 | all restrictions applicable to the restricted stock 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 the value of his unvested restricted stock 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, 2021):
Benefits Triggered By Death Or Permanent Disability
| NAME | | VALUE OF UNVESTED
RESTRICTED STOCK
($)(1) | | VALUE OF UNVESTED
STOCK OPTIONS
($)(2) | | TOTAL
($) | | F.W. Smith | | — | | 80,895,394 | | 80,895,394 | | M.C. Lenz | | 2,833,605 | | 6,383,873 | | 9,217,478 | | R. Subramaniam | | 5,850,429 | | 19,707,861 | | 25,558,290 | | D.F. Colleran | | 5,125,736 | | 11,482,774 | | 16,608,511 | | R.B. Carter | | 4,152,344 | | 9,237,554 | | 13,389,898 | | A.B. Graf, Jr. | | — | | — | | — |
(1) | Computed by multiplying the closing market price per share of FedEx’s common stock on May 28, 2021, the last trading day of fiscal 2021 (which was $314.81), by the number of unvested shares of restricted stock held by the officer as of May 31, 2021.employee immediately lapse; and | (2) | Represents | | all of the difference between the closing market price per share of FedEx’s commonemployee’s unvested stock on May 28, 2021, the last trading day of fiscal 2021 (which was $314.81), and the exercise price ofoptions immediately vest. | | | In addition, FedEx provides each unvested option held by thenamed executive officer as of May 31, 2021.with: |
In addition, FedEx provides each named executive officer (other than Mr. Graf) with:
| | $1,500,000 of group term life insurance coverage; | | | | $500,000 of business travel accident insurance coverage for death or certain injuries suffered as a result of an accident while traveling on company business; and | | | | A supplemental long-term disability program, with a monthly benefit equal to 60% of the officer’s basic monthly earnings (provided the officer continues to meet the definition 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 Stock Option and Restricted Stock Plans Each of our 2010 Omnibus Stock Incentive Plan, as amended, and our 2019 Omnibus Stock Incentive Plan (together, the “Stock Incentive Plans”) provides that, in the event of a “change of control” (as defined in the Stock Incentive Plans), each holder of an unexpired option has the right to exercise such option without regard to the date such option would first be exercisable. The Stock Incentive Plans also provide that, in the event of a “change of control,” depending on the change of control event, either (i) the restricted stock will be canceled and FedEx will make a cash payment to each holder in an amount 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 shares of restricted stock held or (ii) the restrictions applicable to any such shares will immediately lapse. Under the Stock Incentive Plans, our Compensation & HR 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. 78 | |  |
Table of Contents
Executive Compensation – Potential Payments Upon Termination or Change of Control
The following table quantifies for each named executive officerOur 2019 Plan provides that, if the value of hisany award holder’s unvested restricted stock and stock options, the vesting of which would be accelerated uponawards that accelerate in connection with a change of control (assuming thatwould give rise to adverse tax consequences under Section 4999 of the changeInternal Revenue Code, then the amount of control occurred on May 31, 2021, and that the highest price per share received by FedEx’s stockholdersholder’s awards eligible to accelerate will automatically be reduced, to the extent possible, to one dollar ($1) less than the three times the participant’s “base amount” (as defined in connection with the change of control was the closing market price on May 28, 2021 (the last trading day of fiscal 2021), which was $314.81):Section 280G).
Benefits Triggered By Change Of Control(1)
| NAME | | VALUE OF UNVESTED
RESTRICTED STOCK
($)(2) | | VALUE OF UNVESTED
STOCK OPTIONS
($)(3) | | TOTAL
($) | | F.W. Smith | | — | | 80,895,394 | | 80,895,394 | | M.C. Lenz | | 2,833,605 | | 6,383,873 | | 9,217,478 | | R. Subramaniam | | 5,850,429 | | 19,707,861 | | 25,558,290 | | D.F. Colleran | | 5,125,736 | | 11,482,774 | | 16,608,511 | | R.B. Carter | | 4,152,344 | | 9,237,554 | | 13,389,898 | | A.B. Graf, Jr. | | — | | — | | — |
(1) | As discussed below, each of the named executive officers (other than Mr. Graf) is also entitled under his Management Retention Agreement to a two-year employment agreement upon a change of control and certain guaranteed compensation and benefits during the term of the two-year employment period. | (2) | Computed by multiplying the closing market price per share of FedEx’s common stock on May 28, 2021, the last trading day of fiscal 2021 (which was $314.81), by the number of unvested shares of restricted stock held by the officer as of May 31, 2021. | (3) | Represents the difference between the closing market price per share of FedEx’s common stock on May 28, 2021 (which was $314.81) 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, 2021. |
Management Retention Agreements FedEx has entered into MRAs with each of its executive officers, including the named executive officers (other than Mr. Graf).officers. 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 consecutive one-year terms, unless FedEx gives at least thirty days’, but not more than ninety days’, prior notice that the agreement will not be extended. The non-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, each MRA immediately establishes a two-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. | 84 |  |
Table of Contents Executive Compensation –Potential Payments Upon Termination or Change of Control Compensation During the two-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 the 90-day period immediately prior to the change of control. The executive officer also receives incentive compensation (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 the 90-day period immediately prior to the change of control.
Table of Contents
Executive Compensation – Potential Payments Upon Termination or Change of Control
Termination Each 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 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 such six-month period, within 30 days following the date 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 the one-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.
Table of Contents Executive Compensation –Potential Payments Upon Termination or Change of Control Quantification of Potential Payments Upon Termination or Change of Control The following table quantifies for eachand footnotes describe the potential payments to the named executive officer (other than Mr. Graf) the payments and benefits under his MRA triggered by a qualifyingofficers upon termination of the officer immediately followingemployment or a change of control (assuming that the change of control and qualifying termination occurred onFedEx as of May 31, 2021, and that none of the payments and benefits would be subject to any excise tax):2022. Payments And Benefits Triggered By Qualifying Termination after Change Of ControlThis table does not include:
| NAME | | LUMP SUM CASH PAYMENT —
2X BASE SALARY AND
2X TARGET ANNUAL BONUS
($) | | HEALTH
BENEFITS
($) | | TOTAL
($) | | F.W. Smith | | 7,339,546 | | 82,630 | | 7,422,176 | | M.C. Lenz | | 2,795,000 | | 39,196 | | 2,834,196 | | R. Subramaniam | | 4,753,798 | | 34,637 | | 4,788,435 | | D.F. Colleran | | 3,927,784 | | 50,793 | | 3,978,577 | | R.B. Carter | | 3,917,000 | | 45,491 | | 3,962,491 |
| compensation or benefits previously earned by the named executive officers or equity awards that are fully vested; | | the value of pension benefits that are disclosed in the Fiscal 2022 Pension Benefits table beginning on page 80 or balances that are disclosed in the Nonqualified Deferred Compensation table on page 83; and | | the value of any benefits provided on the same basis to substantially all other employees. |
| NAME | | VOLUNTARY
SEPARATION
(NON-CIC)
($) | | INVOLUNTARY
SEPARATION
(NON-CIC)
($) | | RETIREMENT
($) | (1) | DEATH
($) | | PERMANENT
DISABILITY
($) | | CHANGE OF
CONTROL (NO
TERMINATION)
($) | | CHANGE OF
CONTROL AND
QUALIFYING
TERMINATION
($) | | F.W. Smith | | | | | | | | | | | | | | | | Base Salary(2) | | — | | — | | — | | — | | — | | — | | 2,852,730 | | AIC(2) | | — | | — | | — | | — | | — | | — | | 4,661,304 | | Active LTI Plans | | — | | — | | — | | — | | — | | — | | — | | Restricted Stock(3) | | — | | — | | — | | — | | — | | — | | — | | Stock Options(3) | | — | | — | | — | | 25,619,120 | | 25,619,120 | | 25,619,120 | | 25,619,120 | | Health Benefits(2) | | — | | — | | — | | — | | — | | — | | 92,337 | | 280G Cutback Amount(4) | | — | | — | | — | | — | | — | | — | | — | | TOTAL | | — | | — | | | | 25,619,120 | | 25,619,120 | | 25,169,120 | | 33,225,491 | | M.C. Lenz | | | | | | | | | | | | | | | | Base Salary(2) | | — | | — | | — | | — | | — | | — | | 1,510,238 | | AIC(2) | | — | | — | | — | | — | | — | | — | | 1,794,690 | | Active LTI Plans | | — | | — | | — | | — | | — | | — | | — | | Restricted Stock(3) | | — | | — | | 2,125,874 | | 2,125,874 | | 2,125,874 | | 2,125,874 | | 2,125,874 | | Stock Options(3) | | — | | — | | — | | 2,259,611 | | 2,259,611 | | 2,259,611 | | 2,259,611 | | Health Benefits(2) | | — | | — | | — | | — | | — | | — | | 44,112 | | 280G Cutback Amount(4) | | — | | — | | — | | — | | — | | — | | — | | TOTAL | | — | | — | | 2,125,874 | | 4,385,485 | | 4,385,485 | | 4,385,485 | | 7,734,525 | | R. Subramaniam | | | | | | | | | | | | | | | | Base Salary(2) | | — | | — | | — | | — | | — | | — | | 2,252,778 | | AIC(2) | | — | | — | | — | | — | | — | | — | | 3,123,268 | | Active LTI Plans | | — | | — | | — | | — | | — | | — | | — | | Restricted Stock(3) | | — | | — | | 3,661,552 | | 3,661,552 | | 3,661,552 | | 3,661,552 | | 3,661,552 | | Stock Options(3) | | — | | — | | — | | 6,739,671 | | 6,739,671 | | 6,739,671 | | 6,739,671 | | Health Benefits(2) | | — | | — | | — | | — | | — | | — | | 39,045 | | 280G Cutback Amount(4) | | — | | — | | — | | — | | — | | — | | — | | TOTAL | | — | | — | | 3,661,552 | | 10,401,223 | | 10,401,223 | | 10,401,223 | | 15,816,314 |
| | | |
Table of Contents Executive Compensation –Potential Payments Upon Termination or Change of Control | NAME | | VOLUNTARY
SEPARATION
(NON-CIC)
($) | | INVOLUNTARY
SEPARATION
(NON-CIC)
($) | | RETIREMENT
($) | (1) | DEATH
($) | | PERMANENT
DISABILITY
($) | | CHANGE OF
CONTROL (NO
TERMINATION)
($) | | CHANGE OF
CONTROL AND
QUALIFYING
TERMINATION
($) | | D.F. Colleran | | | | | | | | | | | | | | | | Base Salary(2) | | — | | — | | — | | — | | — | | — | | 1,845,496 | | AIC(2) | | — | | — | | — | | — | | — | | — | | 2,193,094 | | Active LTI Plans | | — | | — | | — | | — | | — | | — | | — | | Restricted Stock(3) | | — | | — | | 3,152,429 | | 3,152,429 | | 3,152,429 | | 3,152,429 | | 3,152,429 | | Stock Options(3) | | — | | — | | — | | 3,736,558 | | 3,736,558 | | 3,736,558 | | 3,736,558 | | Health Benefits(2) | | — | | — | | — | | — | | — | | — | | 56,738 | | 280G Cutback Amount(4) | | — | | — | | — | | — | | — | | — | | — | | TOTAL | | — | | — | | 3,152,429 | | 6,888,987 | | 6,888,987 | | 6,888,987 | | 10,984,315 | | R.B. Carter | | | | | | | | | | | | | | | | Base Salary(2) | | — | | — | | — | | — | | — | | — | | 1,840,430 | | AIC(2) | | — | | — | | — | | — | | — | | — | | 2,187,074 | | Active LTI Plans | | — | | — | | — | | — | | — | | — | | — | | Restricted Stock(3) | | — | | — | | 2,474,647 | | 2,474,647 | | 2,474,647 | | 2,474,647 | | 2,474,647 | | Stock Options(3) | | — | | — | | — | | 2,873,424 | | 2,873,424 | | 2,873,424 | | 2,873,424 | | Health Benefits(2) | | — | | — | | — | | — | | — | | — | | 50,826 | | 280G Cutback Amount(4) | | — | | — | | — | | — | | — | | — | | — | | TOTAL | | — | | — | | 2,474,647 | | 5,348,071 | | 5,348,071 | | 5,348,071 | | 9,426,401 |
| (1) | Separation after reaching age 55. | | (2) | The MRAs with each named executive officer provide for (a) a lump–sum cash payment equal to two times his base salary plus two times his target AIC opportunity and (b) 18 months of continued coverage of medical, dental, and vision benefits. | | (3) | Represents the intrinsic value of the acceleration of vesting of any restricted stock or stock options that vest upon the event. For restricted stock, intrinsic value is computed by multiplying the closing market price per share of FedEx’s common stock on May 31, 2022 ($224.58) by the number of unvested shares of restricted stock held by the officer as of May 31, 2022. For stock options, intrinsic value represents the difference between the closing market price of FedEx’s common stock on May 31, 2022 ($224.58) and the exercise price of each unvested option (if the exercise price was less than such market price) held by the officer as of May 31, 2022. The value of the acceleration of any equity awards under the Policy on Limitation of Severance Benefits in connection with an executive officer’s retirement, or in connection with an actual change of control of FedEx, would be determined using the applicable methodology set forth in Section 280G, which amounts would be less than the intrinsic values shown in the table above. | | (4) | Represents the amount of payments that would be forfeited by the named executive officer to avoid being subject to any excise tax or excess payment under the Policy on Limitation of Severance Benefits, the 2019 Plan, or the MRAs, as applicable. Based upon a hypothetical analysis as of May 31, 2022, no executive officer would be required to forfeit any cash payments or reduce the number of shares of stock or amount received upon acceleration of vesting of restricted stock or stock options held as of May 31, 2022. |
Table of Contents Executive Compensation –CEO Pay Ratio CEO Pay Ratio In accordance with Item 402(u) of Regulation S-K (the “pay ratio rule”), we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. This ratio is a reasonable estimate calculated in a manner consistent with the pay ratio rule and is based on our employee and payroll records and the methodology described below. The pay ratio rule allows companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations when calculating the ratio. Our reported ratio may not be comparable to those reported by other companies due to differences in industry, business models, scope of international operations, and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their ratios. As permitted by the pay ratio rule, we used the same median employee to calculate our fiscal 2022 pay ratio as we used to calculate our fiscal 2021 pay ratio because we believe there has been no change in our employee population or employee compensation arrangements that would result in a significant change to our pay ratio disclosures. Based upon the estimates, assumptions, and methodology described herein, the fiscal 20212022 annual total compensation of our CEO was $14,338,756$10,610,447 (including $13,219$14,297 in employer-provided health benefits not included in the Summary Compensation Table), the fiscal 20212022 annual total compensation of our median employee was $46,171$39,177 (including $8,609$9,267 in employer-provided health benefits), and the ratio of these amounts was 311:271:1. Considered Population We determined our median employee as of March 1, 2021, which was within the last three months of our fiscal 2021 year as required by the pay ratio rule. As of that date, we employed 565,238 employees worldwide (other than our CEO), including full-time, part-time, seasonal, and temporary employees. As permitted by the pay ratio rule, in determining our median employee, we excluded approximately 4.3% of our total employee population as of March 1, 2021, or 24,115 employees outside of the U.S., from the following countries and territories: Antilles Francaises (9); Argentina (261); Aruba (12); Austria (251); Bahamas (28); Bahrain (182); Barbados (36); Bermuda (27); Botswana (22); British Virgin Islands (7); Bulgaria (441); Cayman Islands (22); Colombia (294); Costa Rica (71); Curacao (14); Cyprus (166); Czech Republic (1,133); Denmark (809); Dominican Republic (99); Egypt (199); Estonia (131); Fiji (80); Finland (357); Greece (549); Grenada (6); Guadeloupe (9); Guam (13); Guatemala (43); Hungary (602); Ireland (367); Israel (131); Jamaica (65); Jordan (23); Kenya (81); Kuwait (136); Latvia (184); Lithuania (250); Luxembourg (46); Macau (10); Malawi (25); Namibia (62); New Zealand (277); Norway (284); Oman (17); Panama (81); Peru (22); Philippines (861); Portugal (995); Puerto Rico (647); Romania (958); Russia (762); Saint Kitts (9); Saint Lucia (9); Saint Martin (9); Saint Vincent (5); Singapore (1,314); Slovakia (412); Slovenia (208); South Africa (1,546); South Korea (1,153); Swaziland (12); Sweden (1,179); Switzerland (1,541); Taiwan (1,324); Trinidad and Tobago (47);Turks and Caicos Islands (7); Turkey (879); Ukraine (182); United Arab Emirates (1,210); United States Virgin Islands (19); Uruguay (38); Venezuela (33); Vietnam (708); and Zambia (114). As a result, an aggregate employee population of 541,123 was considered (the “considered population”) in determining our median employee in fiscal 2021. Identifying our Median Employee We selected annual taxable wages as the consistently applied compensation measure used to identify our median employee, which is a permissible approach even though this definition is defined differently across jurisdictions. For employees outside the U.S., we applied a reasonable estimate to determine taxable wages by consistently adjusting each non-U.S. employee’s annual pay rate upward to include additional elements of taxable compensation. From the considered population, we used statistical sampling to collect additional data for a group of employees (the “median population”) who were paid within a range of 10% above or below what we estimated to be our median taxable wage amount. We reviewed recent historical taxable wage data of the median population and selected employees within the median population with consistent taxable wages over the past three years. We calculated fiscal 2021 total compensation for each of the selected employees using the methodology for calculating our CEO’s fiscal 2021 total compensation as set forth in the Summary Compensation Table of our 2021 proxy statement. We then identified an employee from this group, who was reasonably representative of our workforce and whose wage was a reasonable estimate of the median wage at our organization as the median employee. 2021 Proxy Statement88 | | 81 |
Table of Contents EQUITY COMPENSATION PLANS Equity Compensation Plans Approved by Stockholders Stockholders approved FedEx’s 2002 Stock Incentive Plan, as amended, FedEx’s Incentive Stock Plan, as amended, FedEx’s 2010 Omnibus Stock Incentive Plan, as amended, and FedEx’sthe 2019 Omnibus Stock Incentive Plan (the “stock incentive plans”). Although options were still outstanding under the 2002 plan, the Incentive Stock Plan and the 2010 Omnibus Stock Incentive Plan as of May 31, 2021,2022, no shares are available under these plans for future grants. Equity Compensation Plans Not Approved by Stockholders In connection with its acquisition of Caliber System, Inc. (“Caliber”) in January 1998, FedEx assumed Caliber’s officers’ deferred compensation plan. This plan was approved by Caliber’s board 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 a one-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, 2021,2022, 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) | | | 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 | |
15,325,497 |
(1) | |
$175.19 | |
12,233,805 |
(2) | | 15,328,425 | (1) | | $190.00 | | 10,824,217 | (2) | Equity compensation plans not approved by
stockholders | |
683 |
(3) | |
N/A | |
— | | | 581 | (3) | | N/A | | — | | | Total | | 15,326,180 | | $175.19 | | 12,233,805 | (2) | | 15,329,006 | | $190.00 | | 10,824,217 | (2) |
| (1) | Represents shares of common stock issuable upon exercise of outstanding options granted under FedEx’s stock incentive plans. This number does not include 880720 shares of common stock issuable under a retirement plan assumed by FedEx for former non-employee directors of Caliber System, Inc. Caliber. | | (2) | Shares available for equity grants under FedEx’sthe 2019 Omnibus Stock Incentive Plan (no more than 1,165,2301,060,628 of the shares available under the 2019 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. |
822022 Proxy Statement | | |
Table of Contents AUDIT MATTERS   | Proposal 3
Ratification of the Appointment of the
Independent Registered Public Accounting Firm | | | | Public Accounting Firm | |
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 2022. 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.
Vote Required for Ratification The Audit and Finance 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 2023. 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 and Finance 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 |
Appointment of Independent Registered Public Accounting Firm Ernst & Young audited FedEx’s annual financial statements for the fiscal year ended May 31, 2021,2022, and FedEx’s internal control over financial reporting as of May 31, 2021.2022. The Audit and Finance Committee has appointed Ernst & Young to be FedEx’s independent registered public accounting firm for the fiscal year ending May 31, 2022.2023. Ernst & Young has been FedEx’s external auditor continuously since 2002. The members of the Audit and Finance 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 attend the meeting to respond to appropriate questions and to make a statement if they so desire. Policies Regarding Independent Auditor The Audit and Finance 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 and Finance 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 and Finance 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 and Finance Committee preapproves all audit services and non-audit services to be provided to FedEx by its independent registered public accounting firm. The Audit and Finance 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 reported at the next Audit and Finance Committee meeting. The Audit and Finance Committee may preapprove for up to one year in advance the provision of particular types of permissible routine and recurring audit-related, tax, and other non-audit services, in each case described in reasonable detail and subject to a specific annual monetary limit also approved by the Audit and Finance Committee. The Audit and Finance 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 and Finance Committee no earlier than one year prior to the commencement of the service. | 90 | |
Table of Contents Audit Matters – Report of the Audit and Finance Committee of the Board of Directors Each audit or non-audit service that is approved by the Audit and Finance 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 $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 and Finance Committee or by an officer of FedEx authorized by the Audit and Finance Committee to sign on behalf of FedEx.
Table of Contents
Audit Matters – Report of the Audit Committee of the Board of Directors
The Audit and Finance Committee will not approve any prohibited non-audit service or any non-audit service that individually or in the aggregate may impair, in the Audit and Finance 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 and Finance 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 under the ESG heading below “Governance Policies”“Governance” on the Investor Relations page of our website at 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 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” period to elapse. FedEx’s Executive Vice President and Chief Financial Officer must preapprove any hire who was employed during the preceding three years by the independent registered public accounting firm, and report at least annually all such hires to the Audit and Finance Committee. Report of the Audit and Finance Committee of the Board of Directors The Audit and Finance Committee assists the Board of Directors in its oversight of FedEx’s financial reporting process. The Audit and Finance Committee’s responsibilities are more fully described in its charter, which is available on the Investor Relations page of the FedEx website at investors.fedex.com/esg/board-of-directors/committee-charters/audit-committee-charter. 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 and Finance Committee reviewed and discussed with management the audited consolidated financial statements for the fiscal year ended May 31, 2021,2022, 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 and Finance Committee also reviewed with the Chief Executive Officer and Chief Financial Officer of FedEx their respective certifications with respect to FedEx’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021.2022.
Table of Contents Audit Matters – Report of the Audit and Finance Committee of the Board of Directors The Audit and Finance Committee reviewed and discussed with the independent registered public accounting firm the audited consolidated financial statements for the fiscal year ended May 31, 2021,2022, 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 and Finance Committee by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. The Audit and Finance 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 and Finance 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 and Finance Committee concerning independence, and discussed with the independent registered public accounting firm the firm’s independence. 84 | | |
Table of Contents
Audit Matters – The Audit and Non-Audit Fees
The AuditFinance 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 and Finance 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 19, 2021,18, 2022, with respect to the consolidated financial statements of FedEx as of and for the fiscal year ended May 31, 2021,2022, and with respect to the effectiveness of FedEx’s internal control over financial reporting, the Audit and Finance Committee recommended to the Board of Directors, and the Board approved, that the audited consolidated financial statements be included in FedEx’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021,2022, for filing with the SEC. Audit and Finance Committee Members   |  |   |  |  | |  | | | | | | | | R. BRAD MARTIN
Chairman | | MARVIN R. ELLISON | | KIMBERLY A. JABAL | | AMY B. LANE* | | | | | | | |  | |  | |  | | | | | | | | | | | FREDERICK P. PERPALL | | JOSHUA COOPER RAMO | | V. JAMES VENA* | | |
| *Ms. Lane and Mr. Vena were appointed to the Audit and Finance Committee effective June 14, 2022. |
| 92 | |
Table of Contents Audit Matters – Audit and Non-Audit Fees Audit and Non-Audit Fees The following table sets forth fees for services Ernst & Young provided to FedEx during fiscal 20212022 and 2020,2021, which were preapproved by FedEx’s Audit and Finance Committee in accordance with the Policy on Engagement of Independent Auditor (discussed above): | | 2021 | | 2020 | | Audit fees | | $32,359,000 | | $30,269,000 | | Audit-related fees | | 1,748,000 | | 1,725,000 | | Tax fees | | 4,667,000 | | 4,093,000 | | All other fees | | 127,000 | | 6,000 | | Total | | $38,901,000 | | $36,093,000 |
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 2021 and fiscal 2020 were for benefit plan audits, international accounting and reporting compliance, and system and organization controls (SOC) assessments and reports. The fees for fiscal 2021 also include fees for technology-related assessments.Tax Fees. Represents fees for professional services provided primarily for international tax compliance and domestic and international tax advisory services. Tax compliance and preparation fees totaled $3,400,000 and $2,885,000 in fiscal 2021 and 2020, respectively.All Other Fees. Represents fees for products and services provided to FedEx not otherwise included in the categories above. The fees for fiscal 2021 were for third-party anti-corruption compliance resources and online technical resources. The fees for fiscal 2020 were for online technical resources.| | | 2022 | | 2021 | | Audit | | $31,050,000 | | $32,359,000 | | Audit-related fees | | 1,732,000 | | 1,748,000 | | Tax fees | | 4,120,000 | | 4,667,000 | | All other fees | | 6,000 | | 127,000 | | Total | | $36,908,000 | | $38,901,000 |
| 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 2022 and fiscal 2021 were for benefit plan audits, international accounting and reporting compliance, and system and organization controls (SOC) assessments and reports. The fees for fiscal 2021 also include fees for technology-related assessments. | | Tax Fees. Represents fees for professional services provided primarily for international tax compliance and domestic and international tax advisory services. Tax compliance and preparation fees totaled $2,900,000 and $3,400,000 in fiscal 2022 and 2021, respectively. | | All Other Fees. Represents fees for products and services provided to FedEx not otherwise included in the categories above. The fees for fiscal 2022 were for online technical resources. The fees for fiscal 2021 were for third-party anti-corruption compliance resources and online technical resources. |
FedEx’s Audit and Finance Committee has determined that the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence. 20212022 Proxy Statement | | 8593 |
Table of Contents STOCK OWNERSHIP Directors, Director Nominees, and Executive Officers The following table sets forth the amount of FedEx’s common stock beneficially owned by each director or nominee, each named executive officer included in the Summary Compensation Table, and all directors, director nominees, and executive officers as a group, as of August 2, 2021.July 25, 2022. Unless otherwise indicated, beneficial ownership is direct and the person shown has sole voting and investment power. | | COMMON STOCK BENEFICIALLY OWNED | | COMMON STOCK BENEFICIALLY OWNED | | NAME OF BENEFICIAL OWNER | | NUMBER OF
SHARES | | NUMBER OF
OPTION SHARES(1) | | PERCENT OF
CLASS(2) | | NUMBER OF
SHARES | | | NUMBER OF
OPTION SHARES(1) | | | PERCENT OF
CLASS(2) | | Frederick W. Smith | | 19,536,788 | (3) | 1,251,327 | | 7.77 | % | | | 19,434,345 | (3) | | | 1,476,580 | | | | 8.00 | % | | Marvin R. Ellison | | 4,682 | | 23,835 | | * | | | | 4,989 | | | | 26,685 | | | | * | | | Susan Patricia Griffith | | 2,458 | (4) | 12,038 | | * | | | | 3,073 | (4) | | | 14,888 | | | | * | | | Kimberly A. Jabal | | 3,213 | (5) | 9,960 | | * | | | | 3,213 | (5) | | | 12,810 | | | | * | | | Shirley Ann Jackson | | 8,809 | | 5,370 | | * | | | | 8,809 | | | | 8,220 | | | | * | | | Amy B. Lane | | | | 772 | | | | 840 | | | | * | | | R. Brad Martin | | 61,700 | (6) | 32,255 | | * | | | | 67,035 | (6) | | | 30,385 | | | | * | | | Frederick P. Perpall | | | | 224 | | | | 1,992 | | | | * | | | Joshua Cooper Ramo | | 2,922 | | 21,300 | | * | | | | 3,537 | | | | 24,150 | | | | * | | | Susan C. Schwab | | 5,592 | | 27,535 | | * | | | | 5,899 | | | | 30,385 | | | | * | | | David P. Steiner | | 29,940 | | 27,535 | | * | | | | 29,940 | | | | 30,385 | | | | * | | | Rajesh Subramaniam | | 65,197 | (7) | 117,102 | | * | | | | 75,117 | (7) | | | 273,096 | | | | * | | | V. James Vena | | | | 1,497 | | | | 840 | | | | * | | | Paul S. Walsh | | 13,000 | | 32,255 | | * | | | | 14,000 | | | | 30,385 | | | | * | | | Alan B. Graf, Jr. | | 230,235 | (8) | 130,318 | | * | | | | Stephen E. Gorman | | | | 178 | | | | — | | | | * | | | Nancy A. Norton | | | | — | | | | — | | | | * | | | Michael C. Lenz | | 13,976 | | 42,200 | | * | | | | 18,251 | | | | 104,900 | | | | * | | | Robert B. Carter | | 54,715 | (9) | 127,910 | | * | | | | 57,862 | (8) | | | 182,975 | | | | * | | | Donald F. Colleran | | 42,084 | | 70,152 | | * | | | | 46,089 | | | | 149,970 | | | | * | | | All directors and executive officers as a group (19 persons) | | 19,923,192 | (10) | 1,960,045 | | 8.16 | % | | | All directors, director nominees, and executive officers as a group (24 persons) | | | | 19,868,241 | (9) | | | 2,780,614 | | | | 8.62 | % |
| * | Less than 1% of FedEx’s outstanding common stock. | | (1) | Reflects the number of shares that can be acquired at August 2, 2021,July 25, 2022, or within 60 days thereafter through the exercise of stock options. These shares are excluded from the column headed “Number of Shares,” but included in the ownership percentages reported in the column headed “Percent of Class.” | | (2) | Based on 266,190,927259,907,654 shares outstanding on August 2, 2021.July 25, 2022. | | (3) | Includes 14,493,72814,387,734 shares owned by Mr. Smith (as of August 2, 2021,July 25, 2022, 1,950,000 of such shares have been pledged as security by Mr. Smith), 4,141,280 shares owned by Frederick Smith Enterprise Company, Inc. (“Enterprise”), a family holding company (as of August 2, 2021,July 25, 2022, 105,000 of such shares have been pledged as security by Enterprise), 898,504902,018 shares held through grantor retained annuity trusts, and 736 shares owned by Mr. Smith’s spouse. Regions Bank, Memphis, Tennessee, as trustee of a trust of which Mr. Smith is the lifetime beneficiary, holds 55% of Enterprise’s outstanding stock, and Mr. Smith owns 45% directly. Includes 2,5402,577 shares held in FedEx’s retirement savings plan. Mr. Smith’s business address is 942 South Shady Grove Road, Memphis, Tennessee 38120. | | (4) | Includes 1,000 shares owned by Susan P. Griffith Living Trust. | | (5) | IncludesAll 3,213 shares owned by KJ Family Trust. | | (6) | Includes 7,250 shares owned by R. Brad Martin Family Foundation, 750 shares in children’s trusts, and 2,100 shares owned by Mr. Martin’s spouse. | | (7) | Includes 43,032 shares owned by a family trust. | | (8) | Includes 40,000 shares owned by family trusts and 474 shares held in FedEx’s retirement savings plan. | (9) | Includes 2,946 shares owned by Mr. Carter’s spouse. | (10)(9) | Includes the shares reflected in footnotes 3-7 and footnote 93-8 above, 383388 shares held in FedEx’s retirement savings plan, 6,51812,554 shares held in trusts, and 100 shares held by children. |
86 | | | |
Table of Contents Stock Ownership – Significant Stockholders Significant Stockholders The following table lists certain persons known by FedEx to own beneficially more than five percent of FedEx’s outstanding shares of common stock as of March 31, 2021.2022. | | AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP | | | PERCENT OF CLASS | | | AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP | | | PERCENT OF CLASS | | BlackRock, Inc.
55 East 52nd Street
New York, New York 10055 | | 18,519,425 | (1) | | 6.98 | % | | The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, Pennsylvania | | 18,109,972 | (2) | | 6.83 | % | | 18,784,798 | (1) | | 7.25 | % | PRIMECAP Management Company
177 East Colorado Boulevard, 11th Floor
Pasadena, California 91105 | | 13,936,709 | (3) | | 5.25 | % | | Dodge & Cox
555 California Street, 40th Floor
San Francisco, CA 94104 | | 13,529,644 | (4) | | 5.10 | % | | Dodge & Cox
555 California Street, 40th Floor
San Francisco, California 94104 | | | 17,328,625 | (2) | | 6.69 | % | BlackRock, Inc.
55 East 52nd Street
New York, New York 10055 | | | 16,452,030 | (3) | | 6.35 | % | PRIMECAP Management Company
177 East Colorado Boulevard, 11th Floor
Pasadena, California 91105 | | | | 13,237,477 | (4) | | | 5.11 | % |
| (1) | BlackRock, Inc. is the parent holding company of certain institutional investment managers, which collectively had sole voting power over 16,069,457 shares and sole investment power over all 18,519,425 shares. | (2) | The Vanguard Group, Inc., a registered investment advisor, did not have sole voting power over any shares, had sole investment power over 17,062,17817,791,629 shares, and shared investment power over 1,047,794993,169 shares. | | (2) | Dodge & Cox, a registered investment advisor, had sole voting power over 16,372,994 shares and sole investment power over all 17,328,625 shares. | | (3) | BlackRock, Inc. is the parent holding company of certain institutional investment managers, which collectively had sole voting power over 14,586,248 shares, had sole investment power over 16,451,475 shares, and shared investment power over 555 shares. | | (4) | PRIMECAP Management Company, a registered investment advisor, had sole voting power over 13,419,71112,741,504 shares and sole investment power over all 13,936,70913,237,477 shares. |
(4) | Dodge & Cox, a registered investment advisor, had sole voting power over 12,851,244 shares and sole investment power over all 13,529,644 shares. |
20212022 Proxy Statement | | 8795 |
Table of Contents AMENDMENT TO 2019 OMNIBUS STOCK INCENTIVE PLAN | Proposal 4 Approval of the Amendment to the 2019 Omnibus Stock
Incentive Plan to Increase the Number of Authorized Shares | | | | Our stockholders originally approved the 2019 Plan at the 2019 annual meeting of stockholders. The 2019 Plan currently provides that the maximum number of shares of FedEx common stock that may be issued pursuant to awards granted under the 2019 Plan is 17,000,000 shares, of which no more than 1,500,000 shares may be issued as full-value awards (i.e., awards other than stock options or stock appreciation rights). On June 12, 2022, our Compensation & HR Committee approved an amendment to the excise tax provision of the 2019 Plan to provide that if, in connection with a change of control of FedEx, any compensation payable to a participant under the 2019 Plan equals or exceeds the amount that is three times the participant’s “base amount” (as defined under Section 280G), any compensation in excess of that threshold will be automatically reduced, to the extent possible, to $1 below that threshold. In addition, on July 18, 2022, the Board of Directors, upon the recommendation of the Compensation & HR Committee, approved an amendment to the 2019 Plan, subject to approval by the stockholders at the annual meeting, to increase the number of shares authorized for issuance under the 2019 Plan. If approved by our stockholders, the amendment would authorize an additional 5,000,000 shares for issuance under the 2019 Plan. However, none of the additional shares will be issuable as full-value awards (i.e., restricted stock or any other equity awards other than stock options or stock appreciation rights). The amendment would not make any other changes to the 2019 Plan. The Board of Directors recommends that our stockholders approve the amendment to increase the number of shares authorized for issuance under the 2019 Plan. FedEx relies on equity awards to retain and attract key employees and non-employee Board members and believes that equity incentives are necessary for FedEx to remain competitive with regard to retaining and attracting highly qualified individuals upon whom, in large measure, the future growth and success of FedEx depend. Absent an increase in the number of authorized shares under the 2019 Plan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for fiscal 2025 (which begins on June 1, 2024). We believe that increasing the number of shares issuable under the 2019 Plan is necessary in order to allow FedEx to continue to utilize equity awards (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. The 2019 Plan amendment would further these objectives by allowing FedEx to grant awards under the 2019 Plan through fiscal 2026, as estimated using current grant practices and assumptions regarding share utilization. The following factors were taken into account by the Compensation & HR Committee and the Board of Directors in approving the proposed amendment to increase the number of authorized shares under the 2019 Plan: FedEx’s historical burn rate; the number of shares remaining available under the 2019 Plan for future awards; the number of outstanding stock options and unvested restricted shares; dilution resulting from the proposed increase in authorized shares; the stockholder value transfer resulting from the proposed increase; and the remaining term of the 2019 Plan in which awards may be granted. A summary of the 2019 Plan is set forth below. This summary is, however, qualified by and subject to the full text of the 2019 Plan, as proposed to be amended, which is attached as Appendix D. For ease of reference, the marked copy of the 2019 Plan in Appendix D shows the deleted text in strikethrough format and added text underlined. Capitalized terms used in this summary that are not otherwise defined have the respective meanings given such terms in the 2019 Plan. If our stockholders approve the amendment to the 2019 Plan, we will file with the SEC a registration statement on Form S-8, as soon as reasonably practicable after the approval, to register the additional shares available for issuance under the 2019 Plan. 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 2019 Plan. | Your Board of Directors recommends that you vote “FOR” this proposal. |
| 96 | |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan STOCKHOLDER PROPOSALSNumber of Shares That May be Awarded under the 2019 Plan
The 2019 Plan is the sole FedEx equity compensation plan under which awards can be made. The 2019 Plan currently provides that the maximum number of shares of FedEx common stock that may be issued pursuant to awards granted under the 2019 Plan is 17,000,000 shares, of which no more than 1,500,000 shares may be issued as full-value awards. The following table sets forth as of July 25, 2022, the total number of shares available for awards (stock option, stock appreciation right, or full-value awards) under the 2019 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 25, 2022, and the number of shares available only for full-value awards under the 2019 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 2019 Plan | | 8,983,951 | | 3.46 | % | 937,201 | | Requested increase in authorized shares under the 2019 Plan | | 5,000,000 | | 1.92 | % | — | | Shares available for future awards under the 2019 Plan after approval of proposed amendment | | 13,983,951 | | 5.38 | % | 937,201 |
 | These share amounts are included in “Total Number of Shares Available for Future Awards.” |
The number of shares that may be issued under the 2019 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 2019 Plan. As of July 25, 2022, there were 16,722,524 shares of FedEx common stock issuable pursuant to the exercise of outstanding stock options with a weighted-average exercise price of $194.72 and a weighted-average remaining contractual term of 6.6 years, and 432,427 unvested shares of restricted stock. In addition, as of July 25, 2022, there were 501 shares of FedEx common stock issuable under the Caliber officers’ deferred compensation plan and 680 shares of FedEx common stock issuable under the Caliber retirement plan for non-employee directors. See “Equity Compensation Plans — Equity Compensation Plans Not Approved by Stockholders” for information on the Caliber plans. On July 25, 2022, the closing price of FedEx common stock on the New York Stock Exchange was $228.17 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 directors 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, 2022, are set forth in the “Outstanding Equity Awards at End of Fiscal 2022” 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
2020 | | | FISCAL
2021 | | | FISCAL
2022 | | | 3-YEAR
AVERAGE | | | Stock options granted | | 3,839,144 | | | 4,717,412 | | | 1,812,623 | | | 3,456,393 | | | Restricted shares granted | | 207,012 | | | 335,004 | | | 115,172 | | | 219,063 | | | Common shares outstanding at fiscal year-end | | 261,571,882 | | | 266,952,909 | | | 259,513,635 | | | 262,679,475 | | | Run rate | | 1.55 | % | | 1.89 | % | | 0.74 | % | | 1.40 | % |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan PLAN HIGHLIGHTS; PROMOTION OF SOUND CORPORATE GOVERNANCE PRACTICES While the 2019 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 2019 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 Discounted Stock Options. The 2019 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 2019 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 2019 Plan does not provide for “reload” awards (i.e., 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 2019 Plan provides a specific maximum share limitation (22,000,000, if the requested increase in authorized shares is approved), and does not provide for an annual or automatic increase in the number of shares available for awards under the 2019 Plan. | | Cap on Full-Value Awards. The 2019 Plan includes a limit on the number of shares (1,500,000) 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 2019 Plan would be issuable as full-value awards. | | Prohibition of Certain Share Recycling, or “Liberal Share Counting,” Practices. The 2019 Plan does not allow shares to be added back to the maximum share limitation under the 2019 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 “Liberal Change in Control” Definition. The 2019 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, the acquisition of any less than 30% of voting power by third parties, or a change in less than half of the Board of Directors. | | No Dividends Paid Out on Unearned Performance Awards. The 2019 Plan provides that dividend equivalents payable on performance awards may be paid only when the underlying award is paid or settled. | | Minimum Vesting Requirement. With limited exceptions, all awards made under the 2019 Plan have a minimum vesting period of at least one year. | | Ten-Year Plan Term. The 2019 Plan prohibits the making of awards after June 30, 2029, and limits the exercise term of stock options and stock appreciation rights to ten years from the grant date. | | Independent Committee Administration. The 2019 Plan is administered by our Compensation & HR Committee, which is comprised solely of independent, non-employee directors. | | Certain Awards are Subject to Clawback Policy. The Board of Directors, upon recommendation of the Compensation & HR Committee, has the authority, in the event of certain types of misconduct and upon the occurrence of specified events, to cancel certain awards, including vested awards, and to recoup gains realized from previous awards by any current or former “executive officer” (defined as “officers” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended). | | Limit on Non-Employee Director Compensation. The maximum amount that may be paid to any one non-employee director in a single fiscal year, in cash, awards (valued on the grant date), or otherwise, is $1,000,000. | | 280G Cutback. Amounts payable under the 2019 Plan in connection with a change of control in FedEx that equal or exceed a participant’s “safe harbor” limit under Section 280G of the Code are automatically reduced, to the extent possible, to $1 below that threshold. |
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 2019 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 1.40% 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 10.6% on a fully diluted basis. | 98 | |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan PURPOSE OF THE 2019 PLAN The purpose of the 2019 Plan is to aid FedEx and its subsidiaries and affiliates in retaining, attracting, and rewarding non-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. ADMINISTRATION OF THE 2019 PLAN The 2019 Plan is administered by those members, not less than two, of the Compensation & HR 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 2019 Plan (the “Committee”) who qualify as “independent directors” under Section 303A of the New York Stock Exchange Listed Company Manual and are “non-employee directors” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Each member of the Compensation & HR Committee currently meets these qualifications. Subject to the express provisions of the 2019 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 2019 Plan, including the following: | Designate participants in the 2019 Plan; | | Determine the type or types of awards to be granted to each participant and the number, terms, and conditions of, and restrictions on, each award; provided, that any award granted under the 2019 Plan is subject to a minimum vesting period of one year with limited exceptions; | | Establish, adopt, or revise rules, guidelines, and policies for the administration of the 2019 Plan; and | | Construe and interpret the 2019 Plan, any award agreement, and other documents and instruments relating to the 2019 Plan or any award. |
Awards made under the 2019 Plan to non-employee directors are approved by the Board of Directors upon the recommendation of the Committee. The Committee retains full independent authority under the 2019 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 2019 Plan within specified parameters (as to the number, types, and terms of such awards), other than awards to certain senior officers. SHARES AWARDED UNDER THE 2019 PLAN The number of shares that may be issued under the 2019 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 2019 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 award will be available again for issuance pursuant to awards granted under the 2019 Plan. To the extent that the full number of shares subject to a performance 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 2019 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 2019 Plan. However, shares will not be added back to the maximum share limitation under the 2019 Plan if (i) 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; (ii) the shares are used for payment of the exercise price of a stock option; or (iii) 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 2019 Plan.
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan ELIGIBILITY TO RECEIVE AWARDS The 2019 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 12 non-employee directors, 11 of whom are standing for reelection at the annual meeting; if all nominees are elected at the 2022 annual meeting, FedEx will have 13 non-employee directors); | | employees of FedEx and its subsidiaries and affiliates (currently, FedEx and its subsidiaries and affiliates have approximately 550,000 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 in respect of or exercise any right with respect to such award until employment has commenced. |
As of July 25, 2022, the stock options and restricted stock awards outstanding under the 2019 Plan were held by a total of 8,422 current and former employees and non-employee directors. The basis for participation in the 2019 Plan is the Compensation & HR Committee’s decision that an award to an eligible participant will further the 2019 Plan’s purposes of retaining, attracting, and rewarding non-employee directors and designated key employees of outstanding ability and motivating eligible participants to exert their best efforts to achieve the company’s long-term goals. In designating participants under the 2019 Plan, the Compensation & HR Committee will consider the recommendations of management and the purposes of the 2019 Plan. TYPES OF AWARDS The 2019 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 as non-qualified stock options (which may be granted to all participants) or incentive stock options (which may be granted to employees, but not to non-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 2019 Plan also may be granted in the form of a performance award); | | dividend equivalents with respect to full-value awards (and not, for the avoidance of doubt, with respect to stock options or stock appreciation rights), 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 2019 Plan shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. | 100 | |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan TERM OF THE 2019 PLAN Unless the 2019 Plan is earlier terminated in accordance with its provisions, no awards will be made under the 2019 Plan after June 30, 2029, but awards granted on or prior to such date will continue to be governed by the terms and conditions of the 2019 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 2019 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 2019 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 2019 Plan to any one participant during any FedEx fiscal year is 1,000,000. The maximum number of restricted shares granted under the 2019 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 2019 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 2019 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. PERFORMANCE GOALS Any performance award granted under the 2019 Plan 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 performance criteria, together with the satisfaction of any other conditions, such as continued service, as the Committee may determine to be appropriate, subject to the change of control provision in the 2019 Plan. Performance goals for performance awards may be based on one or more of, but are not limited to, the following 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: | Revenues (net or gross); | | 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); | | 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; | | Volume growth; | | Package yields; | | Expenses (including expense management, expense ratio, expense efficiency ratios, expense reduction measures, or other expense measures); |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan | Operating efficiency or productivity measures or ratios; | | Dividend payout levels; | | 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 may reserve the right to exercise its discretion to reduce or increase the amounts payable under any performance award. RETAINERS FOR NON-EMPLOYEE DIRECTORS Upon such terms and conditions as may be established by the Board of Directors, each non-employee director may elect to have all or part of his or her retainer paid in shares under the 2019 Plan. LIMIT ON NON-EMPLOYEE DIRECTOR COMPENSATION The maximum aggregate amount that may be paid to any one non-employee director in a single fiscal year, in cash, awards (valued on the grant date), or otherwise, is $1,000,000. LIMITATIONS ON TRANSFER; BENEFICIARIES A participant may not assign or transfer an award under the 2019 Plan, other than by will or by the laws of descent and distribution, or unless otherwise determined by the Committee, 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 under the 2019 Plan upon the participant’s death. TERMINATION OF PARTICIPANT SERVICE; ACCELERATION UPON CERTAIN EVENTS Unless otherwise determined by the Committee, 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 (a) vested service-based (i.e., not performance awards) stock options, and stock appreciation rights will be exercisable for ninety days from the date of the participant’s termination of service or until the expiration of the stated period of the stock option or stock appreciation right, whichever period is the shorter, and (b) other awards will terminate and be forfeited. Unless otherwise determined by the Committee: | If a participant’s service terminates by reason of death, (a) all of the participant’s outstanding service-based 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 stock 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. |
| 102 | |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan | 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 stock 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 2019 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, restricted stock units, and other stock-based awards, as determined by the Committee, either (i) such shares or awards 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, restricted stock units, or other stock-based awards then held by such participant, or (ii) all vesting restrictions and conditions applicable to such shares or awards will immediately lapse and such shares or awards will be fully vested; and (c) with respect to outstanding performance-based awards, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met. |
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. ADJUSTMENTS In the event of an equity restructuring transaction that causes the per-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 2019 Plan will be adjusted proportionately, and the Committee will make such adjustments to the 2019 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 2019 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 2019 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 2019 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 2019 PLAN AND OF OUTSTANDING AWARDS The Board of Directors or the Committee may amend, modify, suspend, discontinue, or terminate the 2019 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 2019 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 2019 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 2019 Plan will impair the rights of any participant under any award previously granted under the 2019 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.
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan 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 may be undertaken if it would 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. 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 2019 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 2019 Plan. CLAWBACK OF AWARDS In March 2019, FedEx adopted a Policy on Recoupment of Incentive Compensation (the “Clawback Policy”) that is applicable to certain awards that may be granted under the 2019 Plan. Pursuant to the Clawback Policy, the Board of Directors, upon the recommendation of the Compensation & HR Committee, has the authority, in the event of certain types of misconduct and upon the occurrence of specified events, to cancel certain awards, including vested awards, and to recoup gains realized from previous awards by any current or former “executive officer” (defined as “officers” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended). 280G CUTBACK In June 2022, the Compensation & HR Committee amended the 2019 Plan to provide that if the value of any unvested equity awards that accelerate in connection with a change of control of FedEx would cause an award holder to incur any excise tax under Section 4999 of the Internal Revenue Code, then the amount of the individual’s awards eligible to accelerate will automatically be reduced, to the extent possible, to one dollar ($1) less than three times the individual’s “base amount” (as defined in Section 280G). NEW PLAN BENEFITS The benefits that will be awarded or paid under the 2019 Plan are not currently determinable. Any future awards granted to eligible participants under the 2019 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. Information regarding our recent practices with respect to equity-based compensation is presented elsewhere in this proxy statement. See “Compensation Discussion and Analysis — Long–Term Equity Incentives — Stock Options and Restricted Stock” beginning on page 67. 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 71 and each group listed below (i) the number of shares of common stock issuable pursuant to stock options granted under the 2019 Plan and (ii) the number of restricted shares of common stock awarded under the 2019 Plan, in each case since the 2019 Plan’s inception on September 24, 2019 through July 25, 2022 (without regard to whether any grants were subsequently forfeited, terminated, or canceled). During this same time period, FedEx has not made any grants under any other stock option or restricted stock plans. | 104 | |
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan | | | OPTION SHARES
GRANTED SINCE
ADOPTION OF
PLAN | | RESTRICTED
SHARES
GRANTED SINCE
ADOPTION OF
PLAN | | F.W. Smith | | 354,735 | | 0 | | M.C. Lenz | | 65,455 | | 14,845 | | R. Subramaniam | | 149,730 | | 24,985 | | D.F. Colleran | | 69,620 | | 16,780 | | R.B. Carter | | 57,705 | | 13,890 | | All current executive officers as a group (10 persons) | | 891,710 | | 123,580 | | All non-employee directors as a group (12 persons) | | 52,632 | | 0 | | Stephen E. Gorman (director nominee) | | 0 | | 0 | | Nancy A. Norton (director nominee) | | 0 | | 0 | | Richard W. Smith, President and Chief Executive Officer – Elect of FedEx Express (associate of executive officer (son of Executive Chairman)) | | 42,645 | | 10,830 | | All employees, including all current officers who are not executive officers, as a group (9,030 persons) | | 8,008,322 | | 450,834 |
FOREIGN JURISDICTIONS In order to foster and promote achievement of the material purposes of the 2019 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 2019 Plan or provide additional terms. These inconsistent or additional terms may be reflected in sub-plans, supplements, or alternative versions of the 2019 Plan, but will not include any provisions that are inconsistent with the 2019 Plan then in effect unless the 2019 Plan could have been amended to eliminate such inconsistency without further approval by the stockholders. EXPENSES All expenses of the 2019 Plan are paid for by FedEx. FEDERAL INCOME TAX CONSEQUENCES The following is a general description of the material United States federal income tax consequences associated with awards under the 2019 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. This information is not exhaustive and is not intended to be tax advice to anyone, including participants in the 2019 Plan. Among other things, this summary does not describe state, local, or foreign tax consequences, which may be substantially different. Accordingly, FedEx urges each participant to consult his or her own tax advisor as to the specific tax consequences of participation in the 2019 Plan under federal, state, local, and other applicable laws. Stock Options. Neither incentive stock option grants nor non-qualified stock option grants cause any tax consequences to the participant or FedEx at the time of grant. Upon the exercise of a non-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
Table of Contents Amendment to 2019 Omnibus Stock Incentive Plan 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, subject to any applicable limitations under Internal Revenue Code Section 162(m), but will not be entitled to a 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 a non-qualified stock option. Stock Appreciation Rights. A participant granted a stock appreciation right under the 2019 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, subject to any applicable limitations under Internal Revenue 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 Internal Revenue 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 Internal Revenue 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 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 Internal Revenue Code Section 162(m). Code Section 409A. The 2019 Plan permits the grant of various types of incentive awards, which may or may not be exempt from Section 409A of the Internal Revenue Code (“Section 409A”), which relates to nonqualified deferred compensation plans. If an award is subject to Section 409A, 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 2019 Plan, however, are intended to be exempt from the application of Internal Revenue 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 2019 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. | 106 | |
Table of Contents Stockholder Proposals  | Proposal 45
Independent Board Chairman | |
  | Your Board of Directors recommends that you vote “AGAINST” this proposal. |
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,John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 95758,90278, the beneficial owner for at least three years of 50 shares of FedEx common stock having a value of at least $2,000, intends to present the following proposal for consideration at the annual meeting: “Proposal 45 – Independent Board Chairman 
Shareholders request that the Board of Directors adopt asan enduring policy, and amend the governing documents as necessary to requirein order that 2 separate people hold the Chairoffice of the Chairman and the office of the CEO as follows: Whenever possible, the Chairman of the Board of Directors, whenever possible, toshall be an independent memberIndependent Director. The Board has the discretion to select a Temporary Chairman of the Board. This policy could be phased in when thereBoard who is a contract renewal for our current CEO or for the next CEO transition. Ifnot an Independent Director to serve while the Board determines that a Chair is no longer independent,seeking an Independent Chairman of the Board on an accelerated basis.
The Chairman shall selectnot be a new Chair who satisfies the requirementsformer CEO of the policy withincompany. It is recommended that the Chairman be a reasonable amountperson of time. Compliance with this policy is temporarily waivedbusiness stature capable of challenging the CEO if inneed be. Mr. R. Brad Martin, Vice Chairman of the unlikely event, no independent director is availableBoard and willingdesignated successor to serve as Chair.Chairman of the Board, is only Chairman of RBM Ventures, a private investment company. According to one source RBM Venture has up to 9 employees and $700,000 in sales. How does the Chairman of RBM Ventures with 9 employees have the stature to challenge Mr. Rajesh Subramaniam, CEO of a company with 384,000 employees, if something goes off the rails? Plus Mr. David P. Steiner, Lead Director, has been an attorney with Gibson, Dunn & Crutcher. Gibson, Dunn is a law firm that may be a contender for the law firm that has made the most money from the management elite by resisting rule 14a shareholder proposals like this proposal. Mr. Steiner could be the profile of exactly what shareholders do not want in a Lead Director. It would be interesting to see how many so-called Lead Directors have Gibson, Dunn or other $Billion law firms on their resume. This proposal topic won 52% support at Boeing and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic in June 2020. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.  rolejob of the CEO and management is to runmanage the company. The job of the Chairman is to oversee the CEO and management.An independent director can better manage the Board of Directors. Without an independent chairman shareholders have a greater need to monitor the directors. This is a good governance shareholder proposal in the spirit of the 2021 shareholder proposal for Shareholder Ratification of Termination Pay that won 58%-support from FedEx shareholders. An independent Chairman with business stature can help turn around the downward spiral of our stock in the past year. Please vote yes: Independent Board Chairman – Proposal 5”
Table of Contents
Board of Directors’ Statement in Opposition The roleBoard of Directors and its Governance, Safety, and Public Policy Committee have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders. FedEx and its stockholders are best served when leadership choices are made by the Board on a case-by-case basis—not pursuant to a predetermined policy. FedEx’s Bylaws provide that the Board shall elect a Chairman of the Board of Directors isfrom among its members and that the Chairman of the Board may, but need not be, the Chief Executive Officer. This approach provides the Board with the necessary flexibility to provide independent oversight of management anddetermine whether the CEO. There is a potential conflict of interest for a CEO to havepositions should be held by the oversight role of Chairman.Shareholders are best servedsame person or by an independent Board Chair who can provide a balance of power between the CEO and the Board. A CEO serving as Chair can result in excessive management influenceseparate persons based on the leadership needs of FedEx at any particular time. Adopting a policy to restrict the Board’s discretion in selecting the Chairman of the Board, and weaker oversightas well as restricting the ability to combine the positions of management.
In an example from a company whose share price went from $120 to $160 in 2020 the 2020 Lowe’s (LOW) annual meeting proxy said Lowe’s independent directors determined that having a separate Chairman and Chief Executive Officer, affordswould deprive the CEOBoard of the opportunityability to focus hisselect the most qualified and appropriate individual to lead the Board as Chairman.
Currently, the roles of FedEx Chairman and Chief Executive Officer are held by two separate individuals.1 From 1977 until May 31, 2022, Frederick W. Smith, FedEx’s founder, served as both Chairman of the Board of Directors and Chief Executive Officer. Mr. Smith is the pioneer of the express transportation industry with a strong record of innovation, achievement, and leadership. On March 25, 2022, in connection with the announcement that Mr. Smith was stepping down as Chief Executive Officer and that Rajesh Subramaniam had been promoted to the role of President and Chief Executive Officer, effective June 1, 2022, the Board determined to name Mr. Smith as Executive Chairman.2 This separation of the roles of Chairman and Chief Executive Officer allows FedEx to leverage Mr. Smith’s extensive knowledge of FedEx while transitioning full oversight of FedEx’s strategic initiatives and business plans to Mr. Subramaniam. In addition, effective March 25, 2022, the Board named R. Brad Martin, the independent chair of the Audit and Finance Committee, as Vice Chairman of the Board and designated him as the successor to the role of Chairman of the Board, meaning that he will become the independent Chairman of the Board at such time and energy on managingas Mr. Smith leaves the business and allowsBoard. The Board also determined to maintain the policy requiring that if the Chairman of the Board is the Chief Executive Officer, an Executive Chairman, or not independent, the chairperson of the Governance, Safety, and Public Policy Committee shall serve as Lead Independent Director. Selecting an appropriate leadership structure is one of the most important tasks of any board. If the proposal were implemented, it would constrain the Board from having the flexibility to devote hisdetermine the best leadership structure for FedEx at any particular time, and attentionregardless of what the Board believes to Board oversight and governance. According to the Council of Institutional Investors: The board should be chaired by an independent director. The CEO and chair roles should only be combined in very limited circumstances; in these situations, the board should provide a written statement in the proxy materials discussing why the combined role is in the best interests of shareowners,the company and it should name a leadits stockholders, to their potential detriment.
The proposal contains numerous factual inaccuracies regarding the background, qualifications, and independence of the Vice Chairman and Lead Independent Director. The proposal contains numerous factual inaccuracies regarding the background, qualifications, and independence of the Vice Chairman and Lead Independent Director. Each of Messrs. Martin and Steiner has substantial experience leading public companies, both as executive officers and as directors. See “Corporate Governance Matters — Proposal 1 — Election of Directors” on page 12 for full biographical information on Messrs. Martin and Steiner. The Board has determined that each of Messrs. Martin and Steiner meets the applicable independence requirements of the New York Stock Exchange (including the additional requirements for Audit and Finance Committee members, in the case of Mr. Martin) and the Board’s more stringent standards for determining director independence and are highly qualified to serve as Vice Chairman and Lead Independent Director, respectively, and provide strong and effective leadership and oversight. FedEx’s strong and independent director who shouldBoard of Directors effectively oversees our management and provides vigorous oversight of FedEx’s business and affairs. The Board of Directors is composed of independent, active, and effective directors. Over the past nine years, we have approval over information flowadded six highly qualified, independent directors to the board,Board. Thirteen of our fifteen director nominees standing for election at the annual meeting agendas and meeting schedules to ensure a structure that provides an appropriate balance betweenmeet the powersindependence requirements of the CEONew York Stock Exchange and thosethe Securities and Exchange Commission and the Board’s more stringent standards for determining director independence. Mr. Smith, our Executive Chairman, and Rajesh Subramaniam, our President and Chief Executive Officer, are the only director nominees who are also members of executive management. Our Lead Independent Director, who has a robust set of duties and responsibilities, provides independent leadership. Under our Corporate Governance Guidelines, if the Chairman of the Board is the Chief Executive Officer, an Executive Chairman, or not independent, directors. To Enhance Shareholder Value, Vote FOR
Independentthe Board Chairman – Proposal 4”
88 | | |
Table of Contents
Stockholder Proposals – Proposal 4 – Independent Board Chairman
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 and its stockholders are best served when leadership choices are made by the Board onmust appoint a case-by-case basis — not pursuant to a predetermined policy. FedEx’s Bylaws provide that the Chairman of the Board of Directors shall be the Chief Executive Officer, unless the Board decides otherwise. This approach provides the Board with the necessary flexibility to determine whether the positions should be held by the same person or by separate persons based on the leadership needs of FedEx at any particular time. Adopting a policy to restrict the Board’s discretion in selecting the Chairman of the Board, as well as restricting the ability to combine the positions of Chairman and Chief Executive Officer, would deprive the Board of the ability to select the most qualified and appropriate individual to lead the Board as Chairman.
The Board has given careful consideration to separating the roles of Chairman and Chief Executive Officer and has determined that, at this time, FedEx and its stockholders are best served by having Frederick W. Smith, FedEx’s founder, serve as both Chairman of the Board of Directors and Chief Executive Officer. Mr. Smith’s combined role as Chairman and Chief Executive Officer promotes unified leadership and direction for the Board and executive management and it allows for a single, clear focus for the chain of command to execute FedEx’s strategic initiatives and business plans.
Mr. Smith has served as both Chairman of the Board and Chief Executive Officer of FedEx since 1977. Mr. Smith is the pioneer of the express transportation industry and his record of innovation, achievement, and leadership speaks for itself. Under Mr. Smith’s leadership, FedEx has become one of the most trusted and respected brands in the world. For twenty-one consecutive years FedEx has ranked in the top 20 in FORTUNE magazine’s “World’s Most Admired Companies” list, ranking number 16 on the most recent 2021 list. FedEx was also named one of the “TIME 100 Most Influential Companies” by TIME magazine in 2021. Mr. Smith has been named one of the top 30 chief executives in the world by Barron’s magazine numerous times in the last fifteen years. Under Mr. Smith’s leadership, FedEx has also experienced strong long-term financial growth and stockholder return. FedEx’s compound annual growth rates for revenue, earnings per share, and stock price since its initial public offering in 1978 through fiscal 2021 are approximately 16%, 14%, and 14%, respectively. The Board of Directors believes that our stockholders have been well served by having Mr. Smith act as both Chairman of the Board and Chief Executive Officer.
Selecting an appropriate leadership structure is one of the most important tasks of any board. If the proposal were implemented, it would prevent future Boards from having the flexibility to determine the best leadership structure for FedEx, regardless of what the Board believes to be in the best interests of the company and its stockholders, to their potential detriment.
FedEx’s strong and independent Board of Directors effectively oversees our management and provides vigorous oversight of FedEx’s business and affairs. The Board of Directors is composed of independent, active, and effective directors. Over the past eight years, we have added three highly qualified, independent directors to the Board in Kimberly A. Jabal, former Chief Financial Officer of Unity Technologies; Marvin R. Ellison, Chairman, President and Chief Executive Officer of Lowe’s Companies, Inc.; and Susan Patricia Griffith, President and Chief Executive Officer of The Progressive Corporation. Nine out of our eleven directors standing for reelection meet the independence requirements of the New York Stock Exchange and the Securities and Exchange Commission and the Board’s standards for determining director independence. Mr. Smith and Rajesh Subramaniam, our President and Chief Operating Officer, are the only directors who are also members of executive management.
Our Lead Independent Director, who has a robust set of duties and responsibilities, provides independent leadership. 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 Lead Independent Director:
| | Presidespresides at executive sessions of the non-management and independent Board members and, if a Vice Chairman of the Board is not serving, presides at all other meetings of the Board ifof Directors at which the Chairman of the Board and Chief Executive Officer is not present; | | Servesserves as a liaison between the Chairman of the Board and Chief Executive Officer and independent Board members;members, it being understood that all Board members have complete and open access to any member of management; | | Presides over the executive sessions of non-management directors; | | May also be designated by the Chairman of the Board and Chief Executive Officer to preside at any Board or stockholder meeting; | | Reviewsreviews and approves all Board meeting agendas and Board meeting schedules; |
| 1 | Nearly 60% of S&P 500 companies separate the board chair and chief executive officer roles. 2021 Spencer Stuart Board Index. | | ConsultsApproximately 15% of board chairs of S&P 500 companies hold the title “executive chair.” 2021 Spencer Stuart Board Index. |
| 108 | |
Table of Contents Stockholder Proposals – Proposal 5 – Independent Board Chairman | consults with the Chairman of the Board and Chief Executive Officer regardingwith regard to other information sent to the Board of Directors in connection with Board meetings or other Board action; | | Maymay call meetings of the non-managementindependent Board members as he deems necessary or appropriate; and | | Isis available to communicate with stockholders of the company, as appropriate, if requested by such stockholders. |
Mr. Steiner, our Lead Independent Director, is an exemplary director and the consummate professional. We consider the breadth of his experience—in the transportation industry, energy sector, and public company leadership—to be a tremendous asset to our company. The Board of Directors carefully considered Mr. Steiner’s qualifications when affirming his role as Lead Independent Director in connection with the Board leadership transitions announced in March 2022. TableOur independent Vice Chairman, who is the designated successor to the Chairman of Contents
Stockholder Proposals – Proposal 4 – Independentthe Board, provides additional independent leadership. Under our Corporate Governance Guidelines, the Board may appoint an independent director to serve as Vice Chairman, and such Vice Chairman is the designated successor to the Chairman of the Board. FedEx’s Bylaws provide that a Vice Chairman of the Board shall exercise the powers and perform the duties of the Chairman of the Board when the Chairman of the Board is not present. In addition, the Vice Chairman of the Board:
David P. Steiner, our Lead Independent Director, is an exemplary director and the consummate professional. We consider the breadth of his experience — in the transportation industry, energy sector, and public company leadership — to be a tremendous asset to our company. The Board of Directors carefully considered Mr. Steiner’s qualifications when electing him as Chairman of the Nominating & Governance Committee.
FedEx’s Board of Directors and its committees vigorously oversee the effectiveness of management policies and decisions, including the execution of key strategic initiatives. Each of the Board’s Audit, Compensation, Information Technology Oversight, and Nominating & Governance Committees is composed entirely of independent directors. Consequently, independent directors directly oversee such critical matters as the integrity of FedEx’s financial statements; the compensation of executive management, including Mr. Smith’s compensation; the oversight of the company’s cybersecurity and technology-related risks; the selection and evaluation of directors; and the development and implementation of corporate governance programs. The Compensation Committee, together
| works closely with the other independent directors, conducts an annual performance review of the Chairman of the Board and Chief Executive Officer, assessing FedEx’s financial and non-financial performance and the quality and effectiveness of Mr. Smith’s leadership. In addition, the Nominating & Governance Committee oversees the processes by which Mr. Smith is evaluated.Consistent with our philosophy of empowering each member of our Board of Directors, each Board member may place items on the agenda for Board meetings or raise subjects that are not on the agenda for that meeting. In addition, 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. Lastly, the Board and each Board committee has the authority to retain independent legal, financial, and other advisors as they deem appropriate. See “Corporate Governance Matters — Board Leadership Structure” on page 31 for more information on our governance practices.
Requiring thatassist the Chairman of the Board in carrying out his duties;
| | provides such other assistance as the Chairman of the Board may request; | | communicates with stockholders of the company, as appropriate, if requested by such stockholders; and | | has additional responsibilities as may be an independent director is not necessaryprescribed by the Board from time to time. |
Mr. Martin, our Vice Chairman, is an experienced public company leader who provides additional independent guidance to the Board. We consider Mr. Martin’s business acumen and public company leadership to be a tremendous asset to our company. FedEx’s Board of Directors and its committees comprised of independent directors vigorously oversee the effectiveness of management policies and decisions, including the execution of key strategic initiatives. Each of the Board’s Audit and Finance, Compensation and Human Resources, Cyber and Technology Oversight, and Governance, Safety, and Public Policy Committees is comprised entirely of independent directors. Consequently, independent directors directly oversee such critical matters as the integrity of FedEx’s financial statements; the compensation of executive management, including Messrs. Smith and Subramaniam; the oversight of the company’s cybersecurity and technology-related risks; the selection and evaluation of directors; and the development and implementation of corporate governance programs. The Compensation and Human Resources Committee, together with the other independent directors, conducts an annual performance review of the Executive Chairman and Chief Executive Officer, assessing, with respect to the Chief Executive Officer, FedEx’s financial and non-financial performance and the quality and effectiveness of his leadership. In addition, the Governance, Safety, and Public Policy Committee oversees the processes by which the Executive Chairman and Chief Executive Officer are evaluated. Consistent with our philosophy of empowering each member of our Board of Directors, each Board member may place items on the agenda for Board meetings or raise subjects that are not on the agenda for that meeting. In addition, each Board member has complete and open access to any member of management and to the chairperson of each Board committee for the purpose of discussing any matter related to the work of such committee. Lastly, the Board and each Board committee has the authority to retain independent legal, financial, and other advisors as they deem appropriate. See “Corporate Governance Matters — Board Structure — Board Leadership Structure” on page 37 for more information on our governance practices. Requiring that the Chairman of the Board be an independent director is not necessary to ensure that our Board provides independent and effective oversight of FedEx’s business and affairs. Such oversight is maintained at FedEx through the composition of our Board, including our Lead Independent Director and Vice Chairman, the strong leadership and engagement of our other independent directors and Board committees, and our highly effective corporate governance structures and processes in place. The Board believes the current leadership model, when combined with our independent board governance structure, strikes an appropriate balance between strong and consistent leadership and independent and effective oversight of FedEx’s business and affairs. The proposal seeks to replace FedEx’s balanced approach to Board provides independent and effective oversight of FedEx’s business and affairs. Such oversight is maintained at FedEx through the composition of our Board, including our Lead Independent Director, the strong leadership and engagement of our other independent directors and Board committees, and our highly effective corporate governance structures and processes in place. The Board believes the current leadership model, when combined with our independent board governance structure, strikes an appropriate balance between strong and consistent leadership and independent and effective oversight of FedEx’s business and affairs. The proposal seeks to replace FedEx’s balanced approach to board leadership with an inflexible approach that does not permit the Board, regardless of circumstances, to exercise judgment about which arrangements would best serve the 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.
|
90 | | |
Table of Contents
Stockholder Proposals – Proposal 5 – Report on Alignment Between Company Values and Electioneering Contributions
 | Proposal 5
Report on Alignment Between Company Values
and Electioneering Contributions | | | | | |  | Your Board of Directors recommends that you vote “AGAINST” this proposal.
| FedEx is not responsible for the content of this stockholder proposal or supporting statement.
FedEx has been notified that Clean Yield Asset Management, PO Box 874, 16 Beaver Meadow Road, Norwich, Vermont 05055, on behalf of The Dawn E. Peterson Trust, the beneficial owner of 150 shares of FedEx common stock, intends to present the following proposal for consideration at the annual meeting:
“Whereas:
Proponents believe that FedEx should establish policies and reporting systems that minimize risk to the firm’s reputation and brand by addressing possible missteps in corporate electioneering and political spending that contrast with our company’s stated and implied values.
Publicly available data shows that FedEx and FedExPAC contributed at least $200,000 during the 2020 election cycle to the 147 members of Congress who challenged the certification of the 2020 presidential results on January 6, 2021. Relatedly, FedEx gave $10,000 to the Republic Attorney Generals Association; about two-thirds of the Association’s member attorneys general signed on to a brief urging the Supreme Court to throw out the election results from four states, and its self-described policy branch ran a robo-calling effort urging “patriots” to “march to Congress” and “stop the steal.” A number of companies and organizations have discontinued their affiliations with the Association.
In another example, FedEx has stated that it “supports an inclusive workplace culture and is committed to the education, recruitment, development and advancement of diverse team members worldwide, and we are recognized for our commitment to those efforts.” FedEx has supported gender diversity by sponsoring a women’s employee resource group and providing maternity leave, financial assistance with adoptions and providing a work-life balance program. Yet based on public data, the proponent estimates that in the 2016-2020 election cycles, FedEx and FedExPAC made political donations totaling over $4 million to politicians and political organizations working to weaken access to reproductive healthcare, undermining the ability of employees to manage their fertility.
Resolved:
Shareholders request that the Board Nominating & Governance Committee issue a report to shareholders annually at reasonable expense, excluding confidential information, consisting of a congruency analysis between company values and any political or electioneering contributions made by the company and FedExPAC. The analysis should include a list of any contributions made during the prior year which raise an issue of significant misalignment with company values, and any further relevant information, such as the rationale for maintaining such exceptions or determinations to halt contributions to the recipients.
Supporting Statement:
Proponents recommend that “company values” considered in the report include any publicly stated Company values and values implied by corporate social responsibility strategies designed to address material social and environmental topics.
Proponents also recommend that Company management disclose coherent criteria for determining congruency, such as identifying other actions or policies supported by the company’s political spending recipients that conflict with core company values. We also recommend that the report include management’s analysis of any risks to our company’s brand, reputation, or shareholder value and identify any actions by the Company to inform contribution recipients of company values and of the outcomes of the annual assessment. “Expenditures for electioneering communications” means spending directly, or through a third party, at any time during the year, on printed, internet or broadcast communications, which are reasonably susceptible to interpretation as in support of or opposition to a specific candidate.”
|
Table of Contents
Stockholder Proposals – Proposal 5 – Report on Alignment Between Company Values and Electioneering Contributions
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 is one of the world’s most admired and trusted companies. We are proud that FedEx is consistently recognized as one of the world’s most reputable companies. Among the many reputation awards we have recently received, FedEx was ranked 16th on FORTUNE magazine’s 2021 “World’s Most Admired Companies” list — the 21st consecutive year we have been ranked in the top 20 on the list, with 15 of those years ranking among the top 10. FedEx was also named one of “America’s Best Large Employers” by Forbes in 2021 and one of “America’s Most Responsible Companies” by Newsweek in 2020, ranking higher than any other “Travel, Transport & Logistics” company included on the list.
The FedEx brand is one of the most widely recognized, trusted, and respected in the world and one of our most important and valuable assets. We have a strong reputation among customers and the general public for high standards of social and environmental responsibility and corporate governance and ethics. The FedEx brand name and our corporate reputation are powerful sales and marketing tools. We recognize that adverse publicity relating to company activities could tarnish our reputation and reduce the value of our brand. As a result, we devote significant resources to promoting and protecting our brand and reputation.
The Board believes it is in the best interests of our stockholders and employees 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 under the ESG heading on the Investor Relations page of our website at investors.fedex.com), we actively participate in the political process and maintain memberships with a variety of trade associations with the ultimate goal of promoting and protecting the economic future of FedEx and our stockholders and employees. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures — 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.
Participation in the political process and as a member of various trade associations comes with the understanding that we may not always agree with all of the positions of the recipients, organizations, or organizations’ other members. We believe, however, that these recipients take many positions and address many issues of importance to FedEx in a meaningful manner, and the associations take positions and address issues in a collective industry manner and often advance positions consistent with company interests, that will help us provide strong financial returns, enhance long-term stockholder value, and advance the best interests of our employees consistent with our corporate values.
Our political contribution policies and procedures help ensure that our participation in the political process does not harm our brand or reputation. 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, under U.S. federal law FedEx cannot directly support candidates for federal office, so we do not. While some states allow corporate contributions to state and local candidates or ballot issue campaigns, it is our policy not to make such contributions. We also do not make independent expenditures.
In addition, FedEx 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, the Democratic and Republican presidential and state gubernatorial inaugural committees, 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 and Regulatory Affairs, in consultation with appropriate members of FedEx senior management, and are made without regard to the personal political preferences of individual FedEx Board members, officers, and employees.
FedEx also provides an opportunity for its employees to participate in the political process by joining FedEx’s non-partisan political action committee (“FedExPAC”). 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 the 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.
|
92 | | |
Table of Contents
Stockholder Proposals – Proposal 5 – Report on Alignment Between Company Values and Electioneering Contributions
FedEx is already subject to extensive federal, state, and 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 at lobbyingdisclosure.house.gov/. Moreover, FedExPAC’s activities are subject to comprehensive regulation by federal, state, and local governments, including detailed disclosure requirements, which include monthly reports filed with the Federal Election Commission. These reports are publicly available at fec.gov and include an itemization of FedExPAC’s receipts and disbursements, including any political contributions, over a certain amount.
We also 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.
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. 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.
The Board believes the expanded disclosure requested in this proposal could place FedEx at a competitive disadvantage by revealing our 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 benefit those parties while harming the interests of FedEx and our stockholders. The Board believes 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).
In short, we believe our current policies and procedures governing political contributions adequately protect our corporate brand, values and reputation, while allowing FedEx to actively and effectively participate in the political process with the ultimate goal of promoting and protecting the best interests of the company and our stockholders and employees. 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 given the level of detail it seeks and the complexity of the political advocacy process, 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.
20212022 Proxy Statement | | 93109 |
Table of Contents Stockholder Proposals – Proposal 6 – Lobbying ActivityReport on Alignment Between Company Values and Expenditure ReportElectioneering Contributions  | Proposal 6
Lobbying ActivityReport on Alignment Between Company
Values and Expenditure ReportElectioneering Contributions | |
| |  | Your Board of Directors recommends that you vote “AGAINST” this proposal. | 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, and As You Sow, 2150 Kittredge Street, Suite 450, Berkeley, California 94704, on behalf of The George Gund Foundation, the beneficial owner of 11,230 shares of FedEx common stock, intend to present the following proposal for consideration at the annual meeting:
“Whereas, 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 stockholders’ best interests.
Resolved, the stockholders of FedEx request the preparation 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 any tax-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.
The report shall be presented to the Nominating & Governance Committee and posted on FedEx’s website.
Supporting Statement:
FedEx spent over $142 million on federal lobbying from 2010 - 2020. This does not include state lobbying expenditures, where FedEx lobbies but disclosure is uneven or absent. For example, FedEx spent $2.89 million lobbying in California from 2010 - 2020.
FedEx sits on the board of the Chamber of Commerce and also belongs to the Business Roundtable (BRT), which have together spent over $2.0 billion on lobbying since 1998. FedEx does not disclose its memberships in, or payments to, trade associations and social welfare organizations, or the amounts used for lobbying, including grassroots. Grassroots lobbying does not get reported at the federal level under the Lobbying Disclosure Act, and disclosure is uneven or absent in states. And FedEx does not disclose its support for the American Legislative Exchange Council (ALEC).
We are concerned FedEx’s lack of lobbying disclosure presents reputational risks when its lobbying contradicts company public positions. For example, FedEx publicly supported COVID-19 efforts, but the Chamber lobbied against use of the Defense Production Act for production of personal protective equipment for workers.1 FedEx has drawn scrutiny for its public support for climate sustainability juxtaposed against the Chamber’s lobbying on climate regulation.2 And FedEx signed the BRT Statement on the Purpose of the Corporation, yet also attended the ALEC annual conference reportedly “to work in secret with lawmakers on bills to promote fossil fuels and bust unions.”3
We believe the reputational damage stemming from these misalignment harms long-term value creation. Thus, we urge FedEx to expand its lobbying disclosure.”
____________________
|
FedEx is not responsible for the content of this stockholder proposal or supporting statement. FedEx has been notified that Clean Yield Asset Management, PO Box 874, 16 Beaver Meadow Road, Norwich, Vermont 05055, on behalf of Rachel Ann Hexter-Fried, the beneficial owner for at least three years of shares of FedEx common stock having a value of at least $2,000, intends to present the following proposal for consideration at the annual meeting: “Whereas: Proponents believe FedEx should establish policies and reporting systems that minimize risk to the firm’s reputation and brand by addressing possible missteps in corporate electioneering and political spending that contrast with our company’s stated values. Following the January 6, 2021, attack on the Capitol, FedEx stated “We condemn the violence that occurred in Washington, D.C., and fully support the results of the U.S. general election.” Yet FedEx subsequently contributed $58,500 to 27 members of Congress who challenged the certification of the 2020 presidential results that day. (https://bit.ly/33crKM0) Relatedly, in 2020, FedEx contributed to the Republic Attorney Generals Association, two-thirds of whose members signed on to a brief urging the Supreme Court to throw out the 2020 election results from four states, and which ran a robo-calling campaign urging “patriots” to “march to Congress” and “stop the steal.” A number of companies and organizations discontinued their affiliations with the Association, but FedEx’s position has not been communicated. In another example, FedEx supports a number of diversity, equity and inclusion initiatives. FedEx has supported gender diversity by sponsoring a women’s employee resource group and providing maternity leave, financial assistance with adoptions and providing a work-life balance program. Yet based on public data, the proponent estimates that in the 2016-2020 election cycles, FedEx and FedExPAC have made political donations totaling over $4 million to politicians and political organizations working to weaken access to reproductive health care, undermining the ability of employees to manage their fertility. In a communication to employees in June 2020, FedEx CEO George Smith wrote that there is “absolutely no place for racism or unequal treatment anywhere, and we must unequivocally speak out and reject it when we see it.” Yet FedEx supports politicians, a trade association and 527 organizations seeking to enact voting restrictions in Tennessee and elsewhere, which disproportionately target minority voters. In the proponents’ view, this activity diminishes the management’s efforts to champion racial inclusion and equity, which could damage morale, recruitment, retention and brand. Resolved: Shareholders request that FedEx publish an annual report, at reasonable expense, disclosing whether incongruencies between political and electioneering expenditures and company values were identified during the preceding year, and disclosing or summarizing any actions taken regarding pausing or terminating support for organizations or politicians, and the types of incongruent policy advocacy triggering those decisions. Supporting Statement: Proponents recommend that such report also contain management’s analysis of risks to our company’s brand, reputation, or shareholder value of expenditures in conflict with publicly stated company values. “Expenditures for electioneering communications” means spending, from the corporate treasury and from the PACs, directly or through a third party, at any time during the year, on printed, internet or broadcast communications, which are reasonably susceptible to interpretation as in support of or opposition to a specific candidate. Proponents believe that FedEx should incorporate this accountability mechanism into its political contributions policies and reporting systems to achieve greater alignment with policies and initiatives of importance to the firm.” 1110 | https://public-accountability.org/report/unmasked-the-corporations-backing-a-lobbying-campaign-against-the-use-of-the-defense-production-act/. | 2 | https://chamberofcommercewatch.org/the-one-thing-fedex-needs-to-lose/. | 3 | https://readsludge.com/2019/08/27/these-ceos-promised-to-be-socially-responsible-but-their-companies-are-pushing-alecs-right-wing-agenda/. |
94 | | |
Table of Contents Stockholder Proposals – Proposal 6 – Lobbying ActivityReport on Alignment Between Company Values and Expenditure ReportElectioneering Contributions Board of Directors’ Statement in Opposition The Board of Directors and its Nominating & Governance, Safety, and Public Policy Committee have considered this proposal and concluded that its adoption is unnecessary and not 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 contributionsPolicy on Political Contributions (which is available under the ESG heading on the Investor Relations page of our website at investors.fedex.com), we actively participate in the political process and maintain memberships with a variety of trade associations with the ultimate goal of promoting and protecting the economic future of FedEx and our stockholders and employees. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures— but only whereexpenditures, as permitted by applicable law.law, to further the best interests of the company and our stockholders and employees. 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. Participation in the political process and as a member of various trade associations comes with the understanding that we may not always agree with all of the positions of the recipients, organizations, or organizations’ other members. We believe, however, that these recipients take many positions and address many issues of importance to FedEx in a meaningful manner, and the associations take positions and address issues in a collective industry manner and often advance positions consistent with company interests, that will help us provide strong financial returns, enhance long-term stockholder value, and advancefurther the best interests of our employees consistent with our corporate values. When we disagree with a position, we employ a range of approaches to make our voice heard. We believe our dissenting voice has greater impact when we participate as a member of these organizations. We have practicesFedEx provides extensive public disclosures about our participation in placethe political process. Following engagement with our stockholders after our 2021 annual meeting, we enhanced our disclosures about FedEx’s public policy and advocacy and created a new website page to ensurecentralize these disclosures, which is publicly available under the appropriate disclosureESG heading on the Investor Relations page of our website at investors.fedex.com. See “Corporate Governance Matters — The Board’s Role and Responsibilities — Stockholder Engagement — Board Responsiveness to 2021 Nonbinding Stockholder Proposals” on page 34. This information includes:
| our policies and procedures governing our participation in the political process, including our Policy on Political Contributions; | | a discussion of management’s decision-making processes relating to lobbying and political activities and Board oversight of our lobbying and political activities and expenditures; | | an overview of our perspective on public policies and the issues on which we engage; | | a discussion of the manner in which we participate in the political process, including our process for alignment of our legislative and regulatory priorities with FedEx’s overall business objectives; | | information on our U.S. federal and state lobbying activities, including links to the quarterly reports we file with the U.S. House of Representatives and the U.S. Senate disclosing a list of our lobbying activities and information on how to access lobbying disclosure reports filed with the Secretary of State of each of the U.S. 50 states and the District of Columbia; | | information on the FedEx non-partisan political action committee (“FedExPAC”), including links to the monthly and year-end reports filed by FedExPAC with the Federal Election Commission; | | a discussion of our participation and membership in trade associations, including the reasons we believe it is important to maintain memberships with a variety of trade associations and industry organizations; our process for evaluating our trade association memberships; Board oversight of our membership in trade associations; and information on the trade associations receiving $50,000 or more in annual payments from FedEx; and | | a list of our corporate contributions to groups organized under section 501(c)(4) or section 527 of the Internal Revenue Code. |
Table of Contents Stockholder Proposals – Proposal 6 – Report on Alignment Between Company Values and Electioneering Contributions These extensive disclosures provide transparency and accountability with respect to our lobbying and political activities. activities and expenditures. The report requested by the proposal would require a duplication of efforts and inefficient use of resources with no meaningful additional information provided to our stockholders. Our political contribution policies and procedures support our brand and reputation. 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, under U.S. federal law FedEx cannot directly support candidates for federal office, so we do not. While some states allow corporate contributions to state and local candidates or ballot issue campaigns, it is our policy not to make such contributions. We also do not make independent expenditures. In addition, FedEx 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, the Democratic and Republican presidential and state gubernatorial inaugural committees, and the annual conferences of the Democratic and Republican Governors Associations. Contributions to groups organized under section 501(c)(4) or section 527 of the Internal Revenue Code are disclosed on our website. 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 and Regulatory Affairs, in consultation with appropriate members of FedEx senior management, and are made without regard to the personal political preferences of individual FedEx Board members, officers, and employees. FedEx is already subject to extensive federal, state, and 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 at lobbyingdisclosure.house.gov/.
We also 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.
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.
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.
Table of Contents
Stockholder Proposals – Proposal 6 – Lobbying Activity and Expenditure Report
FedEx also provides an opportunity for its employees to participate in the political process by joining FedEx’s non-partisan political action committee (“FedExPAC”). FedExPAC allows our employees to pool their financial resources to support federal, state, and local candidates, campaigns, and committees.the FedExPAC. 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 the 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’sWe have governance practices in place, including Board oversight, to ensure effective oversight of our lobbying and political activities are subjectand expenditures. We have in place effective reporting and compliance procedures designed to comprehensive regulation by federal, state, and local governments, including detailed disclosure requirements, which include monthly reports filed with the Federal Election Commission. These reports are publicly available at fec.gov and include an itemization of FedExPAC’s receipts and disbursements, including anyensure that our political contributions overare 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 certain amount.
member. Our independent Governance, Safety, and Public Policy Committee assists the Board of Directors in overseeing FedEx’s political activities and expenditures. In 2022, the Board changed the name of this Committee to more fully reflect its oversight responsibility with respect to FedEx’s participation in the political process. The Board believes the expanded disclosure requested in this proposal could place FedEx at a competitive disadvantage by revealing ourCommittee reviews and discusses with FedEx’s Executive Vice President, General Counsel and Secretary (1) public policy, political, and legislative trends and matters that affect or may affect FedEx’s business, performance, strategies, or reputation; (2) FedEx’s political activities and priorities. Because parties with interests adverse to FedEx also participateparticipation in the political process, to their business advantage, any unilateral expanded disclosure, above what is required by lawincluding direct and equally applicable to all similar parties engaged in public debate, could benefit those parties while harming the interests of FedEx and our stockholders. The Board believes 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). In short, we believe this proposal is duplicative and unnecessary, as a comprehensive system of reporting and accountability forindirect political contributionsspending and lobbying activities and expenditures; (3) FedEx’s contributions to trade associations and other tax-exempt organizations that engage in political activities; (4) the steps management has taken to identify, assess, and manage risks relating to the company’s political activities and expenditures; and (5) FedEx’s reporting of its political activities and expenditures. The Committee also periodically reviews and discusses with management our Policy on Political Contributions and approves any changes to this policy.Given these governance structures, policies, and mandatory compliance and public disclosure requirements, the Board has concluded that ample oversight and public information exist regarding FedEx’s political and lobbying activities and expenditures already exists. If adopted,to alleviate 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 given the level of detail it seeks and the complexity of the political advocacy process, without commensurate benefit to our stockholders.concerns cited in this proposal. 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.
96112 | | |
Table of Contents Stockholder Proposals – Proposal 7 – Assessing Inclusion in the WorkplaceLobbying Activity and Expenditure Report  | Proposal 7
Assessing Inclusion in the WorkplaceLobbying Activity and
Expenditure Report | | | | |
× | Your Board of Directors recommends that you vote “AGAINST” this proposal. |
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 for at least three years of shares of FedEx common stock having a value of at least $2,000, intends to present the following proposal for consideration at the annual meeting: “Whereas, full disclosure of FedEx’s lobbying activities and expenditures to assess whether its lobbying is consistent with FedEx’s expressed goals and stockholder interests. Resolved, the stockholders of FedEx request the preparation 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 any tax-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. The report shall be presented to the Nominating & Governance Committee and posted on FedEx’s website. Supporting Statement: FedEx spent over $151 million on federal lobbying from 2010 - 2021. This does not include state lobbying, where disclosure is uneven or absent. For example, FedEx lobbied in at least 36 states in 2021 and spent $3.14 million lobbying in California from 2010 - 2021. And FedEx lobbies abroad, spending between €800,000 – 899,999 on lobbying in Europe for 2020. FedEx fails to disclose its memberships and payments to trade associations and social welfare organizations, or the amounts used for lobbying, including grassroots. Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity. These groups may be spending “at least double what’s publicly reported.”1 FedEx sits on the board of the Chamber of Commerce and belongs to the Business Roundtable, which have together spent over $2.0 billion on lobbying since 1998, and the RATE Coalition, a social welfare organization. FedEx’s memberships drew attention after these groups launched a “massive lobbying blitz” against raising corporate taxes.2 And FedEx does not disclose its support for the American Legislative Exchange Council (ALEC). FedEx’s lack of disclosure presents reputational risks when its lobbying contradicts company public positions. For example, FedEx believes in addressing climate change, yet the Chamber lobbies to undermine climate regulation. FedEx is committed to diversity, yet groups asked FedEx to cut ties with ALEC “because of its voter restriction efforts.”3 And while FedEx has drawn scrutiny for avoiding federal taxes,4 its trade associations are lobbying against raising corporate taxes to fund infrastructure. Last year, this proposal received majority support.” | 1 | https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/. | | 2 | https://www.washingtonpost.com/us-policy/2021/08/31/business-lobbying-democrats-reconciliation/. | | 3 | https://www.thenation.com/article/politics/alec-corporations-democracy/. | | 4 | https://www.commercialappeal.com/story/money/industries/logistics/2021/04/02/fedex-federal-taxes-cares-act-trump-tax-cuts/4851934001/. |
Table of Contents Stockholder Proposals – Proposal 7 – Lobbying Activity and Expenditure Report Board of Directors’ Statement in Opposition The Board of Directors and its Governance, Safety, and Public Policy Committee have considered this proposal and concluded that its adoption is unnecessary and not in the best interests of our stockholders. FedEx provides extensive public disclosures about our participation in the political process. Following engagement with our stockholders after our 2021 annual meeting, we enhanced our disclosures about FedEx’s public policy and advocacy and created a new website page to centralize these disclosures, which is publicly available under the ESG heading on the Investor Relations page of our website at investors.fedex.com. See “Corporate Governance Matters —The Board’s Role and Responsibilities — Stockholder Engagement — Board Responsiveness to 2021 Nonbinding Stockholder Proposals” on page 34. This information includes: | our policies and procedures governing our participation in the political process, including our Policy on Political Contributions; | | a discussion of management’s decision-making processes relating to lobbying and political activities and Board oversight of our lobbying and political activities and expenditures; | | information on our U.S. federal and state lobbying activities, including links to the quarterly reports we file with the U.S. House of Representatives and the U.S. Senate disclosing a list of our lobbying activities and information on how to access lobbying disclosure reports filed with the Secretary of State of each of the U.S. 50 states and the District of Columbia; | | information on the FedEx non-partisan political action committee (“FedExPAC”), including links to the monthly and year-end reports filed by FedExPAC with the Federal Election Commission; | | a discussion of our participation and membership in trade associations, including the reasons we believe it is important to maintain memberships with a variety of trade associations and industry organizations; our process for evaluating our trade association memberships; Board oversight of our membership in trade associations; and a list of the trade associations receiving $50,000 or more in annual payments from FedEx; and | | a list of our corporate contributions to groups organized under section 501(c)(4) or section 527 of the Internal Revenue Code. |
These extensive disclosures provide transparency and accountability with respect to our lobbying and political activities and expenditures. The report requested by the proposal would require a duplication of efforts and inefficient use of resources with no meaningful additional information provided to our stockholders. We have governance practices in place, including Board oversight, to ensure effective oversight of our lobbying and political activities and expenditures. 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. Our independent Governance, Safety, and Public Policy Committee assists the Board in oversight of FedEx’s political activities and expenditures. In 2022, the Board updated the name of this Committee to more fully reflect its oversight responsibility with respect to FedEx’s participation in the political process. The Committee reviews and discusses with FedEx’s Executive Vice President, General Counsel and Secretary (1) public policy, political, and legislative trends and matters that affect or may affect FedEx’s business, performance, strategies, or reputation; (2) FedEx’s political activities and participation in the political process, including direct and indirect political spending and lobbying activities and expenditures; (3) FedEx’s contributions to trade associations and other tax-exempt organizations that engage in political activities; (4) the steps management has taken to identify, assess, and manage risks relating to the company’s political activities and expenditures; and (5) FedEx’s reporting of its political activities and expenditures. The Committee also periodically reviews and discusses with management our Policy on Political Contributions and approves any changes to this policy. 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 on Political Contributions (which is available under the ESG heading on the Investor Relations page of our website at investors.fedex.com), we actively participate in the political process and maintain memberships with a variety of trade associations with the ultimate goal of promoting and protecting the economic future of FedEx and our stockholders and employees. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures. FedEx’s political contributions and expenditures are made to further the best interests of the company and our stockholders and employees, and are made without regard to the personal political preferences of individual FedEx Board members, officers, and employees. | 114 | |
Table of Contents Stockholder Proposals – Proposal 7 – Lobbying Activity and Expenditure Report Participation in the political process and as a member of various trade associations comes with the understanding that we may not always agree with all of the positions of the recipients, organizations, or organizations’ other members. We believe, however, that these recipients take many positions and address many issues of importance to FedEx in a meaningful manner, and the associations take positions and address issues in a collective industry manner and often advance positions consistent with company interests, that will help us provide strong financial returns, enhance long-term stockholder value, and further the best interests of our employees consistent with our corporate values. When we disagree with a position, we employ a range of approaches to make our voice heard. We believe our dissenting voice has greater impact when we participate as a member of these organizations. Additional disclosure is unnecessary. The Board has concluded that ample oversight and public information regarding FedEx’s lobbying activities and expenditures and governance over our participation in the political process already exists to alleviate the concerns cited in this proposal. 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.
Table of Contents Stockholder Proposals – Proposal 8 – Assessing Inclusion in the Workplace | Proposal 8
Assessing Inclusion in the Workplace | |
| Your Board of Directors recommends that you vote “AGAINST” this proposal. |
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, PO Box 301840, Boston, Massachusetts 02130, the beneficial owner for at least three years of 362 shares of FedEx common stock having a value of at least $2,000, intends to present the following proposal for consideration at the annual meeting: “Assessing Inclusion in the Workplace WHEREAS: FedEx’s 2021 ESG Report states that “diversity starts at the top,” but people of color are underrepresented in management and overrepresented in roles with lower pay and mobility. According to our analysis of FedEx’s 2020 EEO-1 Report, Black and Latinx employees comprise 61% of “laborers & helpers,” but only 15% of executives/senior manager roles. While FedEx’s ESG Report says its U.S. workforce is 55% diverse, only one leadership team has a Black employee (as of April 2022) despite being headquartered in a “black-majority city”1; Furthermore, upsetting accusations have come to light, including a 2020 allegation that FedEx wrongfully terminated two Black drivers who faced a customer’s racist tirade and a 2022 allegation that a Black driver was told to complete his route after being chased and shot at while making deliveries; This evidence signals the need to assess structural racism in corporate culture. FedEx describes newly piloted or initiated diversity programs, but has not addressed structural racism’s influence; “Structural racism is the overarching system of racial bias across institutions and society. These systems give privileges to white people resulting in disadvantages to people of color,” thereby imposing a cultural hierarchy among racial groups; The 2 Harvard Business Review explains that “[c]ompanies must confront racism at a systemic level – addressing everything from the structural and social mechanics of their own organizations to the role they placeplay in the economy at large”3;
A 2020 Citigroup study foundAuthor Ibram X. Kendi explains: “every policy in every institution in every community in every nation is producing or sustaining either racial inequity or equity…” existing both in “written and unwritten laws, rules, procedures, processes, regulations, and guidelines that since 2000 the U.S. gross domestic product (GDP) has lost $16 trillion as a result of discrimination against African Americansgovern people”4;
Corporate culture can include “values, norms, conventions, shared beliefs, customs, traditions, symbols, rituals, knowledge, ideology, identities, and that reversing discriminatory practices could boost U.S. GDP by $5 trillion in the next five years; Tema Okun, a veteran racial justice facilitator, illustrates the insidious nature of white supremacist culture by explaining that “[c]ulture is powerful precisely because it is so present and at the same time so very difficult to name or identify.shared mental models.” Cultural racism can manifest as people of color being ignored, overly criticized, undermined, or assumed as inferior; strict cultural norms or criticisms of certain hairstyles, manners of speech, or other physical appearances. Cultural racism can do long-term emotional and psychological damage;
While FedEx’s Global Citizenship Report indicates that the company seeks to develop a “culturally competent workplace,” including offering affinity groups, the Proponent remains concerned by the company’s limited evaluation of systemic racism in company culture. The Proponent notes that only 34% of new hires are women and at the senior leadership level only 23% are female. While new hire data isn’t disaggregated by diversity, only 34% of leadership staff are people of color;
Shareholders are especially concerned given that in May 2020 FedEx faced allegations of wrongful termination of two Black drivers who faced a racist tirade from a customer in Georgia. One of those drivers’ attorneys stated in a video interview that FedEx needs “cultural sensitivity training by … NAACP and others”;
Proponents5 We believe that our company can advance long-term value creation could be advanced through an analysis of whether and how systemic racism is embedded in company culture,written and unwritten policies and procedures.norms.
RESOLVED: Shareholders urgerequest the Board of Directors to prepare a report to shareholders onoversee an independent third-party audit analyzing whether written policies or unwritten norms at the CompanyFedEx reinforce racism in company culture.culture, and report to shareholders on any planned remedies. SUPPORTING STATEMENT: The report should be prepared within one year,eighteen months, at reasonable cost and excluding proprietary and privileged information. The Boardinformation or admissions or strategy relevant to pending litigation, and, in the discretion of the board, is encouraged to assessinclude assessment of whether CompanyFedEx policies or unwritten norms: | 1. | Yield inequitable outcomes for employees based on race andor ethnicity insuch as patterns of hiring, and retention, promotion, and upward mobility, disciplinary action, allocation of “stretch assignments” (projects intended to develop employee skills and abilities), formal or employeeinformal sponsorship, or usage of benefits; | | | | | 2. | Consider “cultural fit” rather than capabilities or create “prove it again” biases (wherein employees of color are forced to prove their capabilities repeatedly); | | | | | 3. | Establish a cultural hierarchy through permitting racial microaggressions (behaviors that stereotype or belittle a minority group), create perceived pressure to use “whitened” names rather than birth names,code-switch (behavioral adjustments used to adopt “white-centric” physical appearance standards in hair style, body artnavigate interracial interactions), or modifications, and facial hair styles, or to avoid traditional attire and religious head coverings.otherwise suppress cultural identity.” |
| 1 | https://www.brookings.edu/research/the-rise-of-black-majority-cities/ | | 2 | https://nmaahc.si.edu/learn/talking-about-race/topics/being-antiracist | | 3 | https://hbr.org/2020/06/confronting-racism-at-work-a-reading-list | | 4 | https://www.penguin.co.uk/articles/2020/june/ibram-x-kendi-definition-of-antiracist.html | | 5 | https://ssrn.com/abstract=3946604 |
| 116 | |
Table of Contents Stockholder Proposals – Proposal 78 – Assessing Inclusion in the Workplace Board of Directors’ Statement in Opposition The Board of Directors and its Compensation and Nominating &Human Resources and Governance, Safety, and Public Policy Committees 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, equity, and inclusion (“DEI”). Our greatest asset is our people. We believe that DEI delivers a better future for all team members, customers, suppliers, and communities. 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 of the fact that FedEx is consistently recognized as one of the world’s most admired and inclusive companies and as one of the best places to work. For example: | FedEx ranked 16th in FORTUNE magazine’s 2021 “World’s Most Admired Companies” list — the 21st consecutive year we have been ranked in the top 20 on the list; | | FedEx was named to Forbes’ “Best Employers for Diversity” list in 2019 and 2021; | | FedEx was named to the National Business Inclusion Consortium’s “Best of the Best Corporations for Inclusion” list in 2020; | | FedEx was named to FORTUNE magazine’s and the Great Place to Work Institute’s “Best Workplaces for Diversity” list in 2019; and | | FedEx was named to Black Enterprise magazine’s 2018 list of the “50 Best Companies for Diversity.” |
As reflected in our Code of Conduct (which is available under the ESG heading on the Investor Relations page of our website at 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. DEI and respect are core FedEx values that foster acceptance, promote anti-biases, and encourage a more inclusive society. Our company was founded on a people-first philosophy, and respect for each individual is an everyday business practice.
We continually work to make FedEx a diverse, inclusive, equitable, and growth-focused workplace where all team members have the opportunity to flourish. The most important outcomes of our DEI efforts have been the opportunities created for our team members to grow and advance their careers. We are fully committed to attractingactively invest in recruiting, developing, and retaining a diverse workforce that is as diverse asreflects the worldcommunities we serve. In short, we believe that supporting DEI is a smart business practice that fosters innovation and makes FedEx a more competitive company and, more important, is the right thing to do. For additional information regarding our commitment to DEI, see our 20212022 ESG Report, which can be found at fedex.com/en-us/sustainability/reports.html, and our DEI webpage at fedex.com/en-us/about/diversity-inclusion.htmldiversity-inclusion.html..
Creating and maintaining a diverse, equitable, and inclusive workplace has been a foundational practice at FedEx and we are committed to continuous improvement. At FedEx,as represented by our employment policies and practices are designed to promote fairness and respect for each individual. We recruit, hire, evaluate, compensate, and promote our employees, and engage contractors, based on their qualifications and performance. As stated in our Code of Conduct and Equal Opportunity and Anti-Harassment statement, we are committed to equal opportunity, fairness, respect, and inclusion and do not tolerate discrimination or harassment based on race, color, ethnicity, national origin, religion, sex, age, genetic information, citizenship, disability, marital status, pregnancy, sexual orientation, gender identity, gender expression, veteran status, or any other characteristic protected under national, state, or local laws.leadership. Diversity at FedEx starts at the top. The FedEx Board of Directors currently includes elevenfourteen directors, fourfive of whom are women and threefour of whom are ethnically diverse. As of the end of fiscal year 2020,2022, FedEx senior management, which includes 23 individuals comprising the executive officers of FedEx Corporation and executive and regional leadership of FedEx’s operating companies, includes eight women (34%) and seven racially or ethnically diverse individuals (30%). As of the end of fiscal 2021, women represented 25%27% of FedEx management employees globally, while 38%41% of management employees in the U.S. were minorities. In furtherance of our efforts towards continued transparency regarding our workforce composition, beginning in calendar year 2021, we nowminorities, with both percentages representing an increase from fiscal 2020. We report the prior year gender, racial, and ethnic composition of our U.S. workforce by EEO-1 job category as set forth in the consolidated EEO-1 Reports filed by FedEx and its operating subsidiaries with the Equal Employment Opportunity Commission. These reports can be found on our DEI webpage at fedex.com/en-us/about/diversity-inclusion.htmldiversity-inclusion.html.. FedEx values feedback fromOur DEI initiatives create opportunities for our team members to grow and we provide several avenues to listen and engage with our team, including annual surveys, employee networks, and direct feedback. Our annual engagement surveys measure employee satisfaction regarding culture, engagement, and diversity. The results of these surveys are shared with senior leaders to inform leadership development plans and additional changes. We continue to evaluate and continuously improve upon ways to hear from all our team members and implement feedback.
We know DEI must always be a work in progress. Our Chairman of the Board of Directors and Chief Executive Officer, Frederick W. Smith, and our President and Chief Operating Officer, Rajesh Subramaniam, have publicly affirmed that “there is absolutely no place for racism or unequal treatment anywhere” and stated that, “[a]s a company and as individuals, we must understand the power of our words and thinking. We should demonstrate empathy and kindness in all our actions and be willing to address these
98advance their careers. | | |
Table of Contents
Stockholder Proposals – Proposal 7 – Assessing Inclusion in the Workplace
topics in and outside of the workplace. The conversation about treating people with respect, dignity, and acceptance is one that is necessary and one we must keep going. And now, more than ever, it is a priority.”
InSince fiscal year 2021, we addedhave included equity toin the title of our enterprise-wide diversity and inclusion efforts, formalizing our commitment to creating a workplace where everyone has fair treatment and equal opportunity to succeed. Each FedEx operating company maintains a dedicated team to support DEI across the company. Representatives from each operating company also participate in our enterprise-wide DEI Corporate Council, where they share best practices and support multicultural programs in the communities we serve. This council aligns to increase business performance, innovation, and employee engagement by fostering a culture of DEI across the enterprise.
During fiscal year 2021, we establishedWe have four consistent, strategic pillars across our enterprise to frame our DEI work and share our progress: Our People; Our Education and Engagement; Our Communities, Customers, and Suppliers; and Our Story. During fiscal 2022, we continued to align our strategy with these pillars by investing in programs, initiatives, and people across our workforce, culture, marketplace, and communities. The most important outcomes of our DEI efforts have been the opportunities created for our team members to grow and advance their careers. We actively invest in recruiting, developing, and retaining a diverse workforce that reflects the communities we serve.
As part of the “Our People” DEI strategic pillar, our operating companies, in cooperation with key organizations, are working to advance opportunities for team members from a variety of backgrounds to build a workforce reflective of the world and the communities we serve. For example: | FedEx participated in seven enterprisefive enterprise-wide recruitment events focused on increasing the diversity of our external applicant pools with the National Black MBA Association, the Society for Women Engineers, Hiring Our Heroes, the Society of Hispanic Professional Engineers, the National Society of Black Engineers,and the Society of Asian Scientists and Engineers and others in fiscal year 2021; | | Our operating companies reviewed and updated several policies in fiscal year 2021 in support of our DEI strategy; | | FedEx Express createdlaunched OnDeck, a Global DEI Governing Boardtraining and development program that provides frontline workers with skills to oversee DEI efforts throughout the FedEx Express operating company in fiscal year 2020 and launched a review of current selection policy and processes to identify opportunities to increase diversity in staff groups andprepare for management positions in fiscal year 2021;roles; | | FedEx Ground launched anGround’s internal workforce development program — program—Purple Pathways — focused on developing the skillsPathways—which targets career growth and knowledge forengagement of our frontline managers and package handlers, our most diverse employee populations, front-line managers, and package handlers inpopulation, registered 11,000 employees as of the end of fiscal year 2021; | | FedEx Freight facilitated twocontinues to facilitate career-readiness outreach events called “The Boardroom Experience” at historically black colleges and universities (“HBCUs”) in fiscal year 2019;to introduce Black, Hispanic, and other students of color to career possibilities at FedEx; |
| 117 |
Table of Contents Stockholder Proposals – Proposal 8 – Assessing Inclusion in the Workplace | FedEx Services collaborated with its DEI team through the “College Connections” internship program builds relationships with college campuses in close proximity to main FedEx Services geographies to effectively compete for talent and ensure the pipeline of students coming into FedEx summer internships is as diverse as possible and, in fiscal year 2019,with over 50% minority representation in our internship program was 50%;in each of fiscal 2019, 2020, and 2021; and | | In fiscal year | | Since 2019, FedEx Logistics launchedhas operated a first-of-its kindfirst-of-its-kind program at Mississippi Valley State University, an HBCU, which included opening a satellite office on the campus staffed by qualified students.students to provide professional opportunities and build a pipeline of talent to support its industry-leading customs brokerage operations. |
Under the “Our Education and Engagement” pillar, we seek to continue to enrich, expand, and enhance our culture by increasing DEI education for team members through our DEI education platform. Examples include online micro-learning DEI content available to team members across our operating companies covering subjects such as unconscious bias. We also launched a speaker series called “Real Talk” for global officers and directors thatdesigned to foster acceptance, promote anti-biases, and encourage a more inclusive society. The series covers topics such as allyship, unconscious bias, and courageous conversations. Additionally, under the “Our Communities, Customers, and Suppliers” pillar we continue to contribute to non-profit organizations working on DEI in business and the community and make contributions to scholarships and leadership development programming through several scholarship funds, including the American Indian College Fund, APIA (Asian and Pacific Islander American) Scholars, Hispanic Scholarship Fund, the Thurgood Marshall College Fund, and the United Negro College Fund. FedEx continuesfunds. We contributed more than $7 million to support HBCUs through endowed scholarships and pledgednon-profit organizations focused on supporting DEI in fiscal year 2021 to donate $5and provide more than $1 million to four HBCUs near our home baseannually for leadership development programs in Memphis, Tennessee. A portion of this multi-year commitmentthe U.S., mainly through seven scholarship funds. In fiscal 2022 we launched the FedEx–HBCU Student Ambassador Program, which will provide relief support to help students, faculty, and staff who suffered adverse economic impacts due to the COVID-19 pandemic. The schools will use the funds to help prepare students for the workforce beyond formal education.at HBCUs to be future leaders by interacting with FedEx executives and building leadership and career-ready skills. Through the “Our Story” pillar, FedEx is working to amplify the stories of our team members, celebrate differences and promote and strengthen DEI efforts across our enterprise. We launched ourOur virtual DEI Depot is an enterprise-wide online platform created to increase awareness of DEI-relatedwhere team members can access DEI resources, events, and team member stories across our operating companies.stories. Additionally, we distribute a quarterly newsletter focused on ongoing DEI initiatives and insights for managers to encourage DEI within FedEx teams. Our DEI efforts use employee engagement and feedback to inform and promote equity and inclusion practices. FedEx values feedback from our team members and we provide several avenues to listen and engage with our team, including annual surveys, employee networks, and direct feedback. Our annual engagement surveys measure employee perspectives on culture, engagement, and diversity. All surveys included DEI questions in fiscal 2021, such as “I am treated with respect and dignity at work” (88% average favorability rating) and “FedEx has an environment where people of diverse backgrounds are welcome” (86% average favorability rating), to capture team member perspectives on inclusion in the workplace. FedEx Ground, our most diverse employee population, also added DEI as a standard goal in the fiscal 2022 team member annual performance review process. The results of these surveys are shared with senior leaders to inform leadership development plans and additional changes. We continue to evaluate and continuously improve upon ways to hear from all our team members and implement feedback. Our Board and its Compensation and Human Resources Committee provide strong oversight of our culture and DEI strategies and programs. Our Board of Directors is responsible for reviewing and overseeing our culture and evaluating management’s efforts to align corporate culture with our stated values and long-term strategy. In addition, the Board has delegated to the Compensation and Human Resources Committee responsibility for the oversight of specificcertain aspects of our corporate culture. Specifically, the Compensation and Human Resources Committee reviews and discusses with management the company’s key human resource management strategies and programs, including DEI initiatives and workforce demographics. In fiscal 2022, the Board changed the name of this committee from “Compensation Committee” to “Compensation and Human Resources Committee” to more fully reflect its oversight responsibility with respect to our key human resource management strategies and programs. The requested audit and report would impose an unnecessary burden and expense on FedEx with limited, if any, benefit to our stockholders or employees. As previously stated, we already have in place comprehensive and effective policies and practices that promote DEI, equal and fair employment, and respect in the workplace. Furthermore, the audit and 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 and would divert resources that could be otherwise be used on our ongoing DEI initiatives. For these reasons, adoption of this proposal is 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. 2021 Proxy Statement118 | | 99 |
Table of Contents Stockholder Proposals – Proposal 79 – Assessing Inclusion in the Workplace The requested report would impose an unnecessary burden and expense on FedEx with limited, if any, benefit to our stockholders or employees. As previously stated, we already have in place comprehensive and effective policies and practices that promote DEI, equal and fair employment, and respect in the workplace. 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 and would divert resources that could be otherwise be used on our ongoing DEI initiatives.
For these reasons, adoption of this proposal is 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.
|
100 | | |
Table of Contents
Stockholder Proposals – Proposal 8 – Shareholder Ratification of Termination PayReport on Climate Lobbying
| Proposal 89
Shareholder Ratification of Termination PayReport on Climate Lobbying | | | | |
 | Your Board of Directors recommends that you vote “AGAINST” this proposal. |
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,United Church Funds, 475 Riverside Drive, Suite 1020, New York, New York 10115, the beneficial owner for at least one year of 25 shares of FedEx common stock intendshaving a value of at least $25,000, and The Pension Boards –UCC, Inc., 475 Riverside Drive, Suite 1020, New York, New York 10115, as co-filer, the beneficial owner for at least one year of shares of FedEx common stock having a value of at least $25,000, intend to present the following proposal for consideration at the annual meeting: “Proposal 8 – Shareholder Ratification of Termination PayRESOLVED : Shareholders request that the Board seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination paymentsDirectors conduct an evaluation and issue a report (at reasonable cost, omitting proprietary information) describing if, and how, FedEx Corporation’s (“FedEx”) lobbying and policy influence activities (including direct and indirect forms) align with an estimated value exceeding 2.99 times the sumgoal of the executive’s base salary plus target short-term bonus.Paris Agreement to limit average global warming to 1.5 degrees Celsius (1.5°C) above pre-industrial levels, and how FedEx plans to mitigate the risks presented by any misalignment. Such an assessment should examine the underlying actions taken, in both direct and indirect lobbying, and not rely on publicly stated positions solely to determine alignment with the Paris Agreement’s goals. “SeveranceSUPPORTING STATEMENT
In an April 2022 global assessment, the Intergovernmental Panel on Climate Change1 makes it quite clear that nations and fossil-fuel users have fallen short2 to limit global warming to just 1.5°C, and that such a goal is now almost entirely out of reach unless sudden and dramatic changes are implemented to limit fossil fuel use, re-envision energy and transport systems, and re-think land use. Society now has a 6 to 10% chance of meeting this scenario, an additional study noted.3 While corporations are not solely responsible for rising global temperatures, many high-emitting companies have spent years, or termination payments” include cash, equitydecades, intervening in regulatory and policy discussions--through direct lobbying, trade association involvement, and support for policy-focused organizations--to delay global rules that would enable a less disruptive energy transition. Companies therefore have a critical role to play in reversing this course. Of particular concern are trade associations and other policy organizations that speak for business but too often present major obstacles to addressing the climate crisis. Some companies rely on such entities to launch public relations campaigns to hamper climate progress, and then disassociate those efforts by noting that ‘companies don’t always agree with their trade associations on every issue.’ Corporate lobbying that is inconsistent with the Paris Agreement poses escalating material risks to investors, including growing systemic risks to our financial systems, as delays in curbing greenhouse gases increase the physical risks from extreme weather, threaten regional economic stability, and heighten volatility in investment portfolios.4 As investors, we view fulfillment of the Paris Agreement’s goal as an imperative to discharging our fiduciary duties, as climate scenarios of 3-4°C or more are unacceptable and uninvestable. While FedEx has committed to carbon neutrality by 2040 for its operations (including purchasing zero-emissions vehicles for portions of its fleet), it is unclear how FedEx takes account of (if at all) its trade associations or other compensationforms of policy influence. FedEx does not comprehensively disclose its trade association involvement,5 nor nonprofit memberships or other forms of lobbying. In its latest CDP response, FedEx noted that is paid out or vests due tothe US Chamber of Commerce (which nonprofit Influence Map scores as misaligned with the Paris Agreement6) had a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, and change-in-control clauses“mixed” climate record with itself, but did not provide analysis of what that meant.7” | 1 | https://report.ipcc.ch/ar6wg3/pdf/IPCC_AR6_WGIII_SummaryForPolicymakers.pdf | | 2 | https://www.gov.uk/government/news/window-for-climate-action-closing-fast; | | 3 | https://www.nature.com/articles/s41586-022-04553-z | | 4 | https://www.occ.gov/news-issuances/speeches/2021/pub-speech-2021-116.pdf?source=email | | 5 | https://www.reuters.com/business/fedex-investors-approve-ceo-fred-smiths-pay-2021-09-27/ | | 6 | https://influencemap.org/report/The-US-Chamber-of-Commerce-and-its-Corporate-Members-on-Climate-17631; https://lobbymap.org/influencer/US-Chamber-of-Commerce/projectlink/US-Chamber-of-Commerce-In-Climate-Change | | 7 | https://www.fedex.com/content/dam/fedex/us-united-states/sustainability/2021/FedEx2021CDPClimateChangeResponse.pdf |
Table of Contents Stockholder Proposals – Proposal 9 – Report on Climate Lobbying Board of Directors’ Statement in long-term equity plans, but not life insurance, pension benefits, or deferred compensation earned and vested prior to termination. “Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not vested under a plan generally available to management employees; post-employment consulting fees or office expense; and equity awards if vesting is accelerated, or a performance condition waived, due to termination.Opposition
The Board shall retainof Directors and its Governance, Safety, and Public Policy Committee have considered this proposal and concluded that its adoption is unnecessary and not in the optionbest interests of our stockholders. FedEx is a leader in sustainability and has announced a goal to seek shareholder approval after material terms are agreed upon. Generous performance-based paytake our global operations carbon neutral by 2040. FedEx is a leader in sustainability, and we remain steadfast in our commitment to minimize the impacts our business has on the environment. In March 2021, we announced our goal to achieve carbon neutral operations by 2040 across our global operations’ Scope 1 and 2 emissions and our Scope 3 contracted transportation greenhouse gas (GHG) emissions. This goal is ambitious, given our industry and scale, and is in the spirit of alignment with the net-zero ambitions of the Paris Agreement. Our 2022 ESG Report, which can be good but shareholder ratificationfound at fedex.com/en-us/sustainability/reports.html, and our other sustainability disclosures, which can be found at fedex.com/en-us/sustainability.html, provide extensive disclosures regarding our 2040 goal, our path towards achievement of “golden parachute” severance packagesthis goal, and our progress. In April 2021, we issued the first sustainability bond by a North American transportation and logistics company to further our commitment to carbon neutrality. FedEx is a member of the First Movers Coalition, a partnership between The World Economic Forum and U.S. Department of State, that serves as a platform for businesses around the world to leverage their collective purchasing power to send a firm market demand for the emerging technologies essential for a net-zero transition.
FedEx works with various government and industry organizations to advocate for policies that enable FedEx to connect the world in resourceful and responsible ways, including policies related to climate change. Upon occasion, the views of FedEx are not completely aligned with those of other members in external organizations in which we hold membership. In those instances, we strive to engage and foster innovation and improve the transportation sector’s environmental, social, and business performance. Our 2021 CDP Response, available at fedex.com/content/dam/fedex/us-united-states/sustainability/2021/ FedEx2021CDPClimateChangeResponse.pdf, includes disclosures regarding our discussions with trade associations on climate change and how we have influenced, or attempted to influence, positions taken by individual trade associations. FedEx provides extensive public disclosures about our participation in the political process. Following engagement with our stockholders after our 2021 annual meeting, we enhanced our disclosures about FedEx’s public policy and advocacy and created a total cost exceeding 2.99 times base salary plus target bonus better aligns management paynew website page to centralize these disclosures, which is publicly available under the ESG heading on the Investor Relations page of our website at investors.fedex.com. See “Corporate Governance Matters — The Board’s Role and Responsibilities — Stockholder Engagement — Board Responsiveness to 2021 Nonbinding Stockholder Proposals” on page 34. This information includes: | our policies and procedures governing our participation in the political process, including our Policy on Political Contributions; | | an overview of our perspective on public policies and the issues on which we engage, including sustainability; | | a discussion of the manner in which we participate in the political process, including our process for alignment of our legislative and regulatory priorities with FedEx’s overall business objectives; | | an overview of our climate lobbying activities, including information on our engagement with external organizations on climate change; | | a discussion of management’s decision-making processes relating to lobbying and political activities and Board oversight of our lobbying and political activities and expenditures; | | information on our U.S. federal and state lobbying activities, including links to the quarterly reports we file with the U.S. House of Representatives and the U.S. Senate disclosing a list of our lobbying activities and information on how to access lobbying disclosure reports filed with the Secretary of State of each of the U.S. 50 states and the District of Columbia; and | | a discussion of our participation and membership in trade associations, including the reasons we believe it is important to maintain memberships with a variety of trade associations and industry organizations; our process for evaluating our trade association memberships; Board oversight of our membership in trade associations; and a list of the trade associations receiving $50,000 or more in annual payments from FedEx. |
These extensive disclosures provide transparency and accountability with shareholder interests.respect to our lobbying and political activities and expenditures, including those relating to climate change. The report requested by the proposal would require a duplication of efforts and inefficient use of resources with no meaningful additional information provided to our stockholders. For instance at a company larger than FedEx if the CEO is terminated without cause, whether or not his termination follows a change in control, he will receive an estimated $39 million in termination payments, nearly 7-times his 2019 base salary plus short-term bonus.
A former CEO at this company received an estimated $27 million in separation payments due to his retirement, nearly 5-times his 2018 base salary plus short-term bonus. These payments represented the estimated value of performance-based equity grants covering periods as long as 2-years after his retirement.
ItThe Board believes it is in the best interestinterests 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 shareholdersand attempt to be protected from such lavish $39 million management termination packages for one person.
Please vote yes:
Shareholder Ratification of Termination Pay – Proposal 8”
Board of Directors’ Statement in Opposition120
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 executive compensation program effectively aligns executive and stockholder interests and provides reasonable and appropriate limits on post-termination compensation. 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. See “Executive Compensation — Compensation Discussion and Analysis” above.
We award stock options and restricted stock to create and maintain a long-term economic stake in the company for our executives, thereby aligning their interests with the interests of our stockholders. These equity incentives are also designed to
| |
Table of Contents Stockholder Proposals – Proposal 89 – Shareholder RatificationReport on Climate Lobbying protect FedEx from unreasonable, unnecessary, or burdensome legislative or regulatory actions at all levels of Termination Paygovernment. As more fully described in our Policy on Political Contributions (which is available under the ESG heading on the Investor Relations page of our website at investors.fedex.com), we actively participate in the political process and maintain memberships with a variety of trade associations with the ultimate goal of promoting and protecting the economic future of FedEx and our stockholders and employees. An important part of participating effectively in the political process is making prudent political contributions and focused lobbying expenditures. FedEx’s political contributions and expenditures are made to further the best interests of the company and our stockholders and employees, and are made without regard to the personal political preferences of individual FedEx Board members, officers, and employees. Participation in the political process and as a member of various trade associations comes with the understanding that we may not always agree with all of the positions of the recipients, organizations, or organizations’ other members. We believe, however, that these recipients take many positions and address many issues of importance to FedEx in a meaningful manner, and the associations take positions and address issues in a collective industry manner and often advance positions consistent with company interests, that will help us provide strong financial returns, enhance long-term stockholder value, and further the best interests of our employees consistent with our corporate values. When we disagree with a position, we employ a range of approaches to make our voice heard. We believe our dissenting voice has greater impact when we participate as a member of these organizations offering a balance of perspective. FedEx already provides comprehensive and detailed annual sustainability disclosures. FedEx has reported enterprise-wide GHG emissions publicly since fiscal 2009. FedEx discloses targets for emissions reductions as well as target progress annually. We identify and evaluate physical and transition climate-related risks through our enterprise risk management process and align our assessment and reporting with recommendations from the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures. We believe these disclosures provide stockholders with the information needed to assess our sustainability efforts and progress. We have governance practices in place, including Board oversight, to ensure effective oversight of our sustainability efforts and lobbying and political activities. Our independent Governance, Safety, and Public Policy Committee assists the Board of Directors in oversight of FedEx’s sustainability efforts and political activities and expenditures. In 2022, the Board changed the name of this Committee to more fully reflect its oversight responsibility with respect to these important issues. The Committee reviews and discusses with FedEx’s Executive Vice President, General Counsel and Secretary, the Chief Sustainability Officer, and other members of management our (1) corporate social responsibility goals, strategies, and programs, including with respect to sustainability, and (2) management of sustainability- and climate-related risks. The Committee also has the opportunity to review the annual FedEx ESG Report and progress against sustainability goals. This approach allows us to manage our risks while evaluating our progress towards our sustainability-related goals. The Committee also reviews and discusses with FedEx’s Executive Vice President, General Counsel and Secretary (1) public policy, political, and legislative trends and matters that affect or may affect FedEx’s business, performance, strategies, or reputation; (2) FedEx’s political activities and participation in the political process, including direct and indirect political spending and lobbying activities and expenditures; (3) FedEx’s contributions to trade associations and other tax-exempt organizations that engage in political activities; (4) the steps management has taken to identify, assess, and manage risks relating to the company’s political activities and expenditures; and (5) FedEx’s reporting of its political activities and expenditures. The Committee also periodically reviews and discusses with management our Policy on Political Contributions and approves any changes to this policy. The Board has concluded that ample oversight and public information exist regarding FedEx’s sustainability programs, management of sustainability- and climate-related risks, and political and lobbying activities and expenditures to alleviate the concerns cited in this proposal. 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. motivate and reward our executives for maximizing long-term stockholder value. All equity compensation awards are made under the FedEx Corporation 2019 Omnibus Stock Incentive Plan (the “2019 Plan”), which was approved by our stockholders with approximately 93% of the votes cast at our 2019 annual meeting of stockholders. The 2019 Plan expressly provides for accelerated vesting of restricted stock upon a participant’s retirement at or after age 60, death, or permanent disability or a change of control of FedEx, and provides for accelerated vesting of stock options upon a participant’s death or permanent disability or a change of control of FedEx, 2022 Proxy Statement
| provided121 that the Compensation Committee may exercise its discretion to provide for a different treatment with respect to any particular equity award as set forth in the related award agreement.In addition, FedEx has entered into management retention agreements (“MRAs”) with each of its executive officers. The purpose of the MRAs is to secure the executives’ continued services in the event of a change of control. The same definition of change of control is provided in both the MRAs and the 2019 Plan. The MRAs provide that in the event of a qualifying termination (termination of the executive’s employment by FedEx other than for cause, disability, or death or by the officer for “good reason”), the executive officer will receive a lump sum cash payment equal to two times his or her base salary (no less than his or her highest base salary over the twelve-month period prior to the change of control) plus two times target annual incentive compensation, as well as the continuation of certain health benefits. See “Executive Compensation — Potential Payments Upon Termination or Change of Control — Benefits Triggered by Change of Control or Termination after Change of Control — Stock Option and Restricted Stock Plans and Management Retention Agreements.”
Each of FedEx’s executive officers is an at-will employee and, as such, does not have an employment contract. Accordingly, there are no payments or benefits that are triggered by any termination event (including resignation and severance) other than retirement, death, or permanent disability or in connection with a change of control of FedEx, as described above.
The proposal could create a misalignment between the executives and our stockholders during a change-of-control transaction and present increased risk to our stockholders. The MRAs and the accelerated vesting of equity awards upon a change of control of FedEx under our stockholder-approved 2019 Plan are intended to secure the executives’ continued services in the event of a change of control, which further aligns their interests with those of our stockholders when evaluating any such potential transaction.
Without the ability to retain senior executives during a potential change of control, our ability to deliver maximum stockholder value in the transaction could be impaired. The risk of job loss, coupled with an arbitrary limit on compensation and the value that may be realized from equity awards, may present an unnecessary distraction for our senior executives and could lead them to begin seeking new employment while the transaction is being negotiated or is pending. The proposal would significantly limit our Board’s ability to provide reasonable assurance to our senior executives that they would realize the full expected value of their MRAs and equity awards even if a change-of-control transaction were completed, so that they could focus on maximizing the value our stockholders would receive upon the change of control.
The MRAs and the accelerated vesting of equity awards upon a change of control of FedEx enable our executives to avoid distractions and potential conflicts of interest that could otherwise arise when a potential change-of-control transaction is being considered. This permits our leadership team to remain focused on protecting stockholder interests and maximizing stockholder value during the course of the event. If the potential change-of-control transaction is in the best interests of our stockholders, our executives should be motivated to focus their full energy on pursuing this alternative, even if it is likely to result in the termination of their employment. Our current executive compensation program reinforces this message and duty.
By effectively eliminating these important retention tools by requiring stockholder ratification of termination payments above an arbitrary prescribed amount, the proposal could result in the misalignment between the interests of our executives and those of our stockholders in a change-of-control transaction and create increased risk to our stockholders.
The proposal discourages the use of long-term equity incentive awards, which are tied to maximizing long-term stockholder value. We believe long-term performance is the most important measure of our success, as we manage FedEx’s operations and business for the long-term benefit of our stockholders. Equity incentives in the form of stock options, which only have value if our stock price appreciates after the grant date, and restricted stock comprise a significant portion of an executive officer’s compensation. See “Executive Compensation — Compensation Discussion and Analysis” above.
These equity awards support the achievement of FedEx’s business strategies and goals, align financial rewards with the economic interests of our stockholders, facilitate significant FedEx stock ownership by our executives, and promote retention of leadership talent that is critical to our success. These awards are a fundamental element of our executives’ compensation and are granted and accepted with the expectation that the executives will be given a fair opportunity to realize the full value of these awards.
The proposal would potentially trigger a shareholder approval requirement in order for our executives to realize the full value of their equity awards upon a change of control or their retirement, death, or permanent disability. As a result, the Board believes
|
102 | | |
Table of Contents Stockholder Proposals – Proposal 8 – Shareholder Ratification of Termination Pay
the proposal would have the effect of discouraging the use of long-term equity incentive awards and, accordingly, directly conflict with the objectives of our executive compensation program — namely, the alignment of stockholder and executive interests.
The proposal could place FedEx at a competitive disadvantage by limiting our ability to retain and attract highly qualified and effective executives. 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.
FedEx relies on equity awards to motivate and retain our executive officers and believes that equity incentives are necessary for FedEx to remain competitive in retaining and attracting highly qualified individuals upon whom, in large measure, the future growth and success of FedEx depend. The proposal could have an adverse effect on FedEx’s ability to retain and attract executive talent because a significant portion of an executive’s compensation may be uncertain until a stockholder vote could be held.
The proposal would unduly restrict our Compensation Committee’s and Board’s ability to structure executive compensation. We believe that our Compensation Committee, which is composed entirely of independent directors, and Board are in the best position to design and implement executive compensation practices and principles that are aligned with the interests of our stockholders. To do that, the Compensation Committee and Board must have the flexibility and discretion to structure an effective and competitive executive compensation program, taking into account market practices, market competitiveness, and FedEx’s strategic, operational, and financial goals. The proposal would unduly limit the Compensation Committee’s and Board’s ability to exercise their judgment.
In sum, our Board believes that FedEx’s current executive compensation policies and practices are appropriate and effective, aligning the interests of our executives with those of our stockholders, and provide reasonable and appropriate limits on post-termination compensation. Our executive compensation program provides us with the ability to effectively retain, attract, and motivate talented executives. Adoption of this proposal could undermine the objectives of our executive program and would not be in the best interests of our stockholders.
|
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.
|
Table of Contents
INFORMATION ABOUT THE ANNUAL MEETING Why am I receiving these proxy materials? We have made these materials available to you or delivered paper copies to you by mail because you are a FedEx stockholder of record as of the close of business on August 2, 2021,July 25, 2022, and FedEx’s Board of Directors is soliciting your proxy to vote your shares at the 20212022 annual meeting of stockholders. This proxy statement includes information that we are required to provide to you under SEC rules and is designed to assist you in voting your shares. What is a proxy? A proxy is your legal designation of another person to vote the stock you own. The person you designate is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. By submitting your proxy (either by voting electronically on the Internet or by telephone or by signing and returning a proxy card), you authorize Mark R. Allen, FedEx’s Executive Vice President, General Counsel and Secretary, and Michael C. Lenz, FedEx’s Executive Vice President and Chief Financial Officer, or their designees, 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. What is included in the proxy materials? The proxy materials for our 20212022 annual meeting of stockholders include the Notice of 20212022 Annual Meeting of Stockholders (the “Annual Meeting Notice”), this proxy statement (the “Proxy Statement”), and FedEx’s Annual Report to Stockholders for the year ended May 31, 20212022 (the “Annual Report”). If you receive a paper copy of the proxy materials, a proxy card, or voting instruction form, and prepaid return envelope are also included. The Annual Meeting Notice (which is included in the Proxy Statement), Proxy Statement, and Annual Report are being made available at www.proxyvote.com and are being mailed, along with the accompanying proxy card or voting instruction form, to applicable stockholders beginning on or about August 16, 2021.8, 2022. Why did I receive a notice regarding the internetInternet availability of proxy materials instead of a full set of proxy materials? We are furnishing proxy materials to our stockholders primarily through notice-and-access delivery pursuant to SEC rules. As a result, beginning August 16, 2021,8, 2022, we are mailing to many of our stockholders a Notice Regarding the Internet Availability of Proxy Materials (the “Notice of Internet Availability”) containing instructions on how to access the proxy materials on the Internet. Stockholders who have affirmatively requested electronic delivery of our proxy materials will receive instructions via email regarding how to access these materials electronically. All other stockholders, including stockholders who have previously requested to receive a paper copy of the materials, will receive a full paper set of the proxy materials by mail. Using the notice-and-access method of proxy delivery expedites receipt of proxy materials by our stockholders, reduces the cost of producing and mailing the full set of proxy materials, and helps us contribute to sustainable practices. If you receive a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access the proxy materials and vote on the Internet. If you received a notice by mail and would like to receive paper copies of our proxy materials in the mail, you may call 1-800-579-1639 or send an email to sendmaterial@proxyvote.com to request a printed copy of our proxy materials. Who is entitled to vote at the annual meeting? The record date for the meeting is August 2, 2021.July 25, 2022. 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. Each 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 266,190,927259,907,654 shares of FedEx common stock outstanding.
104122 | | |
Table of Contents Information About the Annual Meeting 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 the Notice of Internet Availability or 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, the Notice of Internet Availability or proxy materials (including a voting instruction form) are being forwarded to you by your bank, brokerage firm, or other nominee (the “bank or broker”). As the beneficial owner, you have the right to direct your bank or broker how to vote your shares by following the instructions on the Notice of Internet Availability or voting instruction form for voting on the Internet or by telephone (if made available by your bank or broker with respect to any shares you hold in street name), or by completing and returning the voting instruction form, 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). 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 approval of the amendment to the FedEx Corporation 2019 Omnibus Stock Incentive Plan (Proposal 4), or the adoption of the five stockholder proposals (Proposals 45 through 8)9), and your shares will be considered “broker non-votes” on those proposals. See “— How will broker non-votes be treated?” below. What does it mean if I receive more than one Notice of Internet Availability, proxy card, or voting instruction form? If you receive more than one Notice of Internet Availability, 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 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), or sign and return by mail all proxy cards and voting instruction forms. 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 (online) or represented by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum. Proxies received but marked as abstentions or treated as broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting. 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, onlinein person (online) 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 can stockholders help FedEx reduce mailing costs? If you vote on the Internet, you may elect to have next year’s proxy materials delivered to you electronically. We strongly encourage you to enroll in electronic delivery. Opting to receive your proxy materials electronically will reduce the cost of producing and mailing documents and help us contribute to sustainable practices. 20212022 Proxy Statement | | 105123 |
Table of Contents Information About the Annual Meeting How do I vote?   | You may vote on the Internet or by telephone
If you are a registered stockholder, you may vote on the Internet or by telephone by following the instructions included on the Notice of Internet Availability or proxy card. If you vote on the Internet or by telephone, you do not have to mail in a proxy card. If you are the beneficial owner of shares held in street name, you still may be able to vote your shares electronically on the Internet or by telephone. The availability of Internet and telephone voting will depend on the voting process of your bank or broker. We recommend that you follow the instructions set forth on the Notice of Internet Availability or voting instruction form provided to you. |   | You may vote by mail
If you properly complete, sign, and date a proxy card or voting instruction form provided to you and return it in the envelope provided, it will be voted in accordance with your instructions. The enclosed envelope requires no additional postage if mailed in the United States. All stockholders of record can vote by written proxy card. If you are a stockholder of record and receive the Notice of Internet Availability, you may request a written proxy card by following the instructions included on the notice. If you are a beneficial owner, you may request a voting instruction form from your bank or broker. |   | You may vote online during the virtual meeting
You may vote online during the virtual meeting by following the instructions provided at www.virtualshareholdermeeting.com/FDX2022 FDX2021 and entering the 16-digit control number on your Notice of Internet Availability, proxy card, or voting instruction form when you access the virtual meeting website. |
How do I vote my shares held in a FedEx employee stock purchase plan or benefit plan? If you own shares of FedEx common stock through a FedEx or subsidiary employee stock purchase plan or 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 any proxy card or voting instruction form you receive in the mail and returning it in the envelope provided or by registering your instructions via the Internet or telephone as directed on the Notice of Internet Availability or proxy card you receive. If you register your voting instructions by telephone or on the Internet, you do not have to mail in the proxy card. 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 22, 2021.14, 2022. 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. Do I have to register in advance to attend the meeting? We will have a virtual-only annual meeting of stockholders in 2021.2022. The meeting will be conducted exclusively via live audio webcast. You do not have to register in advance to attend the virtual meeting. To participate in the virtual meeting, please visit www.virtualshareholdermeeting.com/FDX2021FDX2022 and enter the 16-digit control number included in your Notice of Internet Availability, on your proxy card, or on the voting instruction form that accompanied your proxy materials. You may begin to log into the meeting platform at 7:45 a.m. Central Time on Monday, September 27, 2021.19, 2022. The meeting will begin promptly at 8:00 a.m. Central Time on September 27, 2021.19, 2022. See the following question “— Who can attend the meeting?” and “Virtual Meeting Information” below for additional details. Who can attend the meeting? Stockholders of record and “street name” holders at the close of business on August 2, 2021July 25, 2022, can attend the meeting by accessing www.virtualshareholdermeeting.com/FDX2021FDX2022 and entering the 16-digit control number included in the proxy materials previously received. Please note that the www.virtualshareholdermeeting.com/FDX2021FDX2022 website will not be active until approximately two weeks before the meeting date. If you hold your shares in street name and did not receive a 16-digit control number, please contact your bank, broker, or other nominee at least five days before the meeting and obtain a legal proxy to be able to participate in or vote at the meeting. If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please access www.virtualshareholdermeeting.com/FDX2021FDX2022 and enter the information requested on the screen to register as a guest. Please note that you will not have the ability to ask questions vote, or examine the list of stockholdersvote during the meeting if you participate as a guest. See “Virtual Meeting Information” below for additional details. 106124 | | |
Table of Contents Information About the Annual Meeting 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: | a later-dated vote on the Internet or by telephone or submitting a valid, later-dated proxy card in a timely manner (the latest-dated, properly completed proxy that you submit in a timely manner, whether on the Internet, by telephone, or by mail, will count as your vote); or | | giving written notice of such revocation to the Secretary of FedEx prior to the meeting or by voting online at the annual meeting by entering the 16-digit control number found on your proxy card, voting instruction form, or Notice of Internet Availability, as applicable. |
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 online at the virtual meeting. Will my vote be kept confidential? Yes, your vote will be kept confidential and not disclosed to FedEx unless: | required by law; | | necessary to assert or defend claims for or against the company; | | you expressly request disclosure of your vote; | | you communicate your vote to management by following the instructions on your proxy card; or | | there is a proxy contest. |
Who will count the votes? Broadridge Investor Communication Solutions, Inc. (“Broadridge”) will tabulate and certify the votes. A representative of Broadridge will serve as the inspector of election. 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 card but do not indicate any voting instructions, your shares will be voted: | FOR the election of each of the elevenfifteen nominees named in this proxy statement to the Board of Directors; | | FOR the advisory proposal to approve named executive officer compensation; | | FOR the ratification of the appointment of Ernst & Young LLP as FedEx’s independent registered public accounting firm; | | FOR the approval of the amendment to the FedEx Corporation 2019 Omnibus Stock Incentive Plan to increase the number of authorized shares; and | | AGAINST each of the five stockholder proposals. |
Will any other business be conducted at the meeting? We know of no other business to be conducted at the meeting. FedEx’s Bylaws require stockholders to give advance notice of any proposal intended to be presented at the meeting. The deadline for this notice has passed and we did not receive any such 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? EachA nominee who is not already serving as a director and who fails to receive the required majority vote will not be elected and thus will not serve on the Board of Directors.
Each current director who is standing for reelection. Accordingly, each nomineereelection at the annual meeting 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 longer serve on the Board of Directors, and if the Board
Table of Contents Information About the Annual Meeting 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 “Process for Selecting Directors — Nomination Process — Majority-Voting Standard for Director Elections” above.
Table of Contents
Information About the Annual Meeting
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? The stockholder proposals are non-binding. Therefore, approval of a stockholder proposal would merely serve as a recommendation to the Board to take the necessary steps to implement such proposal. What is the effect of a stockholder not casting a vote? If you are a registered stockholder and you do not vote electronically on the Internet or by telephone or sign and return your proxy card, 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. See “— How will broker non-votes be treated” below. 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 8)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. How will broker non-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). Your shares will be treated as broker non-votes on all of the other proposals, including the election of directors (Proposal 1). Broker non-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 approval of the amendment to the FedEx Corporation 2019 Omnibus Stock Incentive Plan (Proposal 4), or the adoption of the five stockholder proposals (Proposals 45 through 8)9). A broker non-vote with respect to these proposals will not affect their outcome. Will the meeting be webcast? The annual meeting of stockholders will be a virtual meeting, conducted exclusively via live audio webcast at www.virtualshareholdermeeting.com/FDX2021FDX2022, and is available to FedEx’s stockholders as of the record date. Guests may also attend the virtual meeting. A replay of the annual meeting will be available under the News & Events heading on the Investor Relations page of our website (investors.fedex.com) approximately 24 hours after the meeting ends and will remain available on our website for at least one month following the meeting. 108126 | | |
Table of Contents VIRTUAL MEETING INFORMATION The annual meeting of stockholders in 20212022 will be a virtual meeting, conducted exclusively via live audio webcast at www.virtualshareholdermeeting.com/FDX2021FDX2022. There will not be a physical location for the annual meeting, and you will not be able to attend the meeting in person. We are committed to ensuring that stockholders will be afforded the same rights and opportunities to participate as they would have at an in-person meeting. To participate in the virtual meeting, please visit www.virtualshareholdermeeting.com/FDX2021FDX2022 and enter the 16-digit control number included in your Notice of Internet Availability, on your proxy card, or on the voting instruction form that accompanied your proxy materials. If you hold your shares in street name and did not receive a 16-digit control number, please contact your bank, broker, or other nominee at least five days before the meeting and obtain a legal proxy to be able to participate in or vote at the meeting. You may begin to log into the meeting platform beginning at 7:45 a.m. Central Time on Monday, September 27, 2021.19, 2022. The meeting audio webcast will begin promptly at 8:00 a.m. Central Time on September 27, 2021.19, 2022. The virtual meeting platform is fully supported across browsers and devices running the most updated version of applicable software and plug-ins. Please ensure that you have a strong Wi-Fi connection wherever you intend to participate in the meeting. Please also give yourself sufficient time to log-in and ensure you can hear the streaming audio before the meeting starts. If you experience any technical difficulties accessing the annual meeting or during the meeting, please call the toll-free number that will be available on www.virtualshareholdermeeting.com/FDX2021FDX2022 for assistance. We will have technicians ready to assist you with any technical difficulties you have beginning 15 minutes prior to the start of the annual meeting. You have multiple opportunities to submit questions. You may submit questions in advance of the annual meeting of stockholders beginning on September 13, 20216, 2022 by logging into www.proxyvote.com and entering your 16-digit control number. Once past the log-in screen, click on “Question for Management,” type in the question, and click “Submit.” Alternatively, stockholders will be able to submit questions live during the virtual meeting by typing the question into the “Ask a Question” field, and clicking submit. In the interest of providing the opportunity for as many stockholders to have their questions answered as possible, we ask that stockholders limit themselves to one question each and provide their name and contact details when submitting a question through the meeting platform. We will answer questions that comply with the meeting rules of conduct during the annual meeting of stockholders, subject to time constraints. If we receive substantially similar questions, we will group such questions together. Questions relevant to meeting matters that we do not have time to answer during the meeting will be posted to our website following the meeting. Questions regarding personal matters or matters not relevant to meeting matters will not be answered. If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. To attend as a guest, please access www.virtualshareholdermeeting.com/FDX2021FDX2022 and enter the information requested on the screen to register as a guest. Please note that you will not have the ability to ask questions vote, or examine the list of stockholdersvote during the meeting if you participate as a guest. An archived copy of the audio webcast will be made available on our website (investors.fedex.com) after the meeting, and will remain available for at least one month following the meeting. If you encounter any technical difficulties with the virtual meeting website on the meeting day, please call the technical support number that will be posted on the virtual meeting log-in page. Technical support will be available starting at 7:45 a.m. Central Time and until the meeting has finished. 20212022 Proxy Statement | | 109127 |
Table of Contents ADDITIONAL INFORMATION 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, 2021,2022, which includes FedEx’s fiscal 20212022 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. In addition, the information on any website referenced in this proxy statement, including fedex.com, investors. fedex.cominvestors.fedex.com, fedex.com/en-us/about/diversity-inclusion.html, and fedex.com/en‑us/en-us/sustainability/reports.html, is not deemed to be part of or incorporated by reference into this proxy statement. Proxy Solicitation FedEx will bear all costs of this proxy solicitation. In addition to soliciting proxies by this distribution, 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, fiduciaries, and other nominees for their out-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request. FedEx has retained Morrow 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 the Notice of Internet Availability or proxy materials, 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 and receive full sets of the proxy materials 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 the Notice of Internet Availability or multiple sets of proxy materials, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of the Notice of Internet Availability or the proxy materials for your household, please contact our transfer agent at Computershare Trust Company, N.A. (for overnight mail delivery: 462 South 4th Street, Suite 1600, Louisville, Kentucky 40202; for regular mail delivery: P.O. Box 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 the Notice of Internet Availability or the proxy materials, or if you do not wish to participate in householding and prefer to receive separate copies of future Notices of Internet Availability or sets of proxy materials, please contact Computershare as indicated above. A separate copy of the Notice of Internet Availability or the proxy materials 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. 110128 | | |
Table of Contents STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 20222023 ANNUAL MEETING Stockholder Proposals for 20222023 Annual Meeting Stockholder proposals (other than director nominations) intended to be included in the proxy statement and presented at FedEx’s 20222023 annual meeting must be received by FedEx no later than April 18, 202210, 2023 and must comply with applicable SEC rules, including Rule 14a-8, to be eligible for inclusion in FedEx’s proxy materials 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 or in the proxy access director nominations section below), but is instead sought to be presented directly at the 20222023 annual meeting, including director 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 20222023 annual meeting of stockholders, our Bylaws require notice to be provided to the Corporate Secretary at the address listed above, as early as May 30, 2022,22, 2023, but no later than June 29, 2022.21, 2023. To comply with the universal proxy rules, stockholders who intend to solicit in support of director nominees other than FedEx’s nominees must provide a notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, by no later than July 21, 2023. 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 20222023 annual meeting of stockholders, our Bylaws require notice to be provided to the Corporate Secretary at the address listed above, as early as March 19, 2022,11, 2023, but no later than April 18, 2022.10, 2023. To comply with the universal proxy rules, stockholders who intend to solicit in support of director nominees other than FedEx’s nominees must provide a notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, by no later than July 21, 2023. Additional Information Our Bylaws are available under “Governance Policies”“Governance” below the ESG heading on the Investor Relations page of our website at 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,  
MARK R. ALLEN
Executive Vice President,
General Counsel and Secretary 20212022 Proxy Statement | | 111129 |
Table of Contents Appendix A COMPANIES IN DIRECTOR COMPENSATION COMPARISON SURVEY GROUP | 3M Company | Dow Inc. | NIKE, Inc. | | Abbott Laboratories | Enbridge Inc. | Northrop Grumman Corporation | | AbbVie Inc. | Energy Transfer L.P. | Oracle Corporation | | Accenture plc | Enterprise Products Partners L.P. | | PepsiCo, Inc. | Abbott Laboratories | Albertsons Companies, Inc. | Exelon Corporation | Performance Food Group Company | | Alimentation Couche-Tard Inc. | Facebook, Inc. | Pfizer Inc. | AbbVie Inc.The Allstate Corporation | | Facebook, Inc. | General Dynamics Corporation | Philip Morris International Inc. | Accenture plcAltria Group, Inc. | General Electric Company | Federal National Mortgage Association | | Plains All American Pipeline, L.P.Phillips 66 | Alimentation Couche-Tard Inc.American Express Company | | (Fannie Mae) | | Plains GP Holdings LP | The Allstate Corporation | | General Dynamics Corporation | Goldman Sachs Group, Inc. | The Procter & Gamble Company | AltriaAmerican International Group, Inc. | | General Electric Co. | HCA Healthcare, Inc. | The Progressive Corporation | American Airlines GroupAmgen Inc. | | The Goldman Sachs Group, Inc. | Hewlett Packard Enterprise Company | Prudential Financial, Inc. | American ExpressArcher-Daniels-Midland Company | | Great-West LifeCoHoneywell International Inc. | | Publix Super Markets, Inc. | American International Group, Inc. | | HCA Healthcare, Inc. | | Raytheon Company | Archer-Daniels-Midland Company | | Hewlett Packard Enterprise Company | | Raytheon Technologies Corp. | | Arrow Electronics, Inc. | | Honeywell InternationalHP Inc. | | Schlumberger N.V.Raytheon Technologies Corporation | | Bank of America Corporation | | HPHumana Inc. | | Sprint CorporationStoneX Group Inc. | | Best Buy Co., Inc. | Intel Corporation | Humana Inc. | | Starbucks CorpSysco Corporation | | The Boeing Company | | IntelInternational Business Machines Corporation | | StoneX Group Inc.Target Corporation | | Bristol Myers Squibb Co. | Jabil Inc. | International Business | | Suncor Energy Inc.Tech Data Corporation | | Caterpillar Inc. | Johnson & Johnson | Machines Corporation | | Sysco Corporation | Centene Corporation | | JABILTesla, Inc. | | Target Corporation | | Charter Communications, Inc. | | Johnson & Johnson | | Tech Data Corporation | CHS Inc. | | Lockheed Martin Corporation | Kraft Heinz Company | Thermo Fisher Scientific Inc. | Chubb LimitedChevron Corporation | Lockheed Martin Corporation | The TJX Companies, Inc. | | CHS Inc. | Lowe’s Companies, Inc. | T-Mobile US, Inc. | | Chubb Limited | LyondellBasell Industries N.V. | The TJXTravelers Companies, Inc. | | Cisco Systems, Inc. | Marathon Petroleum Corporation | LyondellBasell Industries N.V. | | T-Mobile US,Tyson Foods, Inc. | | Citigroup Inc. | Medtronic Public Limited Company | Macy’s Inc. | | The Travelers Companies,United Natural Foods, Inc. | | The Coca-Cola Company | | Manulife Financial Corp | | Tyson Foods,Merck & Co., Inc. | ConocoPhillips | | Medtronic Public Limited Company | | United Airlines Holdings,Parcel Service, Inc. | | Deere & Company | | Merck & Co.,MetLife, Inc. | | United Parcel Service, Inc.Valero Energy Corporation | | Dell Technologies Inc. | | MetLife, Inc. | | US Foods Holding Corp | Delta Air Lines, Inc. | | Mondelez International, Inc. | | ViacomCBS Inc. | | Dollar General Corporation | | Morgan Stanley | | The Walt Disney Company | DowDollar Tree, Inc. | | NIKE, Inc. | | Wells Fargo & Company | Duke Energy Corp. | | Northrop Grumman Corporation | | World Fuel Services Corp | Enbridge Inc. | | Oracle Corporation | | | Energy Transfer L.P. | | Paccar Inc. | | |
| A-1 | |
Table of Contents Appendix B COMPANIES IN EXECUTIVE
COMPENSATION COMPARISON
SURVEY GROUP | 3M | Deere & Company | Johnson Controls International plc | | 7-Eleven | Dell Inc. | LafargeHolcim | | ABB (Asea Brown Boveri) | DENSO International America, Inc. | | Lenovo Group Ltd.Linde Plc | AbbottAbbot Laboratories | | Deutsche Post AG | DHL Supply Chain | Lockheed Martin Corporation | | AbbVie Inc. | | DHL Supply Chain | Dollar General Corporation | L’Oréal S.A. | ABCAccenture plc | | Dollar General Corporation | Dow Chemical Company | Lowe’s Companies, Inc. | Accenture plcAdecco Group | | Dow Chemical Company | Duke Energy Corporation | LyondellBasell Industries N.V. | Adecco GroupAhold Delhaize | | DuPont de Nemours, Inc. | EDF Renewable Energy | Macy’s | | Airbus Group (EADS) | Energy Transfer Partners | E.ON – Climate and RenewablesMaersk | | Albertsons Companies, Inc. | Ericsson | Marathon Petroleum Corporation | Albertsons Companies, Inc. | | EDF Renewable Energy | | Mars, Incorporated | | Altria Group, Inc. | | Energy Transfer Partners | Ernst & Young | Medtronic Public Limited Companyplc | | American Airlines Group, Inc. | | ENGIE North America Inc. | Exelon Corporation | Merck & Co., Inc. | | Anheuser-Busch InBev SA/NV | Facebook, Inc. | ENI US OperatingMichelin | | Archer-Daniels-Midland Company | Flex Ltd. | Micron Technology | ArcelorMittalARM Holdings plc | | Equinor | Fujitsu | Mondelez International, Inc. | Archer-Daniels-Midland CompanyArrow Electronics, Inc. | | Ernst & Young LLP | GE Aviation | Monroe Energy, LLC | ARM Holdings plcAvanade | GE Digital | ESPN | | NBC Universal | Arrow Electronics,NIKE, Inc. | | Exelon Corporation | | Nestlé USA | | AVANGRID, Inc. | GE Healthcare | Flex Ltd. | | NIKE, Inc.Nissan Motor | BASF SEBAE Systems | | Fujitsu | GE Renewable Energy | Northrop GrummanGruman Corporation | Bayer Aktiengesellschaft | | Galderma SA | | Novartis AG | Bechtel Nuclear, Security & | | General Dynamics Corporation | | Panasonic of North America | Environmental, Inc. | | General Dynamics Information Technology | | PBF EnergyNovartis AG | | Best Buy Co., Inc. | General Dynamics Information Technology | GlaxoSmithKline plcPanasonic of North America | | The Boeing Company | General Electric Company | PepsiCo, Inc. | BHP BillitonBristol-Myers Squibb Co. | | GLOBALFOUNDRIES | GlaxoSmithKline plc | Pfizer Inc. | BT Global Services | British American Tobacco | HCA Healthcare Inc. | plc | Pilot Flying J | Bunge Limited | C&S Wholesale Grocers, Inc. | HCA Inc. | | Plains All American Pipeline L.P. | C&S Wholesale Grocers,Caterpillar Inc. | Heineken | Praxair | | CBS | Hewlett Packard Enterprises, LLC | | Praxair | Caterpillar Inc. | | Hitachi Solutions America, Ltd. | | PSA | Centrica plc | | Hitachi Vantara Corporation | | Raytheon CompanyRandstad | | Charter Communications, Inc. | Hitachi Solutions America, Ltd | Honeywell InternationalRaytheon Technologies | | CHS Inc. | Hitachi Vantara Corporation | Reynolds American, Inc. | CHS Inc. | | HP Inc. | | Rio Tinto | | Cisco Systems, Inc. | | HumanaHoneywell International Inc. | | Robert Bosch GmbHRio Tinto | | CNH Industrial N.V. | | IKEA | Humana Inc. | Roche Holding | The Coca-Cola Company | | Intel Corporation | | Saint-Gobain SA | | Comcast Corporation | | International Business Machines Corporation | | SANOFISafran | | Compass Group PLC | IKEA | Machines CorporationSanofi | | ConocoPhillips | Ingram Micro | Schlumberger Limited | ConocoPhillipsContinental Automotive | | Johnson & Johnson | Intel Corporation | Schneider Electric SE | Continental AGCouche-Tard | Jabil Circuit | Shire | | Danone North America | Johnson Controls International plc& Johnson | | Siemens SASimply Business | Deere & Company | | Johnson Matthey | | Sky | Dell Inc. | | The Kraft Heinz Company | | Sony Corporation |
B-1 | | |
Table of Contents Appendix B – Companies in Executive Compensation Comparison Survey Group | Sodexo | Target Corporation | Tyson Foods, Inc. | | Sonepar USA | Tech Data | Unilever United States, Inc. | | Sony Corporation | Telefónica | United Continental Holdings, Inc. | | Sony Electronics Inc. | | thyssenkrupp AG | The Coca-Cola Company | United Technologies Corporation | Sony Pictures Entertainment | | The TJX Companies, Inc. | | Universal Parks & Resorts | | Sprint Corporation | | T-Mobile US, Inc. | | Veolia | Sysco Corporation | | Tyson Foods, Inc. | | Vinci SA | Target Corporation | | Unilever United States, Inc. | | Vodafone Group Public | | The Procter & Gamble Company | United Parcel Service, Inc. | | Starbucks Corporation | United Continental Holdings,Thermo Fisher Scientific | Veolia Environment | | Subaru of America | Thyssenkrupp AG | Viacom CBS Inc. | | Sumitomo Corporation of Americas | The TJX Companies, Inc. | | Limited CompanyVinci SA | | SYSCO Corporation | T-Mobile US, Inc. | The Walt Disney Company | | United Parcel Service, Inc. | | ZF TRW Automotive Holdings Corp. |
| B-2 | |
Table of Contents Appendix C RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or “reported”). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-GAAP (or “adjusted”) financial measures. We believe these adjusted financial measures facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of, or are unrelated to, the company’s and our business segments’ core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operating, compensation, and planning decisions and evaluating the company’s and each business segment’s ongoing performance. Our non-GAAP financial measures are intended to supplement and should be read together with, and are not an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of our financial statements should not place undue reliance on these non-GAAP financial measures. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. See our earnings releases, which are available under the News & Events heading on the Investor Relations page of our website at investors.fedex.com, for additional details regarding the reconciliation of GAAP and non-GAAP financial measures below. | 2022 Proxy Statement | C-1 | | |
Table of Contents Appendix C – Reconciliations of Non-GAAP Financial Measures Fiscal 20212022 Reconciliations for FY19–FY21Fiscal 2022 AIC Plan and FY20–FY22 and Active LTI Plans As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation and Human Resources Committee, approved the exclusion of certain items from fiscal 2022 earnings for purposes of the fiscal 2022 AIC plan and the FY20–FY22, FY21–FY23, FY22–FY24, and FY23–FY25 LTI plans (collectively, the “LTI plans”). The Board approved the following exclusions from the fiscal 2022 AIC plan and the LTI plans, as applicable, in order to ensure that payouts under the plans more accurately reflect core financial performance in fiscal 2022: (i) fiscal 2022 mark-to-market (“MTM”) retirement plans accounting adjustments; (ii) fiscal 2022 costs related to business realignment activities in connection with the FedEx Express workforce reduction plan in Europe that was announced in January 2021; (iii) the fiscal 2022 stock repurchase impact in excess of that which offset dilution from equity awards; (iv) fiscal 2022 TNT Express integration expenses; and (v) certain costs incurred in fiscal 2022 in connection with a FedEx Ground legal matter. The table below presents a reconciliation of our presented fiscal 2022 non-GAAP measures to the most directly comparable GAAP measures. FISCAL 2022 | | | FEDEX CORPORATION | | | DOLLARS IN MILLIONS, EXCEPT EPS | | OPERATING
INCOME | | | INCOME
TAXES(1) | | | NET
INCOME(2) | | | DILUTED
EARNINGS
PER SHARE | | | GAAP measure | | $ | 6,245 | | | $ | 1,070 | | | $ | 3,826 | | | $ | 14.33 | | | MTM retirement plans accounting adjustments(3) | | | — | | | | 379 | | | | 1,199 | | | | 4.49 | | | EPS impact of stock repurchases that more than offset dilution from equity awards | | | — | | | | — | | | | — | | | | (0.15 | ) | | Non-GAAP measure for FY20-FY22 and FY21–FY23 LTI plans(4) | | | 6,245 | | | | 1,449 | | | | 5,025 | | | | 18.67 | | | Business realignment costs(5) | | | 278 | | | | 64 | | | | 214 | | | | 0.80 | | | Non-GAAP measure for FY22–FY24 LTI plan(6) | | $ | 6,523 | | | $ | 1,513 | | | $ | 5,239 | | | $ | 19.47 | | | FedEx Ground legal matter(7) | | | 210 | | | | 50 | | | | 160 | | | | 0.60 | | | Non-GAAP measure for fiscal 2022 AIC plan(8) | | $ | 6,733 | | | $ | 1,563 | | | $ | 5,399 | | | $ | 20.07 | | | TNT Express integration expenses(9) | | | 132 | | | | 29 | | | | 103 | | | | 0.39 | | | Reversal of EPS impact of stock repurchases that more than offset dilution from equity awards | | | — | | | | — | | | | — | | | | 0.15 | | | Non-GAAP measure for FY23–FY25 LTI plan(10) | | $ | 6,865 | | | $ | 1,592 | | | $ | 5,502 | | | $ | 20.61 | | | | | | | | | | | | | | | | | | | |
| (1) | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction. | | (2) | Effect of “Total other (expense) income” on net income amount not shown. | | (3) | The MTM retirement plans accounting adjustments reflect the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. For fiscal 2022, the MTM retirement plans accounting adjustments also include the second quarter TNT Express MTM retirement plan accounting adjustment related to a noncash loss associated with the termination of a TNT Express European pension plan and a curtailment charge related to the U.S. FedEx Freight pension plan. | | (4) | Fiscal 2022 adjusted EPS of $18.67 is used for purposes of calculating actual aggregate EPS under the FY20–FY22 and FY21–FY23 LTI plans. | | (5) | Business realignment costs were recognized at FedEx Express. | | (6) | Fiscal 2022 adjusted EPS of $19.47 is used for purposes of calculating actual aggregate EPS under the FY22–FY24 LTI plan. | | (7) | These charges were recognized at FedEx Corporation. | | (8) | Adjusted consolidated operating income of $6,733 is used for purposes of the fiscal 2022 AIC plan. | | (9) | These charges were recognized at FedEx Corporation and FedEx Express. | | (10) | Fiscal 2022 adjusted EPS of $20.61 is the baseline EPS for the FY23–FY25 LTI plan. | | |
| C-2 | |
Table of Contents Appendix C – Reconciliations of Non-GAAP Financial Measures Fiscal 2021 Reconciliations for FY20–FY22, FY21–FY23, and FY22–FY24 LTI Plans As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation and Human Resources Committee, approved the exclusion of certain items from fiscal 2021 earnings for purposes of the FY19–FY21, FY20–FY22, FY21–FY23, and FY22–FY24 LTI plans (collectively, the “LTI plans”). The Board approved the following exclusion from the LTI plans in order to ensure that payouts under the plans more accurately reflect core financial performance in fiscal 2020:2021: the mark-to-market (“MTM”) retirement planplans accounting adjustments. The table below presents a reconciliation of our presented fiscal 2021 non-GAAP measures to the most directly comparable GAAP measures. FISCAL 2021 | | FEDEX CORPORATION | | FEDEX CORPORATION | | DOLLARS IN MILLIONS, EXCEPT EPS | | | OPERATING
INCOME | | | INCOME
TAXES(1) | | | | NET
INCOME (2) | | | | DILUTED
EARNINGS
PER SHARE | | | OPERATING
INCOME | | | INCOME
TAXES(1) | | | NET
INCOME(2) | | | DILUTED
EARNINGS
PER SHARE | | | GAAP measure | | $ | 5,857 | | $ | 1,443 | | $ | 5,231 | | $ | 19.45 | | | $ | 5,857 | | | $ | 1,443 | | | $ | 5,231 | | | $ | 19.45 | | | MTM retirement plan accounting adjustments(3) | | | — | | | (281 | ) | | | (895 | ) | | | (3.33 | ) | | Non-GAAP measures for FY19–FY21, FY20–FY22, FY21–FY23,
and FY22–FY24 LTI plans(4) | | $ | 5,857 | | $ | 1,162 | | $ | 4,336 | | $ | 16.12 | | | | MTM retirement plans accounting adjustments(3) | | | | — | | | | (281) | | | | (895) | | | | (3.33) | | | Non-GAAP measures for FY20–FY22, FY21–FY23, and FY22–FY24 LTI plans(4) | | | $ | 5,857 | | | $ | 1,162 | | | $ | 4,336 | | | $ | 16.12 | | | | | | | | | | | | | | | | |
| (1) | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction. | | (2) | Effect of “Total other (expense) income” on net income amount not shown. | | (3) | The MTM retirement planplans accounting adjustmentsadjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. For fiscal 2021, the MTM retirement planplans accounting adjustments also include the second quarter TNT Express MTM retirement plan accounting adjustment related to a noncash loss associated with amending a TNT Express European pension plan to harmonize retirement benefits. | | (4) | Fiscal 2021 adjusted EPS of $16.12 is the base-yearbaseline EPS for the FY22–FY24 LTI plan and is used for purposes of calculating actual aggregate EPS under the FY19–FY21, FY20–FY22 and FY21–FY23 LTI plans. |
Table of Contents
Appendix C – Reconciliations of Non-GAAP Financial Measures
Fiscal 2020 Reconciliations for FY19–FY21, FY20–FY22 and
FY21–FY23 LTI Plans As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation and Human Resources Committee, approved the exclusion of certain items from fiscal 2020 earnings for purposes of the company’s FY19–FY21, FY20–FY22 and FY21–FY23 LTI plans (collectively, the “LTI plans”). The Board approved the following exclusions from the LTI plans in order to ensure that payouts under the plans more accurately reflect core financial performance in fiscal 2020: (i) the annual mark-to-market (“MTM”) retirement planplans accounting adjustment and (ii) fiscal 2020 TNT Express integration expenses. The table below presents a reconciliation of our presented fiscal 2020 non-GAAP measures to the most directly comparable GAAP measures. FISCAL 2020 | | FEDEX CORPORATION | | FEDEX CORPORATION | | DOLLARS IN MILLIONS, EXCEPT EPS | | OPERATING
INCOME | | INCOME
TAXES(1) | | NET
INCOME(2) | | DILUTED
EARNINGS
PER SHARE | | OPERATING
INCOME | | | INCOME
TAXES(1) | | | NET
INCOME(2) | | | DILUTED
EARNINGS
PER
SHARE | | | GAAP measure | | $ | 2,417 | | $ | 383 | | $ | 1,286 | | $ | 4.90 | | $ | 2,417 | | | $ | 383 | | | $ | 1,286 | | | $ | 4.90 | | | MTM retirement plan accounting adjustment(3) | | — | | 211 | | 583 | | 2.22 | | | MTM retirement plans accounting adjustment(3) | | | | — | | | | 211 | | | | 583 | | | | 2.22 | | | TNT Express integration expenses(4) | | 270 | | 61 | | 209 | | 0.80 | | | 270 | | | | 61 | | | | 209 | | | | 0.80 | | Non-GAAP measures for FY19–FY21, FY20–FY22, and
FY21–FY23 LTI plans(5) | | $ | 2,687 | | $ | 655 | | $ | 2,078 | | $ | 7.92 | | | Non-GAAP measures for FY20–FY22 and FY21–FY23 LTI plans(5) | | | $ | 2,687 | | | $ | 655 | | | $ | 2,078 | | | $ | 7.92 | | | | | | | | | | | | | | | | |
| (1) | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction. | | (2) | Effect of “Total other (expense) income” on net income amount not shown. | | (3) | The MTM retirement planplans accounting adjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. | | (4) | These expenses were recognized at FedEx CorporateCorporation and FedEx Express. | | (5) | Fiscal 2020 adjusted EPS of $7.92 is the base-yearbaseline EPS for the FY21–FY23 LTI plan and is used for purposes of calculating actual aggregate EPS under the FY19–FY21 and FY20–FY22 LTI plans. plan. |
| C-3 |
Table of Contents Appendix C – Reconciliations of Non-GAAP Financial Measures Fiscal 2019 Reconciliations for FY19–FY21 and FY20–FY22 LTI PlansPlan As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendation of the Compensation and Human Resources Committee, approved the exclusion of certain items from fiscal 2019 earnings for purposes of the company’s FY19–FY21 and FY20–FY22 LTI plans (collectively, the “LTI plans”).plan. The Board approved the following exclusions from the LTI plansplan in order to ensure that payouts under the plansplan more accurately reflect core financial performance in fiscal 2019: (i) the annual mark-to-market (“MTM”) retirement planplans accounting adjustment; (ii) fiscal 2019 TNT Express integration expenses (including any restructuring charges at TNT Express); (iii) costs related to business realignment activities, including the company’s U.S.-based voluntary employee buyout program; (iv) costs related to FedEx Ground’s settlement of pending lawsuits with the City and State of New York arising from FedEx Ground’s alleged shipments of cigarettes to New York residents; and (v) the revision of the provisional benefit associated with the remeasurement of the company’s net U.S. deferred tax liability following the passage of the Tax Cuts and Jobs Act of 2017 (“TCJA”); and (vi) the reversal of certain charges accrued in connection with U.S. Customs and Border Protection matters involving FedEx Logistics that have been fully resolved. Additionally, the Board approved the exclusion of the fiscal 2019 stock repurchase impact in excess of that which offset dilution from equity awards from fiscal 2019 EPS for purposes of the FY19–FY21 LTI plan.. The table below presents a reconciliation of our presented fiscal 2019 non-GAAP measures to the most directly comparable GAAP measures. FISCAL 2019 | | FEDEX CORPORATION | | DOLLARS IN MILLIONS, EXCEPT EPS | | OPERATING
INCOME(1) | | | INCOME
TAXES(2) | | | NET
INCOME(3) | | DILUTED
EARNINGS
PER SHARE | | | GAAP measure | | $ | 4,466 | | | $ | 115 | | | $ | 540 | | $ | 2.03 | | | MTM retirement plan accounting adjustment(4) | | | — | | | | 902 | | | | 2,981 | | | 11.22 | | | TNT Express integration expenses(5) | | | 388 | | | | 74 | | | | 314 | | | 1.18 | | | Business realignment costs(6) | | | 320 | | | | 77 | | | | 243 | | | 0.91 | | | FedEx Ground legal matter | | | 46 | | | | 3 | | | | 43 | | | 0.16 | | | Net U.S. deferred tax liability remeasurement | | | — | | | | (4 | ) | | | 4 | | | 0.02 | | | Non-GAAP measure for FY20–FY22 LTI plan(7) | | $ | 5,220 | | | $ | 1,167 | | | $ | 4,125 | | $ | 15.52 | | | FedEx Logistics legal matters reversal(8) | | $ | (1 | ) | | | 0.3 | | | | 1 | | | — | | | EPS impact of stock repurchases that more than offset dilution | | | — | | | | — | | | | — | | | (0.38 | ) | | Non-GAAP measures for FY19–FY21 LTI plan(9) | | $ | 5,218 | | | $ | 1,167 | | | $ | 4,124 | | $ | 15.14 | |
| | | FEDEX CORPORATION | | DOLLARS IN MILLIONS, EXCEPT EPS | | OPERATING
INCOME | | | INCOME
TAXES(1) | | NET
INCOME(2) | | | DILUTED
EARNINGS
PER SHARE | | | GAAP measure | | $ | 4,466 | | | $ | 115 | | | $ | 540 | | | $ | 2.03 | | | MTM retirement plans accounting adjustment(3) | | | — | | | | 902 | | | | 2,981 | | | | 11.22 | | | TNT Express integration expenses(4) | | | 388 | | | | 74 | | | | 314 | | | | 1.18 | | | Business realignment costs(5) | | | 320 | | | | 77 | | | | 243 | | | | 0.91 | | | FedEx Ground legal matter | | | 46 | | | | 3 | | | | 43 | | | | 0.16 | | | Net U.S. deferred tax liability remeasurement | | | — | | | | (4 | ) | | | 4 | | | | 0.02 | | | Non-GAAP measure for FY20–FY22 LTI plan(6) | | $ | 5,220 | | | $ | 1,167 | | | $ | 4,125 | | | $ | 15.52 | | | | | | | | | | | | | | | | | | | |
| (1) | Does not sum to total due to rounding.
| (2) | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction and give consideration to the effects of the TCJA on the fiscal 2019 rates. | (3)(2) | Effect of “Total other (expense) income” on net income amount not shown. | (4)(3) | The MTM retirement planplans accounting adjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. | (5)(4) | These expenses, including any restructuring charges at TNT Express, were recognized at FedEx CorporateCorporation and FedEx Express. | (6)(5) | Business realignment costs are recognized at FedEx Corporate. Corporation. | (7)(6) | Fiscal 2019 adjusted EPS of $15.52 is the base-yearbaseline EPS for the FY20–FY22 LTI plan. | (8) | The reversal of certain charges accrued in connection with U.S. Customs and Border Protection matters involving FedEx Logistics had a $1 million impact on consolidated operating income but had no impact on fiscal 2019 diluted EPS.
| (9) | Fiscal 2019 adjusted EPS of $15.14 is used for purposes of calculating actual aggregate EPS under the FY19–FY21 LTI plan.
|
| C-4 | |
Table of Contents Appendix D Appendix C – Reconciliations of Non-GAAP Financial MeasuresFedEx Corporation
Fiscal 2018 Reconciliations for FY19–FY21 LTI Plan2019 OMNIBUS STOCK INCENTIVE PLAN
As described in “Executive Compensation — Compensation Discussion and Analysis,” the Board of Directors, upon the recommendationSection 1. Purpose
The purpose of the Compensation Committee, approvedFedEx Corporation 2019 Omnibus Stock Incentive Plan, as amended from time to time (the “Plan”), is to aid the exclusion of certain items from fiscal 2018 earnings for purposesCompany and its Affiliates in retaining, attracting and rewarding Non-Management Directors and designated employees and to motivate them to exert their best efforts to achieve the long-term goals of the company’s FY19–FY21 LTI plan.Company and its Affiliates. The Board approvedCompany believes that the following exclusions fromownership or increased ownership of Common Stock by employees and directors, or otherwise linking the LTI plan in ordercompensation of employees and directors to ensure that payouts under the plan more accurately reflect core financial performance in fiscal 2018: (i) the annual mark-to-market (“MTM”) retirement plan accounting adjustment; (ii) fiscal 2018 TNT Express integration expenses (including any restructuring charges at TNT Express); (iii) goodwill and other asset impairment charges at FedEx Supply Chain; (iv) the costvalue of accelerated 2018 annual pay increases for certain hourly team members to April 2018 from October 2018, following the passageCommon Stock, will further align their interests with those of the Tax CutsCompany’s other stockholders and Jobs Act of 2017 (the “TCJA”); (v) expenses in connection with certain U.S. Customs and Border Protection matters involving FedEx Logistics; and (vi)will promote the provisional benefit from the remeasurementlong-term success of the company’s net U.S. deferred tax liability followingCompany and the passagecreation of long-term stockholder value. Accordingly, the Plan authorizes the grant of equity incentive awards to designated employees of the TCJA.Company and its Affiliates and to directors of the Company. The table below presentsPlan will be treated as a reconciliation of our presented fiscal 2018 non-GAAP measuressuccessor to the most directly comparable GAAP measures. Fiscal 2018 GAAP operating income has been recast to conform to the new pension accounting rules that went into effect for FedEx in fiscal 2019.Corporation 2010 Omnibus Stock Incentive Plan, as amended (the “Prior Plan”). FISCAL 2018Section 2. Definitions and Rules of Construction
| | FEDEX CORPORATION | | DOLLARS IN MILLIONS, EXCEPT EPS | | OPERATING
INCOME | | INCOME
TAXES(1)(2) | | | NET
INCOME(1)(3) | | | DILUTED
EARNINGS
PER SHARE | | | GAAP measure | | $ | 4,272 | | $ | (219 | ) | | $ | 4,572 | | | $ | 16.79 | | | MTM retirement plan accounting adjustment(4) | | | — | | | (1 | ) | | | (9 | ) | | | (0.03 | ) | | TNT Express integration expenses(5) | | | 477 | | | 105 | | | | 372 | | | | 1.36 | | | FedEx Supply Chain goodwill and other asset impairments(6) | | | 380 | | | 1 | | | | 379 | | | | 1.39 | | | Accelerated 2018 annual pay increases | | | 55 | | | 11 | | | | 44 | | | | 0.16 | | | FedEx Logistics legal matters | | | 8 | | | 2 | | | | 6 | | | | 0.02 | | | Net U.S. deferred tax liability remeasurement | | | — | | | 1,150 | | | | (1,150 | ) | | | (4.22 | ) | | Non-GAAP measure for FY19–FY21 LTI plan(7) | | $ | 5,192 | | $ | 1,050 | | | $ | 4,213 | | | $ | 15.47 | |
| 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 19.1. | | “Code” means the Internal Revenue Code of 1986, as amended. | | “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, subject to Section 4.1. | | “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 18.1 or 18.2. | | “Company” means FedEx Corporation, a Delaware corporation, or its successor. | | “Disability” means “permanent disability” as determined by the Committee in its sole discretion. | | “Dividend Equivalent” means the right granted to a Participant under Section 13 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) any Non-Management Director. | | |
(1)2022 Proxy Statement | Does not sum to total due to rounding.
| (2)D-1 | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction and give consideration to the effects of the TCJA on the fiscal 2018 rates.
| (3) | Effect of “Total other (expense) income” on net income amount not shown.
| (4) | The MTM retirement plan accounting adjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. The MTM retirement plan accounting adjustment for fiscal 2018 includes the one-time $210 million charge recognized in the fourth quarter of fiscal 2018 related to the transfer of approximately $6 billion of FedEx Corporation’s tax-qualified U.S. domestic pension plan obligations to Metropolitan Life Insurance Company.
| (5) | These expenses, including any restructuring charges at TNT Express, were recognized at FedEx Corporate and FedEx Express.
| (6) | Goodwill impairment charges are not deductible for income tax purposes.
| (7) | Fiscal 2018 adjusted EPS of $15.47 is the base-year EPS for the FY19–FY21 LTI plan.
|
C-5 | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | “Exchange Act” means the Securities Exchange Act of 1934, as amended. | | “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 and (b) a “non-employee director” as defined in Rule 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 14 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” means the period of service to which the performance goal or goals for a Performance Award relate as determined by the Committee in its sole discretion. | | “Plan” has the meaning given such term in Section 1. | | “Prior Plan” has the meaning given such term in Section 1. | | “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. | | |
| D-2 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | “Retirement” means with respect to any Participant, (a) the attainment by the Participant of the age of 55 and the cessation of the Participant’s Service, or (b) the Participant’s “retirement” as determined by the Committee in its sole discretion. | | “Rule 16b-3” means Rule 16b-3 under the Exchange Act. | | “Securities Act” means the Securities Act of 1933, as amended. | | “Service” means a Participant’s employment with the Company or an Affiliate or a Participant’s service as a Non-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 a Non-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 or business 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”; (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; and (e) references to any provision of a statute shall be deemed to include references to any applicable rules and regulations promulgated thereunder, including proposed rules and regulations, and other guidance issued thereto, by an applicable governmental entity, and any successor provisions, rules and regulations. 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 immediately following 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, 2029, 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; | | (b) | Grant Awards; | | (c) | Delegate the granting of Awards as specified in Section 4.5; | | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | (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; | | (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, 12.2, 17, 18.2, 19 and 21 (the “Minimum Vesting Requirement”); | | (g) | Establish performance conditions for Performance 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) | Adopt sub-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 to Non-Management Directors. | | (a) | Awards. Notwithstanding any other provision of the Plan, including Sections 4.1 and 4.2, any Awards made under the Plan to Non-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 to Non-Management Directors. Solely with respect to the grant of Awards to Non-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. Upon such terms and conditions as may be established by the Board of Directors, each Non-Management Director may elect to have all or part of his or her retainer paid in Shares under the Plan. | | (c) | Limit on Non-Management Director Compensation. The maximum aggregate amount that may be paid to any one Non-Management Director in any one of the Company’s fiscal years, in cash, Awards or otherwise, as applicable, is $1,000,000. In the case of any Awards, the value thereof shall be based on the Grant Date fair value as determined for accounting purposes. | | 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 any Non-Management Director or any Eligible Person who is a Reporting Person. | | | |
| D-4 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | (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. | | (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 5.4 and to adjustment as provided in Section 18, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be equal to the sum of (i) 11,700,0006,700,000 Shares, plus (ii) the total number of Shares remaining available for awards under the Prior Plan as of the Effective Date, with the aggregate maximum number of Shares available for Awards under the Plan pursuant to clauses (i) and (ii) not to exceed 22,000,00017,000,000, of which no more than 1,500,000 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 17,000,000 subject to adjustment as provided in Section 18. | | 5.3 | Prior Plan. On or after the Effective Date, no further awards shall be granted under the Prior Plan, it being understood that: (i) awards granted under the Prior Plan as of the Effective Date shall remain in full force and effect under the Prior Plan according to their respective terms; and (ii) to the extent that any such award is canceled, terminates, expires, is forfeited or lapses for any reason (in whole or in part), or is settled for cash or other consideration in lieu of Shares, the Shares subject to such award not delivered as a result thereof shall again be available for Awards under this Plan, subject to the maximum amount of 22,000,00017,000,000 Shares, as set forth in Section 5.1. | | 5.4 | 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 (or an award under a Prior Plan) 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 (or an award under a Prior Plan) 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 5.4(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. | | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | (g) | To the extent that the full number of Shares subject to a Performance 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. | | (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. | | 5.5 | Source of Shares. Shares issued under the Plan may consist, in whole or in part, of authorized but unissued shares or treasury shares. | | 5.6 | 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. | | 5.7 | Maximum Awards. Subject to Section 4.3(c) and adjustment as provided in Section 18: | | (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 5.7(a) – (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. | | | |
| D-6 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | 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 a Non-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 a Non-Management Director for any reason at any time. |
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 20), 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 23.10), 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, 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, 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. | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | 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 or non-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 a Non-Qualified Stock 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 a Non-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 a Non-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. | | |
| D-8 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan 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. | | (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. | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | 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, 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. |
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 23.10). 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 5.7, 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 and Periods. Each Performance Award 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 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 terms of Section 19.2(c) will control in the event of a Change of Control (as defined in Section 19.1 below). | | The Committee may use such business criteria and other performance measures as it may deem appropriate in establishing any objective performance conditions for Performance Awards. | | The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods. Performance Periods established by the Committee for any Performance Award may be as short as 12 months and may be any longer period. | | |
| D-10 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | 12.3 | Performance Criteria. Performance goals for Performance Awards may be based on one or more of, but are not limited to, the following performance criteria, 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); | | (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 cash flow, operating cash flow, net cash provided by 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; | | (l) | Volume growth; | | (m) | Package yields; | | (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 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. | | The Committee may reserve the right to exercise its discretion to reduce or increase the amounts payable under any Performance Award. |
Section 13. Dividend Equivalents | 13.1 | 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. | | 13.2 | Options and SARs. Dividend Equivalents shall not be granted with respect to Stock Options or Stock Appreciation Rights. | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan Section 14. 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 to Non-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 15. Tax Withholding | 15.1 | 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 an amount (rounded up to the nearest whole Share) required to be withheld for tax purposes as determined by the Committee in its sole discretion and 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. | | 15.2 | 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 16. Compliance with Laws | 16.1 | 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. | | 16.2 | 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. | | 16.3 | 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. | | |
| D-12 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan Section 17. Rights After Termination of Service; Acceleration For Other Reasons | 17.1 | Death. Unless otherwise determined by the Committee, 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 vested and 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 17.1(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to be Non-Qualified Stock Options); and | | (b) | All vesting restrictions and conditions on that Participant’s outstanding Restricted Shares that are not Performance 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 and Other Stock-Based Awards upon a Participant’s termination of Service by reason of his or her death. | | 17.2 | Disability. Unless otherwise determined by the Committee, 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 vested and 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, 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 17.2(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to be Non-Qualified Stock Options); and | | (b) | All vesting restrictions and conditions on that Participant’s outstanding Restricted Shares that are not Performance 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 and Other Stock-Based Awards shall be set forth in the applicable Award Agreement. | | 17.3 | Retirement. Unless otherwise determined by the Committee, 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 17.3(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to be Non-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 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 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 17.1 or Section 17.2, as applicable, shall apply. | | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | Any rights of a Participant following his or her Retirement with respect to outstanding Restricted Stock Units, Performance Awards and Other Stock-Based Awards shall be set forth in the applicable Award Agreement. | | 17.4 | Other. Unless otherwise determined by the Committee, if a Participant’s Service terminates for any reason other than those set forth in Sections 17.1, 17.2 and 17.3 above: | | (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 termination of Service, may thereafter be exercised for a period of ninety (90) days from the date of the Participant’s termination of Service 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 17.4(a) cause Incentive Stock Options to fail to comply with the provisions of Code Section 422, such Stock Options shall be deemed to be Non-Qualified Stock Options); and | | (b) | For all other Awards, the Participant’s Awards shall thereupon terminate and be forfeited. | | 17.5 | 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. | | 17.6 | Acceleration For Any Other Reason. Regardless of whether an event has occurred as described in Sections 17.1, 17.2 and 17.3 above, 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 17.6. Notwithstanding any other provision of the Plan, including this Section 17.6, the Committee may not accelerate the payment of any Award if such acceleration would fail to comply with Code Section 409A(a)(3). |
Section 18. Adjustments for Changes in Capitalization | 18.1 | 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 5.7 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 a per-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 5.7 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. | | 18.2 | 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 18.1, in addition to any of the actions described in Section 18.1, 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 | | |
| D-14 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | 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 will be modified; 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. | | 18.3 | No Fractional Shares, etc. After giving effect to any adjustment pursuant to the provisions of this Section 18, 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 18 shall be subject to the provisions of Section 21. To the extent any adjustments made pursuant to this Section 18 cause Incentive Stock Options to cease to qualify as Incentive Stock Options, such Stock Options shall be deemed to be Non-Qualified Stock Options. |
Section 19. Change of Control | 19.1 | 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 19.1(b) below, becomes the “beneficial owner” (within the meaning of Rule 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 19.1(d) below). | | (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. | | | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | 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. | | 19.2 | Effect of Change of Control. Notwithstanding any other provision of the Plan, unless otherwise determined by the Committee, the provisions of this Section 19.2 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 19.2(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 be Non-Qualified Stock Options. | | (b) | Restricted Shares, Restricted Stock Units and Other Stock-Based Awards. In the event of a Change of Control as described in Section 19.1(b), as shall be determined by the Committee: (1) any outstanding and unvested Restricted Shares, Restricted Stock Units or Other Stock-Based Awards that are not Performance 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, Restricted Stock Units or Other Stock-Based Awards then held by such Participant, with any non-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, Restricted Stock Units or Other Stock-Based Awards that are not Performance Awards shall immediately lapse and such Restricted Shares, Restricted Stock Units or Other Stock-Based Awards shall be fully vested. In the event of a Change of Control as described in Section 19.1(a), (c) or (d), all vesting restrictions and conditions with respect to all outstanding Restricted Shares, Restricted Stock Units or Other Stock-Based Awards that are not Performance Awards shall immediately lapse and such Restricted Shares, Restricted Stock Units or Other Stock-Based Awards shall be fully vested. | | (c) | Performance Awards. In the event of a Change of Control, all performance goals or other vesting criteria with regard to all outstanding Performance Awards shall be deemed to be achieved at 100% of target levels and all other terms and conditions will be deemed met. | | 19.3 | 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 or otherwise 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, then the Award and any other payments or benefits provided hereunder shall, to the extent possible, be reduced (but not below zero) so that the present value of such total amounts and benefits received by the Participant will be one dollar ($1.00) less than three times the Participant’s “base amount” (as defined in Code Section 280G) and so that no portion of such amounts and benefits received by the Participant shall be subject to the excise tax imposed by Code Section 4999. The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order. The determination as to whether any such reduction in the amounts of the Award and any other payments and benefits provided hereunder or otherwise is necessary shall be made by the Committee in its sole discretion. If a reduced Award or any other payment or benefit hereunder is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits to the Participant from the Company (or an Affiliate) used in determining if an “excess parachute payment” exists, exceeds one dollar ($1.00) less than three times the Participant’s base amount, then the Participant shall immediately repay such excess to the Company upon notification that an overpayment has been made. Nothing in this Section 19.3 shall require the Company to be responsible for, or have any liability or obligation with respect to, the Participant’s excise tax liabilities under Code Section 4999. | | | |
| D-16 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan Section 20. Repricing Prohibited Except as contemplated by the provisions of Section 18, 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 21. Amendment and Termination | 21.1 | 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 18), (b) deletes or limits the provision of Section 20 (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 21.3, 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. | | 21.2 | 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 21.3 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. | | 21.3 | 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 22. 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 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 such sub-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.
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan Section 23. General | 23.1 | 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. | | 23.2 | 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. | | 23.3 | 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. | | 23.4 | Use of Proceeds. All proceeds received by the Company pursuant to Awards granted under the Plan shall be used for general corporate purposes. | | 23.5 | 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. | | 23.6 | 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. | | 23.7 | 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. | | 23.8 | 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. | | 23.9 | 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 of Rule 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 of Rule 16b-3 shall not apply to such Reporting Persons. | | 23.10 | 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 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. | | |
| D-18 | |
Table of Contents Appendix D – 2019 Omnibus Stock Incentive Plan | If an Award constitutes “nonqualified deferred compensation” under Section 409A, any payment or settlement of such Award upon a Participant’s termination of Service will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participant’s “separation from service” (within the meaning of Section 409A), whether such “separation from service” occurs upon or after the Participant’s termination of Service. For purposes of the Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms mean a “separation from service.” | | Notwithstanding anything contained in the Plan or any Award Agreement to the contrary, any payment(s) of “nonqualified deferred compensation” required to made under an Award to a “specified employee” (as defined under Section 409A and as the Company determines) due to his or her “separation from service” will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such “separation from service” (or, if earlier, until the specified employee’s death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without interest). Any payments of “nonqualified deferred compensation” under such Award payable more than six months following a Participant’s “separation from service” will be paid at the time or times the payments are otherwise scheduled to be made. | | Notwithstanding anything contained in the Plan or any Award Agreement to the contrary, each and every payment made hereunder shall be treated as a separate payment and not as a series of payments. Whenever a payment under the Plan or an Award Agreement may be paid within a specified period, the actual date of payment within the specified period shall be within the sole discretion of the Company. | | 23.11 | 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. | | 23.12 | 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. | | 23.13 | 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. | | 23.14 | 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. |
Effective as of September 24, 2019
Amended June 12, 2022
Amended September 19, 2022
Table of Contents 
942 South Shady Grove Road Memphis, TN 38120 fedex.com
Table of Contents 
 FEDEX CORPORATION
942 SOUTH SHADY GROVE ROAD
MEMPHIS, TN 38120
ATTN: INVESTOR RELATIONS   | | SCAN TO
VIEW MATERIALS & VOTE | |   |
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions up until 11:59 p.m. Eastern Time on September 26, 202118, 2022 (for shares held through a FedEx or subsidiary employee stock purchase plan or benefit plan, vote by 11:59 p.m. Eastern Time on September 22, 2021)14, 2022). Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/FDX2021FDX2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on September 26, 202118, 2022 (for shares held through a FedEx or subsidiary employee stock purchase plan or benefit plan, vote by 11:59 p.m. Eastern Time on September 22, 2021)14, 2022). Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
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. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | D58163-P60502-Z80857D89050-P77294-Z83091 | KEEP THIS PORTION FOR YOUR RECORDS | | DETACH AND RETURN THIS PORTION ONLY | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
FedEx Corporation The Board of Directors recommends you vote FOR each of the listed nominees and FOR Proposals 2, 3, and 3.4. | | | | | | | | | | 1. | Election of Directors: | For | Against | Abstain | | | | | | | 1a. | MARVIN R. ELLISON | ☐ | ☐ | ☐ | | | | | | | | 1a. 1b. | MARVIN R. ELLISONSTEPHEN E. GORMAN | ☐ | ☐ | ☐ | | | | | | | | 1b.1c. | SUSAN PATRICIA GRIFFITH | ☐ | ☐ | ☐ | | | | | | | | 1c.1d. | KIMBERLY A. JABAL | ☐ | ☐ | ☐ | | | | | | | | 1d.1e. | SHIRLEY ANN JACKSONAMY B. LANE | ☐ | ☐ | ☐ | | | | | | | | 1e.1f. | R. BRAD MARTIN | ☐ | ☐ | ☐ | | | | | | | | 1f.1g. | NANCY A. NORTON | ☐ | ☐ | ☐ | | | | | | | | 1h. | FREDERICK P. PERPALL | ☐ | ☐ | ☐ | | | | | | | | 1i. | JOSHUA COOPER RAMO | ☐ | ☐ | ☐ | | | | | | | | 1g.1j. | SUSAN C. SCHWAB | ☐ | ☐ | ☐ | | | | | | | | 1h.1k. | FREDERICK W. SMITH | ☐ | ☐ | ☐ | | | | | | | | | 1i.1l. | DAVID P. STEINER | ☐ | ☐ | ☐ | | | | | | | | | 1j.1m. | RAJESH SUBRAMANIAM | ☐ | ☐ | ☐ | | | | | | | | 1k. | PAUL S. WALSH | ☐ | ☐ | ☐ | | | | | | | | To disclose your name with your vote and comments, if any, e-mail FedEx at ir@fedex.com. | | | |
| | | | For | Against | Abstain | | | | | | | | 1n. | V. JAMES VENA | ☐ | ☐ | ☐ | | | | | | | | 1o. | PAUL S. WALSH | ☐ | ☐ | ☐ |
| | | 2. | Advisory vote to approve named executive officer compensation. | ☐ | ☐ | ☐ | | | | | | | 3. | Ratify the appointment of Ernst & Young LLP as FedEx's independent registered public accounting firm for fiscal year 2022.2023. | ☐ | ☐ | ☐ | | | | 4. | Approval of amendment to the FedEx Corporation 2019 Omnibus Stock Incentive Plan to increase the number of authorized shares. | ☐ | ☐ | ☐ | | | | | | The Board of Directors recommends you vote AGAINST Proposals 45 through 8.9. | For | Against | Abstain | | | 4.5. | Stockholder proposal regarding independent board chairman. | ☐ | ☐ | ☐ | | | 5.6. | Stockholder proposal regarding report on alignment between company values and electioneering contributions. | ☐ | ☐ | ☐ | | | 6.7. | Stockholder proposal regarding lobbying activity and expenditure report. | ☐ | ☐ | ☐ | | | 7.8. | Stockholder proposal regarding assessing inclusion in the workplace. | ☐ | ☐ | ☐ | | | 8.9. | Stockholder proposal regarding shareholder ratification of termination pay.report on climate lobbying. | ☐ | ☐ | ☐ | | | | NOTE: At their discretion, the proxies are authorized to vote on any other matters that may properly come before the meeting and any adjournments or postponements thereof. | | | |
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by an authorized officer. | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
Table of Contents
How to Attend the Virtual Annual Meeting FedEx's 2021FedEx’s 2022 annual meeting of stockholders will be a virtual meeting, conducted exclusively via live audio webcast at www.virtualshareholdermeeting.com/FDX2021FDX2022. There will not be a physical location for the annual meeting, and you will not be able to attend the meeting in person.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
D58164-P60502-Z80857D89051-P77294-Z83091 |
FedEx Corporation
Annual Meeting of Stockholders
September 27, 202119, 2022
8:00 a.m. Central Time
This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Mark R. Allen and Michael C. Lenz, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote all of the shares of common stock of FedEx Corporation that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held online at 8:00 a.m. Central Time on September 27, 2021,19, 2022, at www.virtualshareholdermeeting.com/FDX2021,FDX2022, and at any adjournments or postponements 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 a 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 the account, your instructions must be received by September 22, 2021.14, 2022. If no direction is given, the plan trustee will vote the shares held in the 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, 3, and 3,4, and AGAINST Proposals 45 through 8.9. The Board of Directors recommends that you vote FOR each of the director nominees, FOR Proposals 2, 3, and 3,4, and AGAINST Proposals 45 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 adjournments or postponements 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'Directors’ recommendations. Messrs. Allen and Lenz cannot vote yourthe shares unless you sign, date, and return this card or vote on the Internet or by telephone. To be signed on reverse side
|
Proxy Access
The highest level of personal and professional ethics, integrity, and values;
