in Section 13.2. “Plan” means the FedEx Corporation 2010 Omnibus Stock Incentive Plan, as amended from time to time. “Qualified Performance-Based Award”means an Award that is either (a) in the form of Restricted Shares, Restricted Stock Units or Other Stock-Based Awards, is intended to qualify for the Section 162(m) Exemption, is made subject to performance goals based on Qualified Performance Criteria as set forth in Section 13.3, and is designated by the Committee as a Qualified Performance-Based Award pursuant to Section 13 of the Plan, or (b) a Stock Option or Stock Appreciation Right having an Exercise Price equal to or greater than the Fair Market Value of a Share as of the Grant Date. “Qualified Performance Criteria” means one or more of the business criteria listed in Section 13.3 upon which performance goals for certain Qualified Performance-Based Awards may be established by the Committee. “Reporting Person” means an employee of the Company or an Affiliate who is subject to the reporting requirements of Section 16(a) of the Exchange Act. “Restricted Shares”means Shares granted to a Participant under Section 10 of the Plan that are subject to certain restrictions and conditions and to a risk of forfeiture. “Restricted Stock Unit” or“RSU” means the right to acquire one Share, or receive the equivalent amount in cash, granted to a Participant under Section 11 of the Plan, which right is subject to certain restrictions and conditions and to a risk of forfeiture. “Retirement ” means with respect to any Participant, (a) the attainment by the Participant of the age of 55and the cessation of the Participant’s Service, or (b) the Participant’s “retirement” as determined by the Committee in its sole discretion. | | | | | Vote by telephoneC-2 | | 2017 Proxy Statement | | |
Appendix C 2010 Omnibus Stock Incentive Plan “Rule16b-3” means Rule16b-3 under the Exchange Act. “Section 162(m) Exemption” means the exemption from the limitation of deductibility under Section 162(m)(4)(C) of the Code. “Securities Act” means the Securities Act of 1933, as amended, and the rules promulgated thereunder or any successor statute thereto. “Service”means a Participant’s employment with the Company or an Affiliate or a Participant’s service as aNon-Management Director, as applicable. “Shares”means shares of Common Stock. “Stock Appreciation Right” or“SAR” means a right granted to a Participant under Section 9 of the Plan to receive a payment equal to the excess of the Fair Market Value of a Share as of the date of exercise of the SAR over the Exercise Price of the SAR. “Stock Option”means a right granted to a Participant under Section 8 of the Plan to purchase a specified number of Shares at a specified price during a specified time period. A Stock Option may be an Incentive Stock Option or aNon-Qualified Stock Option. “Subsidiary”means any corporation or other entity of which the Company possesses, directly or through one or more intermediaries, 50% or more of the total combined voting power of such entity. “Substitute Awards” means Awards granted under Section 7.6 in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by the Company or an Affiliate. 2.2 Rules of Construction. The section and other headings contained in the Plan are for reference purposes only and shall not affect the meaning or interpretation of the Plan. Unless the context clearly requires otherwise: (a) references to the plural include the singular and to the singular include the plural; (b) the terms “includes” and “including” are not limiting; (c) the term “or” has the inclusive meaning represented by the phrase “and/or”; and (d) any grammatical form or variant of a term defined in the Plan shall be construed to have a meaning corresponding to the definition of the term set forth herein. The terms “hereof,” “hereto,” “hereunder” and similar terms in the Plan refer to the Plan as a whole and not to any particular provision of the Plan. Section 3. Term of the Plan 3.1 Effective Date. The Plan shall be effective as of the date on which it is approved by the Company’s stockholders (the “Effective Date”). 3.2 Term of the Plan. Unless the Plan is earlier terminated in accordance with the provisions hereof, no Award shall be granted under the Plan after June 30, 2020, but Awards granted on or prior to such date shall continue to be governed by the terms and conditions of the Plan and the applicable Award Agreement (including terms regarding amendments to or modifications of outstanding Awards). Section 4. Administration of the Plan 4.1 The Committee. The Plan shall be administered by the Committee. No action of the Committee under the Plan shall be void or deemed to be without authority due to a Committee member’s failure to qualify as an Independent Director at the time the action was taken. 4.2 Committee Authority. Subject to the express provisions of the Plan, the Committee shall have full and exclusive power, authority and discretion to take any and all actions necessary, appropriate or advisable for the administration of the Plan, including the following: | (a) | Select Eligible Persons to become Participants; |
| (c) | Delegate the granting of Awards as specified in Section 4.5; |
| (d) | Determine the type or types of Awards to be granted to each Participant and the timing thereof; |
| (e) | Determine the number of Awards to be granted and the number of Shares to which an Award will relate; |
Appendix C 2010 Omnibus Stock Incentive Plan | (f) | Determine the terms, conditions, restrictions and other provisions of each Award,provided that the vesting schedule of any Award granted hereunder (other than Awards involving an aggregate number of Shares equal to or less than 5% of the Shares available for issuance pursuant to Awards under the Plan) shall provide that no portion of such Award may become vested or exercisable prior to the first anniversary of the Grant Date of such Award, subject, however, to the provisions of Sections 4.2(i), 7.6, 13.4, 18, 19.2, 20 and 22 (the “Minimum Vesting Requirement”); |
| (g) | Establish performance conditions for Performance Awards and Qualified Performance-Based Awards, and verify the level of performance attained with respect to such performance conditions; |
| (h) | Prescribe the form of each Award Agreement, which need not be identical for each Participant; |
| (i) | Amend, modify, suspend, discontinue or terminate the Plan, waive any restrictions or conditions applicable to any Award, or amend or modify the terms and conditions of any outstanding Award; |
| (j) | AdoptCall tollsub-plans or supplements to, or alternative versions of, the Plan as the Committee deems necessary or desirable to comply with the laws or regulations of or to accommodate the tax policy or custom of, foreign jurisdictions; |
| (k) | Establish, adopt or revise rules, guidelines and policies for the administration of the Plan; |
| (l) | Construe and interpret the Plan, any Award Agreement and any other documents and instruments relating to the Plan or any Award; |
| (m) | Correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement; and |
| (n) | Make all other decisions and determinations and take such other actions with respect to the Plan or any Award as the Committee may deem necessary, appropriate or advisable for the administration of the Plan. |
The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. 4.3 Grants toNon-Management Directors. (a) Awards. Notwithstanding any other provision of the Plan, including Sections 4.1 and 4.2, any Awards made under the Plan toNon-Management Directors shall be approved, or made in accordance with a policy or program approved, by the Board of Directors;provided,however, (1) the Committee shall recommend such Awards, policy or program to the Board of Directors for its approval and (2) the Committee retains full independent authority conferred under the Plan with respect to all other aspects of Awards toNon-Management Directors. Solely with respect to the grant of Awards toNon-Management Directors, all rights, powers and authorities vested in the Committee under the Plan with respect thereto shall instead be exercised by the Board of Directors and any reference in the Plan to the Committee shall be deemed to include a reference to the Board of Directors. (b) Retainers and Meeting Fees. Upon such terms and conditions as may be established by the Board of Directors, eachNon-Management Director may elect to have all or part of his or her retainer and meeting fees paid in Shares under the Plan. 4.4 Actions and Interpretations by the Committee. All interpretations, decisions, determinations and actions under or with respect to the Plan shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive and binding on all persons, including Participants, persons claiming rights from or through a Participant, and stockholders. The Committee’s determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated. 4.5 Delegation of Authority. (a) Subject to any applicable laws, rules or regulations (including Section 157(c) of the Delaware General Corporation Law or any successor provision), the Committee may, by resolution, expressly delegate to one or more officers of the Company the authority, within specified parameters as to the number, types and terms of Awards, to (1) designate Eligible Persons to be recipients of Awards and (2) determine the number of such Awards to be received by any such Participants;provided,however, that such delegation may not be made with respect to Awards to be granted to anyNon-Management Director, any Eligible Person who is a Reporting Person or any Eligible Person who is then a Covered Employee. (b) The Committee may delegate to any appropriate officer or employee of the Company or an Affiliate responsibility for performing ministerial and administrative functions under the Plan.
Appendix C 2010 Omnibus Stock Incentive Plan (c) In the event that the Committee’s authority is delegated to any officer or employee in accordance with Section 4.5(a) or (b), any actions undertaken by such person in accordance with the Committee’s delegation of authority shall have the same force and effect as if undertaken directly by the Committee, and any reference in the Plan to the Committee shall, to the extent consistent with the terms and limitations of such delegation, be deemed to include a reference to such officer or employee. 4.6 Limitation of Liability. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished by any officer or employee of the Company or an Affiliate, the Company’s independent certified public accountants, counsel or other advisors to the Company, or any consultant, attorney, accountant or other advisor retained by the Committee to assist in the administration of the Plan. Neither the Board of Directors nor the Committee, nor any member of either, shall be liable for any act, omission, interpretation, decision, construction or determination made in good faith in connection with the Plan or any Award. Section 5. Shares Subject to the Plan; Maximum Awards 5.1 Number of Shares. Subject to the Share counting rules set forth in Section 5.3 and to adjustment as provided in Section 19, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be19,600,00029,600,000, of which no more than 3,000,000 may be issued as Full-Value Awards. 5.2 Incentive Stock Options. The maximum number of Shares that may be issued upon exercise of Incentive Stock Options granted under the Plan shall be 19,600,000, subject to adjustment as provided in Section 19. 5.3 Share Counting. (a) The number of Shares covered by an Award, or to which an Award relates, shall be subtracted from the Plan Share reserve as of the Grant Date. (b) To the extent an Award is canceled, terminates, expires, is forfeited or lapses for any reason (in whole or in part), any unissued or forfeited Shares subject to the Award shall be added back to the Plan Share reserve and available again for issuance pursuant to Awards granted under the Plan. (c) Any Shares related to Awards that are settled in cash or other consideration in lieu of Shares shall be added back to the Plan Share reserve and available again for issuance pursuant to Awards granted under the Plan. (d) Shares withheld or deducted from an Award by the Company to satisfy tax withholding requirements relating to Stock Options or Stock Appreciation Rights shall not be added back to the Plan Share reserve and shall not again be available for issuance pursuant to Awards granted under the Plan, but Shares withheld or deducted by the Company to satisfy tax withholding requirements relating to Full-Value Awards shall be added back to the Plan Share reserve and available again for issuance pursuant to Awards granted under the Plan. Shares delivered by a Participant to the Company to satisfy tax withholding requirements shall be treated in the same way as Shares withheld or deducted from an Award as specified above for purposes of Share counting under this Section 5.3(d). (e) To the extent that the full number of Shares subject to a Stock Option or a Share-settled Stock Appreciation Right is not issued upon exercise of such Stock Option or Stock Appreciation Right for any reason, including by reason of a net settlement or Net Exercise, then all Shares that were covered by the exercised Stock Option or SAR shall not be added back to the Plan Share reserve and shall not again be available for issuance pursuant to Awards granted under the Plan. (f) If the Exercise Price of a Stock Option is satisfied by delivering Shares to the Company (by either actual delivery or attestation), such Shares shall not be added to the Plan Share reserve and shall not be available for issuance pursuant to Awards granted under the Plan. (g) To the extent that the full number of Shares subject to a Performance Award or Qualified Performance-Based Award (other than a Stock Option or Stock Appreciation Right) is not issued by reason of failure to achieve maximum performance goals, the number of Shares not issued shall be added back to the Plan Share reserve and shall be available again for issuance pursuant to Awards granted under the Plan. (h) Shares repurchased on the open market with the proceeds of a Stock Option exercise shall not be added to the Plan Share reserve and shall not be available for issuance pursuant to Awards granted under the Plan. (i) Any Dividend Equivalent denominated in Shares shall be counted against the aggregate number of Shares available for issuance pursuant to Awards under the Plan in such amount and at such time as the Dividend Equivalent first constitutes a commitment to issue Shares.
Appendix C 2010 Omnibus Stock Incentive Plan (j) Substitute Awards granted pursuant to Section 7.6 shall not count against the Plan Share reserve and the Shares otherwise available for issuance under the Plan. 5.4 Source of Shares. Shares issued under the Plan may consist, in whole or in part, of authorized but unissued shares or treasury shares. 5.5 Fractional Shares. No fractional Shares shall be issued under or pursuant to the Plan or any Award and the Committee shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down. 5.6 Maximum Awards. Subject to adjustment as provided in Section 19: (a) Stock Options. The maximum aggregate number of Shares subject to Stock Options granted under the Plan to any one Participant during any fiscal year of the Company shall be 1,000,000. (b) SARs. The maximum aggregate number of Shares subject to Stock Appreciation Rights granted under the Plan to any one Participant during any fiscal year of the Company shall be 1,000,000. (c) Restricted Shares. The maximum aggregate number of Restricted Shares granted under the Plan to any one Participant during any fiscal year of the Company shall be 500,000. (d) RSUs. The maximum aggregate number of Shares underlying Awards of Restricted Stock Units granted under the Plan to any one Participant during any fiscal year of the Company shall be 500,000. (e) Other Stock-Based Awards. The maximum aggregate number of Shares underlying Other Stock-Based Awards granted under the Plan to any one Participant during any fiscal year of the Company shall be 500,000. (f) Performance Awards. The maximum aggregate number of Shares underlying Performance Awards granted under the Plan to any one Participant during any fiscal year of the Company shall be as set forth in Sections 5.6(a) — (e) above. (g) Qualified Performance-Based Awards. The maximum aggregate number of Shares underlying Qualified Performance-Based Awards (other than Stock Options and Stock Appreciation Rights ) granted under the Plan to any one Participant during any fiscal year of the Company shall be as set forth in Sections 5.6(c) — (e) above. Section 6. Eligibility and Participation in the Plan; Limitation on Rights of Participants 6.1 Eligible Persons. Only Eligible Persons are eligible to be designated by the Committee to receive Awards and become Participants under the Plan. 6.2 Participation in the Plan. The Committee shall from time to time, in its sole and complete discretion and subject to the provisions of the Plan, designate those Eligible Persons to whom Awards shall be granted and shall determine the nature and amount of each Award. 6.3 No Right to Receive Award or Be Treated Uniformly. (a) No Eligible Person or other person shall have any claim or right to receive an Award under the Plan, and no Participant, having received an Award, shall have any claim or right to receive a future Award. (b) Neither the Company, its Affiliates nor the Committee has any obligation to treat Eligible Persons or Participants uniformly under the Plan. Determinations made under the Plan may be made by the Committee selectively among Eligible Persons and Participants, whether or not such persons are similarly situated. (c) The grant of an Award under this Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in the Plan as being applicable to such type of Award or to all Awards or as are expressly set forth in the Award Agreement relating to such Award. 6.4 No Right to Employment or Service. Neither the Plan, any Award granted under the Plan nor any Award Agreement (a) shall be deemed to constitute an employment contract or confer or be deemed to confer upon any Eligible Person or Participant any right to remain employed by the Company or an Affiliate, as the case may be, or to continue to provide services as aNon-Management Director, or (b) interfere with or limit in any way the right of the Company or an Affiliate, as the case may be, to terminate an Eligible Person’s or Participant’s employment by the Company or an Affiliate or service as aNon-Management Director for any reason at any time.
Appendix C 2010 Omnibus Stock Incentive Plan Section 7. Awards Generally 7.1 Form and Grant of Awards. The Committee shall have the authority, in its sole discretion, to determine the type or types of Awards to be granted under the Plan. Subject to the provisions of the Plan (including Section 21), Awards may, in the sole discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. 7.2 No Cash Consideration for the Grant of Awards. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. 7.3 Award Agreements. Awards granted under the Plan shall be evidenced by an Award Agreement that shall contain such terms, conditions, restrictions and provisions as the Committee shall determine and that are not inconsistent with the Plan. The Committee may, in its sole discretion, require as a condition to any Award Agreement’s effectiveness that such Award Agreement be executed by the Participant, including by electronic signature or other electronic indication of acceptance. The terms and conditions of Award Agreements need not be the same with respect to each Participant. 7.4 Forms of Payment Under Awards. Subject to the provisions of the Plan, payment or settlement of Awards may be made in such form or forms as the Committee shall determine and as shall be set forth in the applicable Award Agreement, including Shares, cash, other securities of the Company, other Awards, any other form of property as the Committee shall determine, or any combination thereof. Payment of Awards may be made in a single payment or transfer, in installments, or on a deferred basis (subject to the provisions of Section 24.10), as determined by the Committee and subject to the provisions of the Plan. 7.5 Nontransferability of Awards; Beneficiaries. (a) Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, no Award, nor any interest in such Award, may be sold, pledged, assigned, exchanged, encumbered, hypothecated, gifted, transferred or disposed of in any manner by the Participant, other than by will or by the laws of descent and distribution. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, all rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant or a duly appointed legal guardian or legal representative of such Participant. Notwithstanding the foregoing, the Committee shall not permit any Participant to transfer an Award to a third party for value. (b) Notwithstanding the provisions of Section 7.5(a), the Committee, in its sole discretion, may provide in the terms of an Award Agreement, or in any other manner prescribed by the Committee, that a Participant shall have the right to designate, in the manner determined by the Committee, a beneficiary or beneficiaries who shall be entitled to exercise any rights and to receive any payments or distributions with respect to an Award following the Participant’s death. (c) A legal guardian, legal representative, beneficiary or other person claiming any rights under the Plan from or through a Participant shall be subject to all terms and conditions of the Plan and the relevant Award Agreement applicable to the Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary, appropriate or advisable by the Committee. If the Committee does not authorize the designation of a beneficiary, or if so authorized, no beneficiary has been designated or survives the Participant, an outstanding Award may be exercised by or shall become payable to the legal representative of the Participant’s estate. 7.6 Substitute Awards. The Committee may grant Awards under the Plan in assumption of, or in substitution or exchange for, stock and stock-based awards held by employees and directors of another entity who become Eligible Persons in connection with the acquisition (whether by purchase, merger, consolidation or other corporate transaction) by the Company or an Affiliate of the business or assets of the former employing entity (“Substitute Awards”). The Committee may direct that the Substitute Awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. 7.7 Issuance of Shares. To the extent that the Plan or any Award Agreement provides for the issuance of Shares, the issuance may be effected on a certificated ornon-certificated basis, subject to applicable law and the applicable rules of any stock exchange. Section 8. Stock Options 8.1 Grant of Stock Options. The Committee may grant Stock Options to any Eligible Person selected by the Committee. Stock Options shall be designated, in the discretion of the Committee, as an Incentive Stock Option or as aNon-Qualified Stock
Appendix C 2010 Omnibus Stock Incentive Plan Option or a combination thereof. Each Stock Option will be evidenced by an Award Agreement that shall set forth the number of Shares covered by the Stock Option, the Exercise Price, the term of the Stock Option, the vesting schedule, and such other terms, conditions and provisions as may be specified by the Committee consistent with the terms of the Plan. 8.2 Exercise Price. The Exercise Price of a Stock Option shall be determined by the Committee,provided that the Exercise Price of a Stock Option (other than a Stock Option issued as a Substitute Award) shall not be less than 100% of the Fair Market Value of a Share on the Grant Date. 8.3 Exercise Term. The Committee shall determine the period during which a Stock Option may be exercised, provided that no Stock Option shall be exercisable for more than ten years from the Grant Date of such Stock Option. 8.4 Time and Conditions of Exercise. The Committee shall establish the time or times at which a Stock Option may be exercised in whole or in part, subject to Section 8.3 and the Minimum Vesting Requirement. The Committee also shall determine the performance or other conditions, if any, that must be satisfied before all or part of a Stock Option may be exercised. 8.5 Incentive Stock Options. (a) Eligibility. Incentive Stock Options may be granted only to employees of (1) the Company or (2) an Affiliate that is a “subsidiary corporation” within the meaning of Code Section 424(f). (b) Annual Limit. To the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under the Plan and any other stock option plan of the Company) exceeds $100,000 or, if different, the maximum limitation in effect at the time of grant under the Code (the Fair Market Value being determined as of the Grant Date for the ISO), such portion in excess of $100,000 shall be treated as aNon-Qualified Stock Option. (c) Code Section 422. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Code Section 422. Any Stock Option or portion thereof that is designated as an ISO that for any reason fails to meet the requirements of an ISO shall be treated as aNon-Qualified Stock Option. (d) Disqualifying Dispositions. If Shares acquired upon exercise of an Incentive Stock Option are disposed of within two years following the Grant Date of the ISO or one year following the transfer of such Shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Company may reasonably require. 8.6 No Reloads. Award Agreements for Stock Options shall not contain any provision entitling a Participant to the automatic grant of additional Stock Options in connection with the exercise of the original Stock Option. 8.7 Exercise Procedures. Stock Options may be exercised by Participants in accordance with such rules and procedures as may be established by the Committee. 8.8 Payment of Exercise Price. The full Exercise Price of a Stock Option shall be payable in cash at the time the Stock Option is exercised (including payment through a “cashless exercise” arrangement), together with any applicable withholding taxes. The Committee, in its sole discretion, may provide in an Award Agreement or otherwise (subject to such terms, conditions, provisions and restrictions set forth therein) that: (a) payment of all or any part of the aggregate Exercise Price of a Stock Option may be made by tendering (actually or by attestation) Shares already owned by the Participant; or (b) the Stock Option may be exercised through a Net Exercise procedure. Section 9. Stock Appreciation Rights 9.1 Grant of SARs. The Committee may grant Stock Appreciation Rights to any Eligible Person selected by the Committee. An SAR may be granted in tandem with a Stock Option or alone (“freestanding”). Each SAR will be evidenced by an Award Agreement that shall set forth the number of Shares covered by the SAR, the Exercise Price, the term of the SAR, the vesting schedule, and such other terms, conditions and provisions as may be specified by the Committee consistent with the terms of the Plan. 9.2 Freestanding SARs. (a) Exercise Price. The Exercise Price of a freestanding Stock Appreciation Right shall be determined by the Committee,provided that the Exercise Price of a freestanding SAR (other than a freestanding SAR issued as a Substitute Award) shall not be less than 100% of the Fair Market Value of a Share on the Grant Date.
Appendix C 2010 Omnibus Stock Incentive Plan (b) Exercise Term. The Committee shall determine the period during which a freestanding Stock Appreciation Right may be exercised,provided that no freestanding SAR shall be exercisable for more than ten years from the Grant Date of such SAR. (c) Time and Conditions of Exercise. The Committee shall determine the time or times at which a freestanding SAR may be exercised in whole or in part, subject to Section 9.2(b) and the Minimum Vesting Requirement. The Committee also shall determine the performance or other conditions, if any, that must be satisfied before all or part of a freestanding SAR may be exercised. 9.3 Tandem Stock Options/SARs. A Stock Appreciation Right may be granted in tandem with a Stock Option, either at the time of grant or at any time thereafter during the term of the Stock Option. A tandem Stock Option/SAR will entitle the Participant to elect, as to all or any portion of the number of Shares subject to the Award, to exercise either the Stock Option or the SAR, resulting in the reduction of the corresponding number of Shares subject to the right so exercised as well as the tandem right not so exercised. An SAR granted in tandem with a Stock Option shall have an Exercise Price equal to the Exercise Price of the Stock Option, will be vested and exercisable at the same time or times that a related Stock Option is vested and exercisable, and will expire no later than the time at which the related Stock Option expires. 9.4 Payment of SARs. Upon the exercise of a Stock Appreciation Right, the Participant shall be entitled to receive an amount determined by multiplying (a) the excess of the Fair Market Value of a Share on the date of exercise over the Exercise Price by (b) the number of Shares with respect to which the SAR is exercised. The payment upon exercise of an SAR may be in cash, Shares valued at their Fair Market Value on the date of exercise, any other form of consideration, or some combination thereof, as determined by the Committee and set forth in the applicable Award Agreement, and shall be subject to any applicable withholding taxes. Section 10. Restricted Shares 10.1 Grant of Restricted Shares. The Committee may grant Restricted Shares to any Eligible Person selected by the Committee, in such amounts as shall be determined by the Committee. Each grant of Restricted Shares will be evidenced by an Award Agreement that shall set forth the number of Restricted Shares covered by the Award and the terms, conditions, restrictions and other provisions applicable to the Restricted Shares as may be specified by the Committee consistent with the terms of the Plan. 10.2 Restrictions and Lapse of Restrictions. Restricted Shares shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions as the Committee may impose. Subject to the Minimum Vesting Requirement, these restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or continued Service requirements, or otherwise, as determined by the Committee and set forth in the applicable Award Agreement. If the vesting requirements applicable to all or any part of an Award of Restricted Shares shall not be satisfied, the Restricted Shares with respect to which such requirements are not satisfied shall be returned to the Company. 10.3 Issuance of Restricted Shares. Restricted Shares shall be delivered to the Participant at the time of grant either by book-entry registration or by delivering to the Participant, or if required by the Committee, a custodian or escrow agent (including the Company or its designee) designated by the Committee, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing the Restricted Shares are registered in the name of the Participant, such certificates may, if the Committee so determines, bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Shares. 10.4 Additional Shares Received With Respect to Restricted Shares. Any Shares or other securities of the Company received by a Participant as a stock dividend on, or in connection with a stock split or combination, share exchange, reorganization, recapitalization, merger, consolidation or otherwise with respect to, Restricted Shares shall have the same status, be subject to the same restrictions and, if such Restricted Shares are represented by a certificate, bear the same legend, if any, as such Restricted Shares. 10.5 Rights with Respect to Shares. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, a Participant who receives an Award of Restricted Shares shall have all rights of ownership with respect to such Restricted Shares, including the right to vote such Shares and to receive any dividends or other distributions paid or made with respect thereto, subject, however, to the provisions of the Plan, the applicable Award Agreement and, if such Restricted Shares are represented by a certificate, any legend on the certificate for such Shares.
Appendix C 2010 Omnibus Stock Incentive Plan Section 11. Restricted Stock Units 11.1 Grant of RSUs. The Committee may grant Restricted Stock Units to any Eligible Person selected by the Committee, in such amounts as shall be determined by the Committee. Each grant of RSUs will be evidenced by an Award Agreement that shall set forth the number of RSUs covered by the Award and the terms, conditions, restrictions and other provisions applicable to the RSUs as may be specified by the Committee consistent with the terms of the Plan. 11.2 Restrictions and Lapse of Restrictions. Restricted Stock Units shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions as the Committee may impose. Subject to the Minimum Vesting Requirement, these restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or continued Service requirements, or otherwise, as determined by the Committee and set forth in the applicable Award Agreement. 11.3 Settlement of RSUs. Restricted Stock Units shall become payable to a Participant at the time or times set forth in the Award Agreement, which may be upon or following the vesting of the Award (subject to the provisions of Section 24.10). RSUs may be paid in cash, Shares or a combination thereof, as determined by the Committee and set forth in the applicable Award Agreement, subject to any applicable withholding taxes. 11.4 No Rights as a Stockholder. The Participant shall have no rights as a stockholder with respect to an Award of Restricted Stock Units until such time as Shares are paid and delivered to the Participant in settlement of the RSUs pursuant to the terms of the Award Agreement. Section 12. Performance Awards 12.1 Grant of Performance Awards. The Committee may specify that any Award granted under the Plan shall constitute a Performance Award by conditioning the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee. The Committee shall have the complete discretion to determine the number of Performance Awards granted to each Participant, subject to the provisions of Section 5.6, and to designate the terms, conditions and provisions of such Performance Awards (subject to the Minimum Vesting Requirement). Each Performance Award will be evidenced by an Award Agreement that shall set forth the terms, conditions and other provisions applicable to the Performance Award as may be specified by the Committee consistent with the terms of the Plan. 12.2 Performance Goals. The Committee may use such business criteria and other performance measures as it may deem appropriate in establishing any performance conditions for Performance Awards, and may reserve the right to exercise its discretion to reduce or increase the amounts payable under any Performance Award, provided that (a) such discretion shall be limited as provided in Section 13.6 with respect to Qualified Performance-Based Awards and (b) no discretion to reduce or increase the amounts payable (except pursuant to the provisions of Section 19) shall be reserved unless such reservation of discretion is expressly stated by the Committee at the time it acts to authorize or approve the grant of such Performance Award. Section 13. Qualified Performance-Based Awards 13.1 Stock Options and SARs. The provisions of the Plan are intended to ensure that all Stock Options and Stock Appreciation Rights granted hereunder to any Covered Employee shall qualify for the Section 162(m) Exemption. 13.2 Other Awards. When granting any Award under the Plan other than a Stock Option or Stock Appreciation Right, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination that the Participant is or may be a Covered Employee with respect to such Award, and the Committee wishes such Award to qualify for the Section 162(m) Exemption. If an Award is so designated, the Committee shall establish objective performance goals for such Award no later than the earlier of (a) the date 90 days after the commencement of the period of service to which the performance goal or goals relate as determined by the Committee in its sole discretion (the “Performance Period”) and (b) the date on which 25% of such Performance Period has elapsed and, in any event, at a time when the outcome of the performance goals remains substantially uncertain. The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods. 13.3 Qualified Performance Criteria. Performance goals for Qualified Performance-Based Awards shall be based on one or more of the following Qualified Performance Criteria for the Company, on a consolidated basis or for a specified Affiliate or other business unit of the Company, or a division, region, department or function within the Company or an Affiliate: | (a) | Revenues (net or gross); |
| | | | | C-10 | | 2017 Proxy Statement | | |
Appendix C 2010 Omnibus Stock Incentive Plan | (b) | Profit (including net profit,pre-tax profit, gross profit, operating profit, economic profit, profit margins or other corporate profit measures); |
| (c) | Earnings (including earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, earnings per share (basic or diluted) or other corporate earnings measures); |
| (d) | Income (including net income (before or after taxes), operating income or other corporate income measures); |
| (e) | Cash (including cash flow, free 1-800-652-VOTE (8683) within the USA, US territories &Canada on a touch-tone telephone Follow the instructionscash flow, operating cash flow, net cash provided by the recorded message operations, cash flow in excess of cost of capital or other cash measures); |
| (f) | Return measures (including return on assets (gross or net), return on equity, return on income, return on invested capital, return on operating capital, return on sales, and cash flow return on assets, capital, investments, equity or sales); |
| (g) | Operating margin or profit margin; |
| (h) | Contribution margin by business segment; |
| (i) | Share price or performance; |
| (j) | Total stockholder return; |
| (k) | Economic value increased; |
| (n) | Expenses (including expense management, expense ratio, expense efficiency ratios, expense reduction measures or other expense measures); |
| (o) | Operating efficiency or productivity measures or ratios; |
| (p) | Dividend payout levels; |
| (q) | Internal rate of return or increase in net present value; and |
| (r) | Strategic business criteria consisting of one or more goals regarding, among other things, acquisitions and divestitures, successfully integrating acquisitions, customer satisfaction, employee satisfaction, safety standards, strategic plan development and implementation, agency ratings of financial strength, completion of financing transactions and new product development. |
Performance goals with respect to the foregoing Qualified Performance Criteria may be specified in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, and may be measured relative to the performance of one or more specified companies, or a published or special index, or a stock market index, as the Committee deems appropriate. Performance goals need not be based on audited financial results. 13.4 Performance Goals. Each Qualified Performance-Based Award (other than a Stock Option or Stock Appreciation Right) shall be earned, vested and payable (as applicable) only upon the achievement of the performance goals established by the Committee based upon one or more Qualified Performance Criteria, together with the satisfaction of any other conditions, such as continued Service, as the Committee may determine to be appropriate;provided,however, that the Committee may provide in the applicable Award Agreement, either at the time of grant or by amendment thereafter, that achievement of such performance goals will be waived, in whole or in part, upon (a) the termination of employment of a Participant by reason of death or Disability, or (b) the occurrence of a Change of Control. Performance Periods established by the Committee for any Qualified Performance-Based Award may be as short as one year and may be any longer period. 13.5 Calculation of Performance Goals. The Committee may provide in any Qualified Performance-Based Award, at the time the performance goals are established, that any evaluation of performance shall exclude or otherwise objectively adjust for any specified event that occurs during a Performance Period, including the following: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) accruals and charges for reorganization and restructuring programs; (e) acquisitions or divestitures; (f) foreign exchange gains and losses; (g) extraordinary nonrecurring items as described in Financial Accounting Standards Board Accounting Standards Codification Topic 225.20, “Income Statement — Extraordinary and Unusual Items”; and (h) extraordinary nonrecurring items as described in management’s discussion and analysis of financial condition and results of | | | | | | | 2017 Proxy Statement | | C-11 |
Appendix C 2010 Omnibus Stock Incentive Plan operations appearing in the Company’s annual report to stockholders for the applicable year. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility. 13.6 Certification of Performance Goals. After the completion of the applicable Performance Period, the Committee shall certify in writing the extent to which any performance goals and any other material conditions relating to a Qualified Performance-Based Award (other than a Stock Option or Stock Appreciation Right) have been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of such Award. Except as specifically provided in Section 13.4, no Qualified Performance-Based Award held by a Covered Employee or by an employee who in the reasonable judgment of the Committee may be a Covered Employee on the date of payment, may be amended, nor may the Committee exercise any discretionary authority it may otherwise have under the Plan with respect to a Qualified Performance-Based Award, in any manner to waive the achievement of the applicable performance goals based on Qualified Performance Criteria or to increase the amount payable pursuant thereto or the value thereof, or otherwise in a manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption. Subject to the provisions of Section 12.2, the Committee may, however, exercise negative discretion to determine that the portion of a Qualified Performance-Based Award actually earned, vested or payable (as applicable) shall be less than the portion that would be earned, vested or payable based solely upon application of the applicable performance goals. 13.7 Award Limits. Section 5.6 sets forth the maximum number of Shares that may be granted to any one Participant during any fiscal year of the Company in designated forms of Awards. Section 14. Dividend Equivalents 14.1 Grant of Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents with respect to Full-Value Awards granted hereunder, subject to such terms and conditions as may be established by the Committee and set forth in the applicable Award Agreement. Dividend Equivalents shall entitle the Participant to receive payments equal to dividends paid on outstanding Shares with respect to all or a portion of the number of Shares subject to a Full-Value Award, as determined by the Committee. The Committee may provide that Dividend Equivalents be paid or distributed when accrued or be deemed to have been reinvested in additional Shares, or otherwise reinvested;provided,however, that with respect to Dividend Equivalents payable on Performance Awards, such Dividend Equivalents may be earned but shall not be paid until payment or settlement of the underlying Performance Award. 14.2 Options and SARs. Dividend Equivalents shall not be granted with respect to Stock Options or Stock Appreciation Rights. Section 15. Other Stock-Based Awards The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including Shares awarded purely as a “bonus” and not subject to any restrictions or conditions, Shares issued toNon-Management Directors pursuant to the provisions of Section 4.3(b), Shares issued in lieu of other rights to cash compensation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares and Awards valued by reference to the book value of Shares or the value of securities of or the performance of specified Affiliates. The Committee shall determine the terms and conditions of such Other Stock-Based Awards (any Other Stock-Based Award that includes continued Service requirements shall be subject to the Minimum Vesting Requirement), which shall be set forth in the applicable Award Agreement. Section 16. Tax Withholding 16.1 Tax Withholding. The Company and its Affiliates shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company or an Affiliate, an amount sufficient to satisfy any federal, state, local or other taxes of any kind, domestic or foreign, required by any applicable law, rule or regulation to be withheld with respect to any grant, exercise, lapse of restriction, vesting, distribution, payment or other taxable event involving an Award or the Plan, and take such other action as the Committee may deem necessary, appropriate or advisable to enable the Company or an Affiliate to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by delivery of, or withholding from the Award, Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) | | | | | C-12 | | 2017 Proxy Statement | | |
Appendix C 2010 Omnibus Stock Incentive Plan required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes. All such elections shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. 16.2 Company Not Liable. Neither the Company, any Affiliate, the Board of Directors, nor the Committee shall be liable to any Participant or any other person as to any tax consequences expected, but not realized, by any Participant or other person due to the grant, exercise, lapse of restriction, vesting, distribution, payment or other taxable event involving any Award. Although the Company and its Affiliates may endeavor to (a) qualify an Award for favorable tax treatment in a jurisdiction or (b) avoid adverse tax treatment for an Award, the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. Section 17. Compliance with Laws 17.1 Compliance with Laws. The Plan, all Awards (including the grant, exercise, payment and settlement thereof), and the issuance of Shares hereunder shall be subject to all applicable laws, rules and regulations, domestic or foreign, and to such approvals by any governmental agencies or securities exchange or similar entity as may be required. Notwithstanding any other provision of the Plan or the provisions of any Award Agreement, the Company shall have no obligation to issue or deliver any Shares under the Plan or make any other payment or distribution of benefits under the Plan unless such issuance, delivery, payment or distribution would comply with all applicable laws, rules and regulations (including the Securities Act and the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity. The Company may require any Participant to make such representations and warranties, furnish such information, take such action and comply with and be subject to such conditions as may be necessary, appropriate or advisable to comply with the foregoing. 17.2 No Obligation to Register Shares. The Company shall be under no obligation to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any Shares, security or interest in a security payable, issuable or deliverable under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made. 17.3 Stock Trading Restrictions. All Shares issuable under the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state or foreign securities laws, rules and regulations and the rules of any securities exchange or similar entity. The Committee may place legends on any certificate evidencing Shares or issue instructions to the transfer agent to reference restrictions applicable to the Shares. Section 18. Rights After Termination of Service; Acceleration For Other Reasons 18.1 Death. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, if a Participant’s Service terminates by reason of his or her death: (a) All of that Participant’s outstanding Stock Options and Stock Appreciation Rights that are not Performance Awards shall become fully exercisable and may thereafter be exercised in full by the legal representative of the Participant’s estate or by the beneficiary, if any, designated by the Participant pursuant to the provisions of Section 7.5(b), for a period of twelve months from the date of the Participant’s death or until the expiration of the stated period of the Stock Option or SAR, whichever period is shorter (to the extent that the provisions of this Section 18.1(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to beNon-Qualified Stock Options); and (b) All vesting restrictions and conditions on that Participant’s outstanding Restricted Shares that are not Performance Awards or Qualified Performance-Based Awards shall immediately lapse and such Restricted Shares shall be fully vested. The applicable Award Agreement shall set forth the treatment of a Participant’s outstanding Restricted Stock Units, Performance Awards, Qualified Performance-Based Awards (other than Stock Options and SARs) and Other Stock-Based Awards upon a Participant’s termination of Service by reason of his or her death. 18.2 Disability. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, if a Participant’s Service terminates by reason of his or her Disability: (a) All of that Participant’s outstanding Stock Options and Stock Appreciation Rights that are not Performance Awards shall become fully exercisable and may thereafter be exercised in full for a period of twenty-four months from the date of such termination of Service or the stated period of the Stock Option or SAR, whichever period is the shorter;provided,however, that if the Participant dies within a period of twenty-four months after such termination of Service, any outstanding Stock Option or SAR may thereafter be exercised by the legal representative of the Participant’s estate or by the beneficiary, | | | | | | | 2017 Proxy Statement | | C-13 |
Appendix C 2010 Omnibus Stock Incentive Plan if any, designated by the Participant pursuant to the provisions of Section 7.5(b), for a period of twelve months from the date of the Participant’s death or until the expiration of the stated period of the Stock Option or SAR, whichever period is the shorter (to the extent that the provisions of this Section 18.2(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to beNon-Qualified Stock Options); and (b) All vesting restrictions and conditions on that Participant’s outstanding Restricted Shares that are not Performance Awards or Qualified Performance-Based Awards shall immediately lapse and such Restricted Shares shall be fully vested. Any rights of a Participant following his or her termination of Service by reason of Disability with respect to his or her outstanding Restricted Stock Units, Performance Awards, Qualified Performance-Based Awards (other than Stock Options and SARs) and Other Stock-Based Awards shall be set forth in the applicable Award Agreement. 18.3 Retirement. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, if a Participant’s Service terminates by reason of his or her Retirement: (a) The Participant’s outstanding Stock Options and Stock Appreciation Rights that are not Performance Awards will cease vesting but, solely to the extent exercisable at the time of the Participant’s Retirement, may thereafter be exercised until the expiration of the stated period of the Stock Option or SAR;provided,however, that if the Participant dies after such termination of Service, any unexercised Stock Option or SAR may thereafter be exercised by the legal representative of the Participant’s estate or by the beneficiary, if any, designated by the Participant pursuant to the provisions of Section 7.5(b), for a period of twelve months from the date of the Participant’s death or until the expiration of the stated period of the Stock Option or SAR, whichever period is the shorter (to the extent that the provisions of this Section 18.3(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to beNon-Qualified Stock Options); (b) If the Participant has attained the age of 60 at the time of his or her Retirement, all vesting restrictions and conditions on that Participant’s outstanding Restricted Shares that are not Performance Awards or Qualified Performance-Based Awards shall immediately lapse and such Restricted Shares shall be fully vested; and (c) If the Participant has not yet attained the age of 60 at the time of his or her Retirement, that Participant’s outstanding Restricted Shares that are not Performance Awards or Qualified Performance-Based Awards shall not be forfeited, but all time-based vesting conditions and restrictions on such Restricted Shares shall continue in accordance with their terms, or until the Participant’s death or Disability, in which case the provisions of Section 18.1 or Section 18.2, as applicable, shall apply. Any rights of a Participant following his or her Retirement with respect to outstanding Restricted Stock Units, Performance Awards, Qualified Performance-Based Awards (other than Stock Options and SARs) and Other Stock-Based Awards shall be set forth in the applicable Award Agreement. 18.4 Other. Unless otherwise determined by the Committee and set forth in the applicable Award Agreement, if a Participant’s Service terminates for any reason other than death, Disability or Retirement, the Participant’s Awards shall thereupon terminate and be forfeited. 18.5 Transfer; Leave of Absence. (a) Transfer. For purposes of the Plan, a transfer of an employee Participant from the Company to an Affiliate, or vice versa, or from one Affiliate to another shall not be deemed a termination of Service by the Participant. (b) Leave of Absence. Unless otherwise determined by the Committee, a leave of absence by an employee Participant, duly authorized in writing by the Company or an Affiliate, shall not be deemed a termination of Service by the Participant for purposes of the Plan. 18.6 Acceleration For Any Other Reason. Regardless of whether an event has occurred as described in Sections 18.1, 18.2 and 18.3 above, and subject to the provisions of Section 13 with respect to Qualified Performance-Based Awards, the Committee may in its sole discretion at any time determine that all or a portion of a Participant’s Stock Options, Stock Appreciation Rights and other Awards in the nature of rights that may be exercised shall become fully or partially exercisable, that all or a part of any time-based or Service-based vesting conditions on all or a portion of any outstanding Awards shall lapse, or that any performance-based conditions with respect to any Awards shall be deemed to be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole discretion, determine. The Committee may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 18.6. Notwithstanding any other provision of the Plan, | | | | | C-14 | | 2017 Proxy Statement | | |
Appendix C 2010 Omnibus Stock Incentive Plan including this Section 18.6, the Committee may not accelerate the payment of any Award if such acceleration would fail to comply with Code Section 409A(a)(3). Section 19. Adjustments for Changes in Capitalization 19.1 Mandatory Adjustments. In the event of an “equity restructuring” (as such term is defined in Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation — Stock Compensation”), including any stock dividend, stock split,spin-off, rights offering, or large nonrecurring cash dividend, the authorization limits under Sections 5.1, 5.2 and 5.6 shall be adjusted proportionately, and the Committee shall make such adjustments to the Plan and outstanding Awards as it deems necessary or appropriate, in its sole discretion, to prevent dilution or enlargement of benefits or potential benefits intended to be made available under the Plan, including: (a) adjustment of the number and kind of shares or securities that may be issued under the Plan; (b) adjustment of the number and kind of shares or securities subject to outstanding Awards; (c) adjustment of the Exercise Price of outstanding Stock Options and Stock Appreciation Rights or the measure to be used to determine the amount of the benefit payable on an Award; (d) adjustment to market price-based performance goals or performance goals set on aper-Share basis; and (e) any other adjustments that the Committee determines to be equitable. Notwithstanding the foregoing, the Committee shall not make any adjustments to outstanding Stock Options or SARs to the extent that it causes such Stock Options or SARs to provide for a deferral of compensation subject to Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the outstanding Common Stock (a stock split), a dividend payable in Shares, or a combination or consolidation of the outstanding Common Stock into a lesser number of Shares, the authorization limits under Sections 5.1, 5.2 and 5.6 shall automatically be adjusted proportionately, and the Shares then subject to each outstanding Award shall automatically, without the necessity for any additional action by the Committee, be adjusted proportionately without any change in the aggregate Exercise Price therefor. 19.2 Discretionary Adjustments. Upon the occurrence or in anticipation of any share combination, exchange or reclassification, recapitalization, merger, consolidation or other corporate reorganization affecting the Common Stock, or any transaction described in Section 19.1, in addition to any of the actions described in Section 19.1, the Committee may, in its sole discretion, provide: (a) that Awards will be settled in cash rather than Shares; (b) that Awards will become immediately vested and exercisable and will expire after a designated period of time to the extent not then exercised; (c) that Awards will be equitably converted, adjusted or substituted in connection with such transaction; (d) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Shares as of a specified date associated with the transaction, over the Exercise Price of the Award; (e) that performance targets and Performance Periods for Performance Awards and Qualified Performance-Based Awards will be modified, consistent with Code Section 162(m) where applicable; or (f) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated. 19.3 No Fractional Shares, etc.. After giving effect to any adjustment pursuant to the provisions of this Section 19, the number of Shares subject to any Award denominated in whole Shares shall always be a whole number, unless otherwise determined by the Committee. Any discretionary adjustments made pursuant to the provisions of this Section 19 shall be subject to the provisions of Section 22. To the extent any adjustments made pursuant to this Section 19 cause Incentive Stock Options to cease to qualify as Incentive Stock Options, such Stock Options shall be deemed to beNon-Qualified Stock Options. Section 20. Change of Control 20.1 Definition. For purposes of the Plan, the term “Change of Control” means the occurrence of any of the following on or after the Effective Date: (a) Any “person” (as such term is used in Sections 13(d) and 14 of the Exchange Act), other than (1) the Company, (2) any subsidiary of the Company, (3) any employee benefit plan (or a trust forming a part thereof) maintained by the Company or any subsidiary of the Company, (4) any underwriter temporarily holding securities of the Company pursuant to an offering of such securities or (5) any person in connection with a transaction described in clauses (1), (2) and (3) of Section 20.1(b) below, becomes the “beneficial owner” (within the meaning ofRule 13d-3 under the Exchange Act) of securities of the Company representing 30% or more of the total voting power of the Company’s then outstanding voting securities, unless such securities (or, if applicable, securities that are being converted into voting securities) are acquired directly from the Company in a transaction approved by a majority of the Incumbent Board (as defined in Section 20.1(d) below). | | | | | | | 2017 Proxy Statement | | C-15 |
Appendix C 2010 Omnibus Stock Incentive Plan (b) The consummation of a merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued, or the sale or other disposition, in one transaction or a series of transactions, of all or substantially all of the assets of the Company (a “Corporate Transaction”), unless: (1) the stockholders of the Company immediately before such Corporate Transaction will own, directly or indirectly, immediately following such Corporate Transaction, at least 60% of the total voting power of the outstanding voting securities of the corporation or other entity resulting from such Corporate Transaction (including a corporation or other entity that acquires all or substantially all of the Company’s assets, the “Surviving Company”) or the ultimate parent company thereof in substantially the same proportion as their ownership of the voting securities of the Company immediately before such Corporate Transaction; (2) the individuals who were members of the Board of Directors immediately prior to the execution of the agreement providing for such Corporate Transaction constitute a majority of the members of the board of directors or equivalent governing body of the Surviving Company or the ultimate parent company thereof; and (3) no person, other than (A) the Company, (B) any subsidiary of the Company, (C) any employee benefit plan (or a trust forming a part thereof) maintained by the Company or any subsidiary of the Company, (D) the Surviving Company, (E) any subsidiary or parent company of the Surviving Company, or (F) any person who, immediately prior to such Corporate Transaction, was the beneficial owner of securities of the Company representing 30% or more of the total voting power of the Company’s then outstanding voting securities, is the beneficial owner of 30% or more of the total voting power of the then outstanding voting securities of the Surviving Company or the ultimate parent company thereof. (c) The stockholders of the Company approve a complete liquidation or dissolution of the Company. (d) Directors who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”), cease to constitute at least a majority of the Board of Directors (or, in the event of any merger, consolidation or reorganization the principal purpose of which is to change the Company’s state of incorporation, form a holding company or effect a similar reorganization as to form, the board of directors of such surviving company or its ultimate parent company);provided,however, that any individual becoming a member of the Board of Directors subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened proxy contest relating to the election of directors. Notwithstanding the foregoing, a Change of Control will not be deemed to occur solely because any person (a “Subject Person”) becomes the beneficial owner of more than the permitted amount of the outstanding voting securities of the Company as a result of the acquisition of voting securities by the Company which, by reducing the number of voting securities outstanding, increases the proportional number of voting securities beneficially owned by the Subject Person,provided, that if a Change of Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such acquisition by the Company, the Subject Person becomes the beneficial owner of any additional voting securities that increases the percentage of the then outstanding voting securities beneficially owned by the Subject Person to 30% or more of the total voting power, then a Change of Control will have occurred. 20.2 Effect of Change of Control. Notwithstanding any other provision of the Plan, unless otherwise determined by the Committee and set forth in the applicable Award Agreement, the provisions of this Section 20.2 shall apply to the types of Awards specified in subsections (a) and (b) below in the event of a Change of Control. (a) Stock Options and SARs. In the event of a Change of Control, all outstanding Stock Options and Stock Appreciation Rights that are not Performance Awards shall become fully vested and immediately exercisable. To the extent that the provisions of this Section 20.2(a) cause Incentive Stock Options to exceed the dollar limitation set forth in Code Section 422(d), the excess Stock Options shall be deemed to beNon-Qualified Stock Options. (b) Restricted Shares. In the event of a Change of Control as described in Section 20.1(b), as shall be determined by the Committee: (1) any outstanding and unvested Restricted Shares that are not Performance Awards or Qualified Performance-Based Awards shall be canceled and the Company shall make a cash payment to those Participants in an amount equal to the highest price per Share received by the holders of Common Stock in connection with such Change of Control multiplied by the number of such unvested Restricted Shares then held by such Participant, with anynon-cash consideration to be valued in good faith by the Committee; or (2) all vesting restrictions and conditions with respect to all outstanding Restricted Shares | | | | | C-16 | | 2017 Proxy Statement | | |
Appendix C 2010 Omnibus Stock Incentive Plan that are not Performance Awards or Qualified Performance-Based Awards shall immediately lapse and such Restricted Shares shall be fully vested. In the event of a Change of Control as described in Section 20.1(a), (c) or (d), all vesting restrictions and conditions with respect to all outstanding Restricted Shares that are not Performance Awards or Qualified Performance-Based Awards shall immediately lapse and such Restricted Shares shall be fully vested. (c) Other Awards. Any rights of a Participant in connection with a Change of Control with respect to Restricted Stock Units, Performance Awards, Qualified Performance-Based Awards (other than Stock Options and Stock Appreciation Rights) and Other Stock-Based Awards shall be set forth in the applicable Award Agreement. 20.3 Excise Taxes. In the event that any acceleration of vesting pursuant to an Award and any other payment or benefit received or to be received by a Participant under the Plan in connection with a Change of Control would subject a Participant to any excise tax pursuant to Code Section 4999 (which excise tax would be the Participant’s obligation) due to the characterization of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Code Section 280G, the Participant may elect, in his or her sole discretion, to reduce the amount of any acceleration of vesting, payment or benefit called for under an Award in order to avoid such characterization. Section 21. Repricing Prohibited Except as contemplated by the provisions of Section 19, outstanding Stock Options and Stock Appreciation Rights will not be “repriced” for any reason without the prior approval of the Company’s stockholders. For purposes of the Plan, a “repricing” means lowering the Exercise Price of an outstanding Stock Option or SAR or any other action that has the same effect or is treated as a repricing under generally accepted accounting principles, and includes a tandem cancellation of a Stock Option or SAR at a time when its Exercise Price exceeds the fair market value of the underlying Common Stock and exchange for another Stock Option, SAR, other Award, other equity security or a cash payment. Section 22. Amendment and Termination 22.1 Amendment or Termination of the Plan. The Board of Directors or the Committee may amend, modify, suspend, discontinue or terminate the Plan or any portion of the Plan at any time;provided,however, any amendment or modification that (a) increases the total number of Shares available for issuance pursuant to Awards granted under the Plan (except as contemplated by the provisions of Section 19), (b) deletes or limits the provision of Section 21 (repricing prohibition), or (c) requires the approval of the Company’s stockholders pursuant to any applicable law, regulation or securities exchange rule or listing requirement, shall be subject to approval by the Company’s stockholders. Subject to the provisions of Section 22.3, no amendment, modification, suspension, discontinuance or termination of the Plan shall impair the rights of any Participant under any Award previously granted under the Plan without such Participant’s consent,provided that such consent shall not be required with respect to any Plan amendment, modification or other such action if the Committee determines in its sole discretion that such amendment, modification or other such action is not reasonably likely to significantly reduce or diminish the benefits provided to the Participant under such Award. 22.2 Awards Previously Granted. The Committee may waive any conditions or restrictions under, amend or modify the terms and conditions of, or cancel or terminate any outstanding Award at any time and from time to time;provided,however, subject to the provisions of Section 22.3 and the provisions of the applicable Award Agreement, no such amendment, modification, cancellation or termination shall impair the rights of a Participant under an Award without such Participant’s consent,provided that such consent shall not be required with respect to any amendment, modification or other such action if the Committee determines in its sole discretion that such amendment, modification or other such action is not reasonably likely to significantly reduce or diminish the benefits provided to the Participant under such Award. 22.3 Compliance Amendments. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Committee may, in its sole discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable in order for the Company, the Plan, an Award or an Award Agreement to satisfy or conform to any applicable present or future law, regulation or rule or to meet the requirements of any accounting standard. Section 23. Foreign Jurisdictions Awards granted to Participants who are foreign nationals or who are employed by the Company or an Affiliate outside of the United States may have such terms and conditions different from those specified in the Plan and such additional terms and conditions as the Committee, in its sole discretion, determines to be necessary, appropriate or advisable to foster and promote | | | | | | | 2017 Proxy Statement | | C-17 |
Appendix C 2010 Omnibus Stock Incentive Plan achievement of the material purposes of the Plan and to fairly accommodate for differences in local law, tax policy or custom or to facilitate administration of the Plan. The Committee may approve suchsub-plans, appendices or supplements to, or amendments, restatements or alternative versions of, the Plan as it may consider necessary, appropriate or advisable, without thereby affecting the terms of the Plan as in effect for any other purpose. The special terms and any appendices, supplements, amendments, restatements or alternative versions, however, shall not include any provisions that are inconsistent with the terms of the Plan as then in effect, unless the Plan could have been amended to eliminate such inconsistency without further approval by the Company’s stockholders. Section 24. General 24.1 No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall preclude or limit the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. 24.2 Treatment for Other Compensation Purposes. The amount of any compensation received or deemed to be received by a Participant pursuant to an Award shall not be deemed part of a Participant’s regular, recurring compensation for purposes of any termination, indemnity or severance pay laws, and shall not be included in or have any effect on the determination of benefits under any other compensation or benefit plan, program or arrangement of the Company or an Affiliate, including any pension or severance benefits plan, unless expressly provided by the terms of any such plan, program or arrangement. 24.3 No Trust or Fund. The Plan is intended to constitute an “unfunded” plan. Nothing contained herein or in any Award Agreement shall (a) require the Company to segregate any monies, other property or Shares, create any trusts, or to make any special deposits for any amounts payable to any Participant or other person, or (b) be construed as creating in respect of any Participant or any other person any equity or other interest of any kind in any assets of the Company or an Affiliate or creating a trust of any kind or a fiduciary relationship of any kind between the Company or any Affiliate and a Participant or any other person. Prior to the payment or settlement of any Award, nothing contained herein or in any Award Agreement shall give any Participant or any other person any rights that are greater than those of a general unsecured creditor of the Company or an Affiliate. 24.4 Use of Proceeds. All proceeds received by the Company pursuant to Awards granted under the Plan shall be used for general corporate purposes. 24.5 No Limitations on Corporate Action. Neither the Plan, the grant of any Award nor any Award Agreement shall limit, impair or otherwise affect the right or power of the Company or any of its Affiliates to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. 24.6 No Stockholder Rights. Subject to the provisions of the Plan and the applicable Award Agreement, no Participant shall have any rights as a stockholder with respect to any Shares to be issued under the Plan prior to the issuance thereof. 24.7 Prohibition on Loans. The Company shall not loan funds to any Participant for the purpose of paying the Exercise Price associated with any Stock Option or Stock Appreciation Right or for the purpose of paying any taxes associated with the grant, exercise, lapse of restriction, vesting, distribution, payment or other taxable event involving an Award or the Plan. 24.8 No Obligation to Exercise Awards; No Right to Notice of Expiration Date. An Award of a Stock Option or a Stock Appreciation Right imposes no obligation upon the Participant to exercise the Award. The Company, its Affiliates and the Committee have no obligation to inform a Participant of the date on which a Stock Option or SAR is no longer exercisable except in the Award Agreement. 24.9 Compliance with Section 16(b). With respect to Participants who are Reporting Persons, all transactions under the Plan are intended to comply with all applicable conditions ofRule 16b-3. All transactions under the Plan involving Reporting Persons are subject to such conditions, regardless of whether the conditions are expressly set forth in the Plan. Any provision of the Plan that is contrary to a condition ofRule 16b-3 shall not apply to such Reporting Persons. 24.10 Code Section 409A Compliance. Notwithstanding anything contained in the Plan or in any Award Agreement to the contrary, the Plan and all Awards hereunder are intended to satisfy the requirements of Code Section 409A so as to avoid the imposition of any additional taxes or penalties thereunder, and all terms, conditions and provisions of the Plan and an Award Agreement shall be interpreted and applied in a manner consistent with this intent. If the Committee determines that an Award, Award Agreement, payment, distribution, transaction, or any other action or arrangement contemplated by the provisions of the Plan or an Award Agreement would, if undertaken, cause a Participant to become subject to any additional taxes or penalties | | | | | C-18 | | 2017 Proxy Statement | | |
Appendix C 2010 Omnibus Stock Incentive Plan under Code Section 409A, such Award, Award Agreement, payment, distribution, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan or Award Agreement will be deemed modified or, if necessary, suspended in order to comply with the requirements of Code Section 409A to the extent determined appropriate by the Committee in its sole discretion, in each case without the consent of or notice to the Participant. 24.11 Governing Law. Except as to matters governed by United States federal law or the Delaware General Corporation Law, the Plan, all Award Agreements and all determinations made and actions taken under the Plan and any Award Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without giving effect to its conflicts of law principles. 24.12 Plan Controls. In the event of any conflict or inconsistency between the Plan and any Award Agreement, the provisions of the Plan shall govern and the Award Agreement shall be interpreted to minimize or eliminate any such conflict or inconsistency. 24.13 Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. 24.14 Successors. The Plan shall be binding upon the Company and its successors and assigns, and the Participant and the Participant’s legal representatives and beneficiaries. Adopted September 27, 2010 Amended September 23, 2013 Amended July 16, 2017 Amended September 25, 2017 | | | | | | | 2017 Proxy Statement | | C-19 |
| | | | | Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | | | | |
Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m. Eastern time on September 24, 2017. | | | | | Vote by Internet • Go towww.investorvote.com/FEDX • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website | | Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch-tone telephone • Follow the instructions provided by the recorded message |
Annual Meeting Proxy Card/Card/Sign and Date on Reverse Side IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. | | | | | A | | The Board of Directors recommends a voteFOR each of the listed nominees, andFOR Proposals 2, 4 and 5, and for every1 Year on Proposal 3. | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors: | | For | | Against | | Abstain | | | | | | | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | 1. | Election of Directors: | For | Against | Abstain | | | | | For | Against | Abstain | | | | | For | Against | Abstain | | | 01 - James L. Barksdale | | o☐ | o | o | | ☐ | | ☐ | | 02 - John A. Edwardson | | o | o | o | | ☐ | | ☐ | | ☐ | | 03 - Marvin R. Ellison | | o☐ | o | o☐ | | ☐ | | | | | | | | | | | | | | | | | | | | 04 - John C. (“Chris”) Inglis | | ☐ | | ☐ | | ☐ | | 05 - Kimberly A. Jabal | | o | o | o | | 05☐ | | ☐ | | ☐ | | 06 - Shirley Ann Jackson | | o | o | o☐ | | 06 - Gary W. Loveman☐ | | o☐ | o | o | | | | | | | | | | | | | | | | | | 07 - R. Brad Martin | | o☐ | o | o☐ | | ☐ | | 08 - Joshua Cooper Ramo | | o | o | o | | ☐ | | ☐ | | ☐ | | 09 - Susan C. Schwab | | o☐ | o | o☐ | | ☐ | | | | | | | | | | | | | | | | | | | | 10 - Frederick W. Smith | | o☐ | o | o☐ | | ☐ | | 11 - David P. Steiner | | o | o | o☐ | | ☐ | | ☐ | | 12 - Paul S. Walsh | | ☐ | | ☐ | | ☐ | | | | | o | o | o | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | 1 Year | | 2 Years | | 3 Years | | Abstain | 2. | | Advisory vote to approve named executive officer compensation. | | ☐ | | ☐ | | ☐ | | | | 3. Advisory vote on the frequency of future advisory votes on executive compensation. | | ☐ | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | For | | Against | | Abstain | 4. | | Approval of amendment to 2010 Omnibus Stock Incentive Plan to increase the number of authorized shares. | | ☐ | | ☐ | | ☐ | | | | 5. Ratification of independent registered public accounting firm. | | ☐ | | ☐ | | ☐ | B | | The Board of Directors recommends a voteAGAINST Proposals 6 through 9. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | For | | Against | | Abstain | 6. | | Stockholder proposal regarding shareholder proxy access revisions. | | ☐ | | ☐ | | ☐ | | | | 7. Stockholder proposal regarding lobbying activity and expenditure report. | | ☐ | | ☐ | | ☐ | 8. | | Stockholder proposal regarding executive pay confidential voting. | | ☐ | | ☐ | | ☐ | | | | 9. Stockholder proposal regarding application of company non-discrimination policies in states with pro-discrimination laws. | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | | | For | Against | Abstain | | | For | Against | Abstain | | 2. | Advisory vote to approve named executive officer compensation. | o | o | o | | 3. | Ratification of independent registered public accounting firm. | o | o | o | | | | | | | | | | | | B | The Board of Directors recommends a voteAGAINST Proposals 4 through 8. | | | | For | Against | Abstain | | | For | Against | Abstain | | 4. | Stockholder proposal regarding proxy access for shareholders. | o | o | o | | 5. | Stockholder proposal regarding simple majority vote-counting. | o | o | o | | | | | | | | | | | | 6. | Stockholder proposal regarding hedging and pledging policy. | o | o | o | | 7. | Stockholder proposal regarding tax payments on restricted stock awards. | o | o | o | | | | | | | | | | | | 8. | Stockholder proposal regarding political disclosure and accountability. | o | o | o | | | | | | |
Table of Contents
Admission Ticket
FedEx Corporation
Annual Meeting of Stockholders
Monday, September 29, 2014 25, 2017 8:00 a.m. local time
FedEx Express World Headquarters
Auditorium
3670 Hacks Cross Road, Building G, Memphis, TN 38125 Important information if you plan to attend the annual meeting in person If you wishplan to attend the annual meeting in person, you must register in advance. The registration deadline is 11:59 p.m. Eastern time on Thursday, September 21, 2017. You may register by accessingwww.investorvote.com/FEDX and following the instructions to register for the meeting and print out an admission ticket. If you do not have access to the Internet, you may register by calling FedEx Investor Relations at 1-901-818-7200. You will need the 15-digit control number included on the reverse side of this proxy card to bring this Admission Ticket with you.register. PleaseIn order to be admitted to the meeting, you must present this Admission Ticketboth an admission ticket, which you will obtain when you register in advance, and a valid government-issued photo identification, (suchsuch as a driver’s license or a passport) for admission to the meeting.passport.
Security measures will be in place at the meeting to help ensure the safety of attendees. Metal detectors similar to those used in airports will be located at the entrance to the meeting room, and briefcases, handbags and packages will be inspected. No cameras or recording devices of any kind, or signs, placards, banners or similar materials, may be brought into the meeting. Anyone who refuses to comply with these requirements will not be admitted. This Admission Ticket is not transferable.
IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy Solicited on Behalf of the Board of Directors of FedEx Corporation for the Annual Meeting of Stockholders, September 29, 201425, 2017 The undersigned hereby constitutes and appoints Christine P. Richards and Alan B. Graf, Jr., and each of them, his or her true and lawful agents and proxies, each with full power of substitution, to represent the undersigned and to vote all of the shares of FedEx Corporation common stock of the undersigned at the Annual Meeting of Stockholders of FedEx to be held in the auditorium at the FedEx Express World Headquarters, 3670 Hacks Cross Road, Building G, Memphis, Tennessee 38125, on Monday, September 29, 2014,25, 2017, at 8:00 a.m. local time, and at any postponements or adjournments thereof, on Proposals 1 through 89 as specified on the reverse side hereof (with discretionary authority under Proposal 1 to vote for a substitute nominee if any nominee is unable to stand for election) and on such other matters as may properly come before said meeting.This card also constitutes voting instructions for any shares held for the undersigned in the FedEx Corporation employee stock purchase plan or in anya benefit plan of FedEx Corporation or its subsidiaries. If you wish to instruct a record holder or plan trustee on the voting of shares held in your account, your instructions must be received by September 24, 2014.20, 2017. If no direction is given, the plan trustee will vote the shares held in your account in the same proportion as votes received from other plan participants. This proxy, when properly signed, dated and returned, will be voted as specified by you. If no direction is made, this proxy will be voted (and voting instructions given) FOR each of the director nominees, FOR Proposals 2, 4 and 5, for every 1 YEAR on Proposal 3, and AGAINST Proposals 46 through 8.9. The Board of Directors recommends that you vote FOR each of the director nominees, FOR Proposals 2, 4 and 5, for every 1 YEAR on Proposal 3, and AGAINST Proposals 46 through 8.9. In their discretion, the proxy holders are authorized to vote on such other matters as may properly come before the meeting or any postponements or adjournments thereof. You are encouraged to specify your choices by marking the appropriate boxes on the reverse side, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. Ms. Richards and Mr. Graf cannot vote your shares unless you sign, date and return this card or vote on the Internet or by telephone. If you vote by the Internet or telephone, please DO NOT mail back this proxy card. If you wish to attend the annual meeting in person, however, you will need to register in advance and bring the Admission Ticket attached to this proxy cardadmission ticket with you.you that you will receive when you register. NOTE: If you vote on the Internet, you may elect to have next year’s proxy statement and annual report to stockholders delivered to you electronically. We strongly encourage you to enroll in electronic delivery. It is a cost-effective way for us to send you proxy materials and annual reports. C | Non-Voting Items | | | | | C | | Non-Voting Items |
| | | | | | | | | | | | | | | Change of Address— Please print your new address below. | | | | Comments— Please print your comments below. | | | | Mark this box if you would like your name to be disclosed with your vote and comments, if any. | | ☐ | | | | | | o | | | | | |
| | | | | | | D | | Authorized Signatures — This section must be completed for your vote to be counted — Date and Sign Below. | |
The signer hereby revokes all proxies previously given by the signer to vote at said meeting or at any postponements or adjournments thereof.
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