DEF 14A 1 fdx3608061-def14a.htm DEFINITIVE PROXY STATEMENT

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

SCHEDULE 14A

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

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

Filed by the Registrant Filed by a Party other than the Registrant      

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

FedEx Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
  No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:


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Notice of 2019
Annual Meeting
of Stockholders

Monday, September 23, 2019
8:00 a.m. local time

FedEx Express World Headquarters
Auditorium
3670 Hacks Cross Road, Building G
Memphis, Tennessee 38125








Table of Contents


Our solutions connect
people and possibilities.

At FedEx, we believe that a connected world is a better world, and that belief guides everything we do.

With networks that span billions of people across six continents, delivering is our business. It’s also our responsibility to deliver the resources that improve the lives of those we serve.

When we help businesses of all sizes access new markets, they grow and create jobs that boost standards of living in our communities. Investments in safer and more sustainable transportation improve our own footprint and make our communities more livable. A more connected world sparks innovation when shared ideas, goods and technologies interact to transform how we live and work.

We believe a connected world is a prosperous and sustainable world. And we aim to multiply opportunities.

LEARN MORE ABOUT FEDEX

Learn more about how we are multiplying opportunities across the world through our 2019 Global Citizenship Report:

     
2019 Global Citizenship Report*
http://csr.fedex.com
* The information on the Global Citizenship Report web page is not incorporated by reference into, and does not form part of, this proxy statement.


Table of Contents

Notice of Annual Meeting of Stockholders

ITEMS OF BUSINESS
Voting Proposal Board
Recommendation
Proposal 1
Elect the twelve nominees named in the proxy statement as FedEx directors for a one-year term
     FOR each
director
nominee
Proposal 2
Advisory vote to approve named executive officer compensation
FOR
Proposal 3
Approve the FedEx Corporation 2019 Omnibus Stock Incentive Plan
FOR
Proposal 4
Ratify the appointment of Ernst & Young LLP as FedEx’s independent registered public accounting firm for fiscal year 2020
FOR
Proposals 5-6
Act upon two stockholder proposals, if properly presented at the meeting
AGAINST

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

Members of FedEx’s management team will be present at the meeting to respond to appropriate questions from stockholders.

Annual Meeting Admission
If you plan to attend the annual meeting in person, you must register by 11:59 p.m. Eastern time on Thursday, September 19, 2019. See page 108 of the proxy statement for information on how to register in advance to attend the meeting.

If you attend the annual meeting in person, you will need to present your admission ticket, which you will receive in advance, and a valid government-issued photo identification.

Please Vote Your Shares
Your vote is very important. Please vote your shares whether or not you plan to attend the meeting. We look forward to your attendance at the annual meeting either in person or by proxy.

By order of the Board of Directors,

MARK R. ALLEN
Executive Vice President,
General Counsel and Secretary

August 12, 2019

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON SEPTEMBER 23, 2019:

The following materials are available on the Investor Relations section of the FedEx website at http://investors.fedex.com:

The Notice of Annual Meeting of Stockholders to be held September 23, 2019;
The FedEx 2019 Proxy Statement; and
The FedEx Annual Report to Stockholders for the fiscal year ended May 31, 2019.

A Notice Regarding the Internet Availability of Proxy Materials or the proxy statement, form of proxy and accompanying materials are first being sent to stockholders on or about August 12, 2019.

LOGISTICS

Date and Time

Monday, September 23,
2019, at 8:00 a.m. local time

Location

The Auditorium, FedEx
Express World Headquarters,
3670 Hacks Cross Road,
Building G, Memphis,
Tennessee 38125

Who Can Vote

Stockholders of record at the close of business on July 29, 2019, may vote at the meeting or any postponements or adjournments of the meeting.


HOW TO CAST YOUR VOTE

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

Online
www.investorvote.com/FDX
through 9/22/2019

By phone

1-800-652-VOTE (8683)
through 9/22/2019

Proxy card

Completing, signing and returning your proxy card

In person

With a ticket obtained upon advance registration and valid photo identification

If you are a beneficial owner, please follow the instructions provided by your bank or broker to vote your shares. In order to vote at the meeting, you must obtain a legal proxy from your bank or broker and bring it with you to hand in with your signed ballot.



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Proxy Statement Summary

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

PROPOSAL 1

Election of Directors
Your Board of Directors recommends that you vote “FOR” the election of each of the twelve nominees

See page 8

Director COMMITTEES
Nominee and position Age since AC CC ITOC NGC Other public directorships

FREDERICK W. SMITH
Chairman and Chief Executive Officer of FedEx Corporation

     75      1971          

JOHN A. EDWARDSON(1) Independent
Former Chairman and Chief Executive Officer of CDW Corporation

70 2003

Chubb Limited

MARVIN R. ELLISON(2) Independent
President and Chief Executive Officer of Lowe’s Companies, Inc.

54 2014

Lowe’s Companies, Inc.

SUSAN PATRICIA GRIFFITH Independent
President and Chief Executive Officer of The Progressive Corporation

54 2018

The Progressive Corporation

JOHN C. (“CHRIS”) INGLIS(3) Independent
Professor at the U.S. Naval Academy

64 2015

Huntington Bancshares Inc.

KIMBERLY A. JABAL Independent
Chief Financial Officer of Unity Technologies

50 2013

SVB Financial Group

SHIRLEY ANN JACKSON(4) Independent
President of Rensselaer Polytechnic Institute

73 1999

International Business Machines Corporation, Public Service Enterprise Group Incorporated (Lead Director)

R. BRAD MARTIN(5) Independent
Chairman of RBM Venture Company

67 2011

Chesapeake Energy Corporation (Chairman)

JOSHUA COOPER RAMO Independent
Vice Chairman, Co-Chief Executive Officer, Kissinger Associates, Inc.

50 2011 Starbucks Corporation

SUSAN C. SCHWAB Independent
Professor at the University of Maryland School of Public Policy

64 2009

The Boeing Company,
Caterpillar Inc.,
Marriott International, Inc.

DAVID P. STEINER Lead Independent Director
Former Chief Executive Officer of Waste Management, Inc.

59 2009

Vulcan Materials Company

PAUL S. WALSH Independent
Chairman of Compass Group PLC

64 1996

Compass Group PLC (Chairman),
RM2 International S.A.,
TPG Pace Holdings Corp.,
McDonald’s Corporation

(1) If elected, Mr. Edwardson will become a member of the CC and NGC and will no longer serve on the AC.     
AC:  Audit Committee
CC:  Compensation Committee
ITOC:  Information Technology Oversight Committee
NGC:  Nominating & Governance Committee
Chair
(2) If elected, Mr. Ellison will become a member of the AC and will no longer serve on the ITOC or NGC. Member
(3) If elected, Mr. Inglis will no longer serve on the CC.    
(4) If elected, Dr. Jackson will no longer serve on the NGC.    
(5) If elected, Mr. Martin will become Chairman of the AC and will no longer serve on the NGC.  
 

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 2019 PROXY STATEMENT



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Proxy Statement Summary – Director Nominee Highlights

DIRECTOR NOMINEE HIGHLIGHTS

DIVERSITY OF TENURE, AGE, GENDER AND BACKGROUND

Independent Director Nominee Tenure*

Age*

10 years Average Independent Director Nominee Tenure

62 years Average Age

4 Newer Directors (6 years or less)

4 Medium-Tenured Directors (7 to 10 years)

4 Experienced Directors (more than 10 years)

2 Directors
45 to 50 Years

3 Directors
51 to 60 Years

5 Directors
61 to 70 Years

2 Directors
over 70 Years

             
             

Board Refreshment

Diversity

In the past 6 years:

33% Female

4 New independent directors have joined our Board

4 Independent directors have retired from our Board

17% Ethnically Diverse

         
*

As of August 12, 2019.


DIRECTOR EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS

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

Transportation

International

Financial

Marketing

Technological

Energy

Government

Leadership

6 Directors

7 Directors

6 Directors

4 Directors

5 Directors

4 Directors

5 Directors

12 Directors

CORPORATE GOVERNANCE HIGHLIGHTS

You can find detailed information about our corporate governance policies and practices in the Corporate Governance Matters section of this proxy statement. You can also access our corporate governance documents on the Governance & Citizenship page of the Investor Relations section of our website at http://investors.fedex.com.

CORPORATE GOVERNANCE FACTS

Proxy Access
Majority Voting for Directors
Annual Election of All Directors
Gender and Ethnically Diverse Board
Annual Board and Committee Self-Evaluations
Strong and Experienced Lead Independent Director
Independent Directors Meet Regularly Without Management Present
Annual Independent Director Evaluation of Chairman and CEO
Code of Business Conduct and Ethics Applicable to all Directors
Lead Independent Director’s Mandatory Service on Nominating & Governance Committee
Stock Ownership Goal for Directors and Executive Officers
Separate Chairman & CEO

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Proxy Statement Summary – Proposal 2

PROPOSAL 2

Advisory Vote to Approve
Named Executive Officer
Compensation
Your Board of Directors recommends that you vote “FOR” this proposal

See page 34

EXECUTIVE COMPENSATION DESIGN

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

In the 2018 advisory vote, 95.3% of the voted shares supported the compensation of our named executive officers.


ELEMENTS OF COMPENSATION

The elements of target total direct compensation for fiscal 2019 are presented below.

      Element and Fiscal 2019
Average NEO Target Pay Mix
(1)
      Description and Metrics
Base Salary     

Fixed cash income to retain and attract highly marketable executives in a competitive market for executive talent.

Performance-Based AIC

Annual cash incentive program designed to motivate our executives to achieve annual financial goals and other business objectives and reward them accordingly. Total amount paid is based on:

Achievement of adjusted consolidated operating income objective and individual performance goals

 

Restricted Stock(2)

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

An officer’s position and level of responsibility
Stock Options
Performance-Based LTI

Long-term cash incentive program designed to motivate management to build long-term shareowner value and reward them accordingly. Total amount paid is based on:

Achievement of aggregate earnings-per-share (“EPS”) goals for the preceding three-fiscal-year period
(1) See page 40 for individual fiscal 2019 target total direct compensation components.
(2) This average excludes our Chairman and CEO because restricted stock was not a component of his fiscal 2019 compensation. As a result, the percentages included in this table do not sum to 100%.

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 2019 PROXY STATEMENT



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Proxy Statement Summary – Proposal 3

FISCAL 2019 COMPENSATION HIGHLIGHTS

In response to the challenging business conditions, the fiscal 2019 annual incentive compensation program was amended to provide that no officers or managing/staff directors across the enterprise, including the named executive officers, would receive a payout under the program.
The FY2017-FY2019 long-term incentive plan paid above target to all participants, including the named executive officers, as the company’s strong adjusted EPS results in fiscal 2018 more than offset weaker than expected adjusted EPS results in fiscal 2019.
Officers realize value from the stock options recognized in the total direct compensation calculation only if the stock price appreciates after the grant date. The exercise price for the fiscal 2019 annual option grant to executive officers exceeded the closing price of FedEx common stock on July 29, 2019.

PROPOSAL 3

Approve the FedEx
Corporation 2019 Omnibus
Stock Incentive Plan
Your Board of Directors recommends that you vote “FOR” this proposal

See page 80

FedEx relies on equity awards to retain and attract key employees and non-employee Board members and believes that equity incentives are necessary for FedEx to remain competitive in retaining and attracting highly qualified individuals upon whom, in large measure, the future growth and success of FedEx depend. The FedEx Corporation 2010 Omnibus Stock Incentive Plan, as amended, which is the only FedEx equity compensation plan under which equity or equity-based awards can be made, is scheduled to expire on June 30, 2020. In order to continue the practice of granting equity incentive awards, the Board of Directors is seeking stockholder approval of the 2019 Plan. If adopted, the 2019 Plan will become effective on September 24, 2019 (the date immediately following the annual meeting).

If adopted, the number of shares available for future issuance under the 2019 Plan will equal the sum of (i) 6.7 million shares and (ii) the total number of shares remaining available for awards under the 2010 Plan, up to a maximum of 17,000,000 shares. Of the shares authorized for issuance under the 2019 Plan, the maximum number that may be issued as full-value awards will be 1,500,000.


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Proxy Statement Summary – Proposal 4

PROPOSAL 4

Ratify the Appointment of
Ernst & Young LLP as FedEx’s
Independent Registered
Public Accounting Firm
Your Board of Directors recommends that you vote “FOR” this proposal

See page 93

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm and has specific policies in place to ensure its independence. The Audit Committee has appointed Ernst & Young LLP (“Ernst & Young”) to serve as FedEx’s independent registered public accounting firm for fiscal 2020. Ernst & Young has been our independent registered public accounting firm since 2002.

Fees paid to Ernst & Young for fiscal 2019 and 2018 are detailed on page 96.

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


PROPOSALS 5-6

Two Stockholder Proposals,
if properly presented
Your Board of Directors recommends that you vote “AGAINST” each of these proposals

See pages 99 – 104

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 2019 PROXY STATEMENT



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2019 PROXY STATEMENT

Table of Contents

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS       01
PROXY STATEMENT SUMMARY 02
CORPORATE GOVERNANCE MATTERS 08
PROPOSAL 1 — ELECTION OF DIRECTORS 08
Process for Selecting Directors 08
Process for Training and Evaluating Directors 10
Nominees for Election to the Board 11
The Board’s Role and Responsibilities 22
Board Structure 25
Board Processes and Policies 29
Directors’ Compensation 31
EXECUTIVE COMPENSATION 34
PROPOSAL 2 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION 34
Report of the Compensation Committee of the Board of Directors 35
Compensation Discussion and Analysis 36
Summary Compensation Table 60
Grants of Plan-Based Awards During Fiscal 2019 65
Outstanding Equity Awards at End of Fiscal 2019 66
Option Exercises and Stock Vested During Fiscal 2019 69
Fiscal 2019 Pension Benefits 70
Potential Payments Upon Termination or Change of Control 73
CEO Pay Ratio 78
2019 OMNIBUS STOCK INCENTIVE PLAN 80
PROPOSAL 3 — APPROVAL OF THE FEDEX CORPORATION 2019 OMNIBUS STOCK INCENTIVE PLAN 80
EQUITY COMPENSATION PLANS 92
Equity Compensation Plans Approved by Stockholders 92
Equity Compensation Plans Not Approved by Stockholders 92
Summary Table 92
AUDIT MATTERS 93
PROPOSAL 4 — RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 93
Appointment of Independent Registered Public Accounting Firm 93
Policies Regarding Independent Auditor 93
Report of the Audit Committee of the Board of Directors 94
Audit and Non-Audit Fees 96
STOCK OWNERSHIP 97
Directors and Executive Officers 97
Significant Stockholders 98
STOCKHOLDER PROPOSALS 99
INFORMATION ABOUT THE ANNUAL MEETING 105
ADDITIONAL INFORMATION 111
General Information 111
Proxy Solicitation 111
Householding 111
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2020 ANNUAL MEETING 112
Stockholder Proposals for 2020 Annual Meeting 112
Proxy Access Director Nominations 112
Additional Information 112
APPENDIX A – COMPANIES IN DIRECTOR COMPENSATION COMPARISON SURVEY GROUP A-1
APPENDIX B – COMPANIES IN EXECUTIVE COMPENSATION COMPARISON SURVEY GROUP B-1
APPENDIX C – RECONCILIATIONS OF NON-GAAP MEASURES C-1
APPENDIX D – FEDEX CORPORATION 2019 OMNIBUS STOCK INCENTIVE PLAN D-1

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Corporate Governance Matters

PROPOSAL 1

Election of Directors
Your Board of Directors recommends that you vote “FOR” the election of each of the twelve nominees

All of FedEx’s directors are elected at each annual meeting of stockholders and hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. The Board of Directors currently consists of twelve members. The Board proposes that each of the current directors be reelected to the Board. Each of the nominees elected at this annual meeting will hold office until the annual meeting of stockholders to be held in 2020 and until his or her successor is duly elected and qualified.

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

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

PROCESS FOR SELECTING DIRECTORS

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

Experience, Qualifications, Attributes and Skills

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

The highest level of personal and professional ethics, integrity and values;
Practical wisdom and mature judgment;
     
An inquiring and independent mind;
Expertise that is useful to FedEx and complementary to the background and experience of other Board members; and
     
Willingness to represent the best interests of all stockholders and objectively appraise management performance.

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 2019 PROXY STATEMENT



Table of Contents

Corporate Governance Matters – Process for Selecting Directors

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

TRANSPORTATION
INDUSTRY EXPERIENCE
TECHNOLOGICAL
EXPERTISE

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

INTERNATIONAL
EXPERIENCE
ENERGY EXPERTISE
FINANCIAL EXPERTISE GOVERNMENT
EXPERIENCE
MARKETING EXPERTISE LEADERSHIP
EXPERIENCE

Nomination Process

NOMINATION OF DIRECTOR CANDIDATES

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

The Committee considers potential new candidates that may be proposed by current directors, management, professional search firms, stockholders or other persons. The Committee may engage a third-party executive search firm to assist in identifying potential director candidates. The Committee considers and evaluates a director candidate recommended by a stockholder in the same manner as a nominee recommended by a Board member, management, search firm or other sources.
      The Nominating & Governance Committee evaluates a potential new director candidate thoroughly in considering whether the candidate fits the criteria that the Board seeks in all of its directors and how that candidate’s skills and experience would contribute to the Board. The process may include reviewing the candidate’s qualifications, interviewing the candidate, engaging an outside firm to gather additional information and making inquiries of persons with knowledge of the candidate.

      In its evaluation of all director candidates, including the members of the Board of Directors eligible for reelection, the Nominating & Governance Committee considers the appropriate size, composition, skills and contributions of current members and the needs of the Board of Directors and each of its committees.
 
AS A RESULT OF THIS PROCESS, FOUR NEW, INDEPENDENT, HIGHLY QUALIFIED DIRECTORS HAVE JOINED THE FEDEX BOARD IN THE PAST SIX YEARS.

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Corporate Governance Matters – Process for Training and Evaluating Directors

STOCKHOLDER NOMINATIONS

The Nominating & Governance Committee will consider director nominees recommended by stockholders. To recommend a prospective director candidate for the Nominating & Governance Committee’s consideration, stockholders may submit the candidate’s name, qualifications, including whether the candidate satisfies the requirements set forth in our Corporate Governance Guidelines and discussed in “— Process for Selecting Directors — Experience, Qualifications, Attributes and Skills,” and other relevant biographical information in writing to: FedEx Corporation Nominating & Governance Committee, c/o Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120. FedEx’s Bylaws require stockholders to give advance notice of stockholder proposals, including nominations of director candidates. For more information, please see “Stockholder Proposals and Director Nominations for 2020 Annual Meeting.”

MAJORITY-VOTING STANDARD FOR DIRECTOR ELECTIONS

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

PROCESS FOR TRAINING AND EVALUATING DIRECTORS

New Director Orientation

FedEx has a New Director Orientation Program that enables new members of the Board to quickly become active, knowledgeable and effective Board members. The program includes, among other things, individual meetings with key members of the Board and executive management, facility tours, and attendance at committee meetings of each Board committee even when the new director is not a member, in order to gain better understanding of committee functions. The process is tailored to take into account the individual needs of each new director.

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

Continuing Director Education

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

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 2019 PROXY STATEMENT



Table of Contents

Corporate Governance Matters – Nominees for Election to the Board

Board and Committee Evaluations

The Nominating & Governance Committee oversees an annual performance evaluation of each committee of the Board and the Board as a whole. Each Board member also completes an individual self-assessment, the responses to which are provided to the Chairman of the Board and the chairperson of the Nominating & Governance Committee, who is our lead independent director. The responses to the performance evaluations and individual self-assessments are compiled annually by a third-party provider who distributes the results to the applicable recipients.

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

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

NOMINEES FOR ELECTION TO THE BOARD

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

FREDERICK W. SMITH
Age 75
Director Since 1971
Committees None
Other Public Company
Directorships None
Mr. Smith is the company’s founder and has been Chairman and Chief Executive Officer of FedEx since 1998 and Chairman of FedEx Express since 1975. Mr. Smith was President of FedEx from 1998 through January 2017. He was Chairman, President and Chief Executive Officer of FedEx Express from 1983 to 1998, Chief Executive Officer of FedEx Express from 1977 to 1998, and President of FedEx Express from 1971 to 1975.
 
 
Skills and Qualifications
 
           
Transportation Industry
Founder of our company and the pioneer of the express transportation industry.
Energy
Co-chairman of the Energy Security Leadership Council.
International
Leads our multinational company and has served on the board of the Council on Foreign Relations and as chairman of the U.S.-China Business Council and the French-American Business Council.

 

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Table of Contents

Corporate Governance Matters – Nominees for Election to the Board

JOHN A. EDWARDSON
Independent
Age 70
Director Since 2003
Committees
Audit (Chairman)
Other Public Company
Directorships
Chubb Limited
Mr. Edwardson is the former Chairman and Chief Executive Officer of CDW Corporation, a provider of technology products and services, serving as Chief Executive Officer from 2001 to September 2011 and as Chairman from 2001 to December 2012. He was Chairman and Chief Executive Officer of Burns International Services Corporation, a provider of security services, from 1999 to 2000. He was President and Chief Operating Officer of UAL Corporation (the parent company of United Air Lines, Inc.), an airline, from 1995 to 1998. He is a former director of CDW Corporation and Rockwell Collins, Inc.
 
 
Skills and Qualifications
 
           
Financial
Former CFO of two public companies. An audit committee financial expert, as determined by the Board.
Technological
Former CEO of a technology products and services provider.
Transportation Industry/International
Former President and COO of a major airline.

 

MARVIN R. ELLISON
Independent
Age 54
Director Since 2014
Committees
Compensation
Information Technology
Oversight
Nominating &
Governance
Other Public Company
Directorships
Lowe’s Companies, Inc.
Mr. Ellison serves as President and Chief Executive Officer and a director of Lowe’s Companies, Inc., a home improvement retailer, positions he has held since July 2018. Mr. Ellison served as Chairman of J. C. Penney Company, Inc., an apparel and home furnishings retailer, from August 2016 until May 2018, and Chief Executive Officer from August 2015 through May 2018. He served as President and CEO-Designee of J. C. Penney from November 2014 through July 2015. From August 2008 through October 2014, Mr. Ellison served as Executive Vice President – U.S. Stores of The Home Depot, Inc., a home improvement specialty retailer. From June 2002 to August 2008, he served in a variety of operational roles at The Home Depot, including as President – Northern Division and as Senior Vice President – Global Logistics. Prior to joining The Home Depot, Mr. Ellison spent 15 years at Target Corporation in a variety of operational roles. He is a former director of J. C. Penney Company, Inc. and H&R Block, Inc.
 
 
Skills and Qualifications
 
           
Marketing
Marketing expert through his executive experience at Lowe’s, The Home Depot and J. C. Penney.
Leadership
Significant executive leadership experience gained from executive positions held at Lowe’s, The Home Depot and J. C. Penney.
Transportation Industry
Served in a variety of logistics roles during his career, including as Senior Vice President – Global Logistics at The Home Depot. Also has significant e-commerce experience due to his executive positions held at Lowe’s, J. C. Penney and The Home Depot.

 

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SUSAN PATRICIA GRIFFITH
Independent
Age 54
Director Since 2018
Committees
Information Technology
Oversight
Nominating &
Governance
Other Public Company
Directorships
The Progressive
Corporation
Ms. Griffith currently serves as President and Chief Executive Officer of The Progressive Corporation, a leading property and casualty insurance company, positions she has held since July 2016. Prior to being named President and Chief Executive Officer, Ms. Griffith served as Personal Lines Chief Operating Officer from April 2015 through June 2016 and Vice President from May 2015 through June 2016. She joined Progressive as a claims representative in 1988 and has served in many key leadership positions during her tenure. Ms. Griffith held several managerial positions in the Claims division before being named Chief Human Resources Officer in 2002. In 2008, she returned to the Claims division as the group president, and prior to being named Personal Lines Chief Operating Officer, she was President of Customer Operations from April 2014 to March 2015. Ms. Griffith was named one of FORTUNE magazine’s “Most Powerful Women in Business” in 2016 and 2017. She is a former director of The Children’s Place, Inc.
 
 
Skills and Qualifications
 
           
Marketing
Extensive executive and managerial experience in an industry that emphasizes distinctive advertising and marketing campaigns.
Leadership
Has held a series of executive leadership positions at The Progressive Corporation, including her role as President and CEO.
Technological
Executive and managerial experience at a company that relies heavily on its ability to adapt to change, innovate, develop, and implement new applications and other technologies.

 

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JOHN C. (“CHRIS”) INGLIS
Independent
Age 64
Director Since 2015
Committees
Information Technology
Oversight (Chairman)
Compensation
Nominating &
Governance
Other Public Company
Directorships
Huntington
Bancshares Inc.
Mr. Inglis is currently a Visiting Professor of Cyber Studies at the U.S. Naval Academy. He previously served for 28 years at the National Security Agency as a computer scientist and operational manager, retiring in 2014 as the Agency’s Deputy Director and senior civilian leader. In this role, he acted as the NSA’s chief operating officer responsible for guiding and directing strategies, operations and policy. Prior to joining the NSA, Mr. Inglis had nine years of active duty service as an officer and pilot in the U.S. Air Force, followed by twenty-one years with the Air National Guard, from which he retired as a Brigadier General. He is a former director of KEYW Corp.
 
 
Skills and Qualifications
 
                 
Transportation Industry
Commanded USAF C-130 tactical airlift units at the Squadron and Group level, holds the rating of USAF Command Pilot and has more than 20 years of experience piloting USAF C-141 and C-130 aircraft.
International
Has extensive experience conducting intelligence liaison as a senior representative of the U.S. government, including three years as the U.S. Special Liaison to the United Kingdom at U.S. Embassy London.
Technological
Serves on technical advisory boards across the private and public sectors, including service as a member of the U.S. Defense Science Board. Holds graduate degrees in engineering and computer science from Columbia, Johns Hopkins, and George Washington Universities.
Government/Leadership
Served for 17 years as a senior executive in the U.S. Department of Defense, including seven and one-half years as the Deputy Director and Chief Operating Officer of the NSA. He currently serves as a member of the Strategic Advisory Groups for U.S. Strategic Command and the Director of National Intelligence. Mr. Inglis is also a commissioner on the U.S. Cyberspace Solarium Commission charged by law to consider and recommend a U.S. national cyberspace strategy.

 

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KIMBERLY A. JABAL
Independent
Age 50
Director Since 2013
Committees
Audit
Information Technology
Oversight
Other Public Company
Directorships
SVB Financial Group
Ms. Jabal currently is the Chief Financial Officer of Unity Technologies, a creator of real-time 3D development platforms. Prior to joining Unity Technologies in March 2019, Ms. Jabal was the Chief Financial Officer of Weebly, a small business software company, from November 2015 through December 2018. Prior to joining Weebly in November 2015, she served as Chief Financial Officer of Path, Inc. and as Vice President of Finance at Lytro, Inc., both early-stage technology companies. She served in various capacities at Google from 2003 to 2011, including as director of engineering finance, director of investor relations and director of online sales finance. Prior to Google, Ms. Jabal spent two years at Goldman Sachs in technology investment banking and eight years with Accenture working in information technology.
 
 
Skills and Qualifications
 
     
Financial
Current CFO of a software company, sixteen years of experience in finance at software and Internet companies, and two years of experience in technology investment banking.
Technological
Has extensive information technology experience, having spent eight years serving in various capacities with Google and eight years with Accenture designing and building technical infrastructure for major information technology systems implementations at global companies. Ms. Jabal also holds a B.S. in engineering from the University of Illinois at Urbana-Champaign.

 

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SHIRLEY ANN JACKSON
Independent
Age 73
Director Since 1999
Committees
Audit
Compensation
Nominating &
Governance
Other Public Company
Directorships
International Business
Machines Corporation and
Public Service Enterprise
Group Incorporated
(Lead Director)
Dr. Jackson is President of Rensselaer Polytechnic Institute (RPI), a technological research university, a position she has held since 1999. She was Chairman of the U.S. Nuclear Regulatory Commission (NRC) from 1995 to 1999 and Commissioner of the NRC from 1995 to 1999. Dr. Jackson was a member of the President’s Council of Advisors on Science and Technology (PCAST) from 2009 until 2014, Co-Chair of the President’s Intelligence Advisory Board from November 2014 to January 2017, a member of the International Security Advisory Board to the U.S. Secretary of State from July 2011 to January 2017, a member of the Secretary of Energy Advisory Board from 2013 to 2017, a member of the Board of Directors of the Council on Foreign Relations from 2008 to 2018, and Chairman of the International Nuclear Regulators Association from 1997 to 1999. Dr. Jackson was Vice-Chair of the Board of Regents of the Smithsonian Institution from 2014 to 2017 and a member of the Board of Regents from 2005 to 2017. She also is a life trustee of M.I.T. (member of the M.I.T. Corporation). Dr. Jackson is a National Medal of Science recipient. She was previously a director of Medtronic, Inc., Marathon Oil Corporation, NYSE Euronext and U.S. Steel Corporation.
 
 
Skills and Qualifications
 
                 
Financial
Has numerous years of public company audit committee experience, including as a chair. Dr. Jackson is also a former director of NYSE Euronext and former chair of the Board of NYSE Regulation.
Technological
Earned undergraduate and doctorate degrees in physics from the Massachusetts Institute of Technology and is the president of a world-renowned technological research university (RPI). Dr. Jackson is also a member of the Board of IBM and a former member of PCAST.
International
As Chairman and Commissioner of the U.S. Nuclear Regulatory Commission, traveled extensively on behalf of the U.S. government, including negotiating on nuclear safety matters with foreign government officials. Extensive involvement with the World Economic Forum (WEF), including as Co-Chair of the WEF Global Future Council on International Security. Dr. Jackson is also a former director of the Council on Foreign Relations.
Energy/Government/ Leadership
Serves as Lead Director of Public Service Enterprise Group Incorporated and is the former Vice-Chair of the Smithsonian Institution, former Chairman and Commissioner of the U.S. Nuclear Regulatory Commission, former Co-Chair of the President’s Intelligence Advisory Board, a former member of the International Security Advisory Board to the U.S. Secretary of State, a former member of the Secretary of Energy Advisory Board and a former director of Marathon Oil Corporation.

 

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R. BRAD MARTIN
Independent
Age 67
Director Since 2011
Committees
Audit
Nominating &
Governance
Other Public Company
Directorships
Chesapeake Energy
Corporation (Chairman)
Mr. Martin is Chairman of the Board of Chesapeake Energy Corporation, a producer of oil, natural gas, and natural gas liquids, a position he has held since October 2015. In addition, Mr. Martin has served as Chairman of RBM Ventures, a private investment company, since 2007. Mr. Martin was Chairman and Chief Executive Officer of Saks Incorporated from 1989 to 2006 and remained Chairman until his retirement in 2007. He is the former Interim President of the University of Memphis, a position he held from July 2013 until May 2014. He was previously a director of First Horizon National Corporation, Caesars Entertainment Corporation, Dillard’s, Inc., Gaylord Entertainment Company, lululemon athletica inc. and Ruby Tuesday, Inc.
 
 
Skills and Qualifications
 
                 
Financial
Earned an MBA from Vanderbilt University. As a former CEO of a public company, he actively supervised the CFO, and has significant public company audit committee experience. An audit committee financial expert, as determined by the Board.
Marketing
Gained valuable retail marketing experience and successfully applied his marketing expertise as the former CEO of Saks, a leading department store retailer.
Energy
Member of the boards of Chesapeake Energy Corporation, where he currently serves as Chairman, and Pilot Travel Centers LLC.
Government
Former Tennessee state representative.

 

JOSHUA COOPER RAMO
Independent
Age 50
Director Since 2011
Committees
Audit
Information Technology
Oversight
Other Public Company
Directorships
Starbucks Corporation
Mr. Ramo is Vice Chairman, Co-Chief Executive Officer, Kissinger Associates, Inc., a strategic advisory firm (he has been Vice Chairman since 2011 and Co-Chief Executive Officer since July 1, 2015). He served as Managing Director of Kissinger Associates from 2006 to 2011. Prior to joining Kissinger Associates, he was Managing Partner of JL Thornton & Co., LLC, a consulting firm. Before that, he worked as a journalist and served as Senior Editor, Foreign Editor and then Assistant Managing Editor of TIME Magazine from 1995 to 2003.
 
 
Skills and Qualifications
 
     
Leadership
Vice Chairman, Co-Chief Executive Officer, Kissinger Associates.
International
Has been a term member of the Council on Foreign Relations, Asia 21 Leaders Program, World Economic Forum’s Young Global Leaders and Global Leaders of Tomorrow. He co-founded the U.S.-China Young Leaders Forum in conjunction with the National Committee on U.S.-China Relations.
 
 

 

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SUSAN C. SCHWAB
Independent
Age 64
Director Since 2009
Committees
Compensation
Information Technology
Oversight
Other Public Company
Directorships
The Boeing Company,
Caterpillar Inc. and
Marriott International, Inc.
Ambassador Schwab is a Professor at the University of Maryland School of Public Policy, a position she has held since January 2009. She has also served as a strategic advisor to Mayer Brown LLP, a law firm, since March 2010. She served as U.S. Trade Representative from 2006 to January 2009 and as Deputy U.S. Trade Representative from 2005 to 2006. She was Vice Chancellor of the University System of Maryland and President and Chief Executive Officer of the University System of Maryland Foundation from 2004 to 2005. She was Dean of the University of Maryland School of Public Policy from 1995 to 2003. She was Director of Corporate Business Development of Motorola, Inc., an electronics manufacturer, from 1993 to 1995. She was Assistant Secretary of Commerce for the U.S. and Foreign Commercial Service from 1989 to 1993.
 
 
Skills and Qualifications
 
     
International/Government
Former U.S. Trade Representative and former Director–General of the U.S. and Foreign Commercial Service (Assistant Secretary of Commerce), the export promotion arm of the U.S. government.
Leadership
Former U.S. Trade Representative, former Director–General of the U.S. and Foreign Commercial Service (Assistant Secretary of Commerce), former President and Chief Executive Officer of the University System of Maryland Foundation and former Dean of the University of Maryland School of Public Policy.
 
 
 

 

DAVID P. STEINER
Lead Independent Director
Age 59
Director Since 2009
Committees
Nominating &
Governance (Chairman)
Other Public Company
Directorships
Vulcan Materials
Company
Mr. Steiner is the former Chief Executive Officer of Waste Management, Inc., a provider of integrated waste management services, serving as Chief Executive Officer from 2004 through October 2016. He was President of Waste Management, Inc. from 2010 through July 2016, Executive Vice President and Chief Financial Officer from 2003 to 2004, Senior Vice President, General Counsel and Corporate Secretary from 2001 to 2003, and Vice President and Deputy General Counsel from 2000 to 2001. He was a partner at Phelps Dunbar L.L.P., a law firm, from 1990 to 2000. Mr. Steiner was previously a director of TE Connectivity Ltd. and Waste Management, Inc.
 
 
Skills and Qualifications
 
           
Transportation
Former CEO of Waste Management, which transports waste materials.
Financial
Has an accounting degree from Louisiana State University and was CFO of Waste Management before becoming its CEO.
 
 
 
Energy
Former CEO of Waste Management, which has taken an industry leadership role in converting waste to renewable energy.

 

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PAUL S. WALSH
Independent
Age 64
Director Since 1996
Committees
Compensation
(Chairman)
Other Public Company
Directorships
Compass Group PLC
(Chairman),
RM2 International S.A.,
TPG Pace
Holdings Corp. and
McDonald’s Corporation
Mr. Walsh is Chairman of the Board of Compass Group PLC, a food service and support services company, a position he has held since February 2014. He also serves as an advisor for L.E.K. Consulting, a global strategy consulting firm, and TPG Capital LLP, a private investment firm. Mr. Walsh served as Chief Executive Officer of Diageo plc, a beverage company, from 2000 to June 2013 and then served as an advisor to the company from July 2013 through 2014. Mr. Walsh also is a director of Chime Communications Limited, where he serves as Chairman of the Board, and RM2 International S.A. He has been a member of the U.K. Prime Minister’s Business Advisory Group since July 2015 and has been a Business Ambassador on the U.K. government’s Business Ambassador Network since his appointment in August 2012. Mr. Walsh was Chairman, President and Chief Executive Officer of The Pillsbury Company, a wholly owned subsidiary of Diageo plc, from 1996 to 2000, and Chief Executive Officer of The Pillsbury Company from 1992 to 1996. He was previously a director of Avanti Communications Group PLC, Centrica plc, Diageo plc, HSBC Holdings plc, Ontex Group NV, Pace Holdings Corp. and Unilever PLC.
 
 
Skills and Qualifications
 
                 
International
Former CEO of a U.K.–based, large multinational corporation.
Financial
Has held executive finance positions, including CFO of a major division, at a U.K.–based public company.
Marketing
Led a company that owes much of its growth and success to highly effective marketing of its brands. His consumer-centric experience brings a vital and unique perspective to the Board.
Government
Has held executive positions at companies where government interface is crucial.

 

SUMMARY OF DIRECTOR EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS

Transportation Industry Experience is a positive attribute as it greatly increases a director’s understanding of our business operations and its management.
International Experience is beneficial given our continued capitalization on increasing globalization and the resulting expansion of customer access to goods, services and information.
Financial Expertise is important given our use of financial targets as measures of success and the importance of accurate financial reporting and robust internal auditing.
Marketing Expertise is valuable because we emphasize promoting and protecting the FedEx brand, one of our most important assets.
Technological Expertise is beneficial because attracting and retaining customers and competing effectively depend in part upon the sophistication and reliability of our technology.
Energy Expertise is important as we are committed to protecting the environment and have initiatives underway to reduce our energy use and minimize our environmental impact.
Government Experience is useful in our highly regulated industry as we work constructively with governments around the world.
Leadership Experience is critical because we want directors with the experience and confidence to capably advise our executive management team on a wide range of issues.

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Audit Committee Financial Expert

The Board of Directors has determined that at least two members of the Audit Committee, John A. Edwardson and R. Brad Martin, are audit committee financial experts as that term is defined in SEC rules.

Director Independence

The Board of Directors has determined that each member of the Audit, Compensation and Nominating & Governance Committees and, with the exception of Frederick W. Smith, each of the Board’s current members and director nominees (John A. Edwardson, Marvin R. Ellison, Susan Patricia Griffith, John C. (“Chris”) Inglis, Kimberly A. Jabal, Shirley Ann Jackson, R. Brad Martin, Joshua Cooper Ramo, Susan C. Schwab, David P. Steiner and Paul S. Walsh) is independent and meets the applicable independence requirements of the New York Stock Exchange (including the additional requirements for Audit Committee and Compensation Committee members) and the Board’s more stringent standards for determining director independence. Mr. Smith is FedEx’s Chairman of the Board and Chief Executive Officer. James L. Barksdale served as a director for approximately four months of fiscal 2019, but retired as a director immediately before the 2018 annual meeting, and the Board of Directors had previously determined that he was independent.

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

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

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

Mr. Barksdale served as an officer of FedEx, but he left the company well over five years ago (his employment at FedEx ended in 1992).
Mr. Barksdale has made an investment (holding a less-than-10% equity interest) in a privately held entity that is headed by Mr. Smith’s daughter and of which Mr. Smith is a director and 10% owner.
Messrs. Ellison and Martin and Alan B. Graf, Jr., FedEx’s Executive Vice President and Chief Financial Officer, serve on the Board of Trustees of the University of Memphis, a non-profit entity to which FedEx makes payments and charitable contributions. The payments and charitable contributions made by FedEx to the University of Memphis in its 2018 and 2016 fiscal years represented one percent of the University’s consolidated gross revenues for each such year, and the payments made by FedEx to the University in its 2017 fiscal year represented less than one percent of the University’s consolidated gross revenues for the year. The Board determined that Messrs. Ellison and Martin are independent directors under the Board’s independence standards as neither of them have a direct or indirect material relationship with either FedEx or the University of Memphis, other than as a director or trustee, and neither of them derive any financial or other personal benefit from these transactions.
FedEx has an ordinary course business relationship with Lowe’s Companies, Inc., an entity for which Mr. Ellison has served as President and Chief Executive Officer and as a director since July 2018. The amount of the payments made by FedEx to Lowe’s within any of its three most recently completed fiscal years has not exceeded one percent (or $1 million, whichever is greater) of its consolidated gross revenues for such year.
FedEx has an ordinary course business relationship with The Progressive Corporation, an entity for which Ms. Griffith serves as President and Chief Executive Officer and as a director since July 2016. The amount of the payments made by FedEx to Progressive within any of its three most recently completed fiscal years has not exceeded one percent (or $1 million, whichever is greater) of its consolidated gross revenues for such year.
Mr. Martin and Robert B. Carter, FedEx’s Executive Vice President, FedEx Information Services and Chief Information Officer, serve as members of the board of managers of Pilot Travel Centers LLC.
In the ordinary course of business, FedEx makes purchases of aircraft and related services and equipment from The Boeing Company, an entity for which Ambassador Schwab serves as a director. The payments made by FedEx to Boeing in its three most recently completed fiscal years represented more than one percent of Boeing’s consolidated gross revenues for each such year. Ambassador Schwab recuses herself when the Board discusses or votes on Boeing-related matters. The Board determined that Ambassador Schwab is an independent director under the Board’s independence standards as she does not have a direct or indirect material relationship with either FedEx or Boeing, other than as a director, and does not derive any financial benefit from these ordinary course transactions.

Related Person Transactions

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

In November 1999, FedEx entered into a multi-year, $205 million naming rights agreement with Washington Football, Inc. Under this agreement, FedEx has certain marketing rights, including the right to name the stadium where the NFL Washington Redskins professional football team plays “FedExField.” In August 2003, Mr. Smith acquired an approximate 10% ownership interest in the Washington Redskins and joined its Leadership Council, or board of directors.
FedEx’s policy on personal use of corporate aircraft requires officers to pay FedEx two times the cost of fuel, plus applicable passenger ticket taxes and fees, for personal trips. Pursuant to this requirement, Mr. Smith and David J. Bronczek, FedEx’s former President and Chief Operating Officer, paid FedEx $480,846 and $143,792, respectively, during fiscal 2019 in connection with certain personal use of corporate aircraft.
Mr. Smith’s son is employed by FedEx Logistics (formerly FedEx Trade Networks) as its President and CEO. The compensation of Mr. Smith’s son for fiscal 2019 (including any incentive compensation amounts and the Black-Scholes value of any stock option award) was approximately $1,500,000.

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Mr. Smith’s daughter is employed by FedEx Corporation as a global public policy advisor in Washington, D.C.; the brother of Rajesh Subramaniam, the company’s President and Chief Operating Officer, is employed by FedEx Services as a manager of information technology; the son-in-law of Mark R. Allen, FedEx’s Executive Vice President, General Counsel and Secretary, is employed by FedEx Express as a managing director in the legal department; and the son of Henry J. Maier, the President and Chief Executive Officer of FedEx Ground, was employed by FedEx Services (during June and July 2018) as a manager of marketing and, beginning August 1, 2018, by FedEx Logistics as a manager of program management and planning. The total annual compensation of each of Mr. Smith’s daughter, Mr. Subramaniam’s brother, Mr. Allen’s son-in-law and Mr. Maier’s son for fiscal 2019 (including any incentive compensation and the Black-Scholes value of any stock option award) did not, individually, exceed $315,000.
In fiscal 2017, following the Board’s approval, FedEx entered into a two-year agreement with LiveSafe, Inc., a leading mobile safety communications platform delivering actionable crowd-sourced safety and security intelligence, preventing incidents, and connecting people to the help they need. Mr. Smith is a former member of the board of directors of LiveSafe, and an affiliated entity of Mr. Smith has invested $7.25 million in LiveSafe’s Series B financings. Mr. Smith’s son is an employee and partial owner of LiveSafe. Under the terms of the agreement, FedEx paid LiveSafe $300,000 per year, in addition to an initial set-up fee of approximately $20,000. In July 2018, following the Board’s approval, FedEx and LiveSafe agreed to amend and extend the agreement through July 2021. Pursuant to the amendment, the number of licensed FedEx users of the LiveSafe application increased and FedEx will pay total license fees of approximately $4.4 million over the three-year term of the agreement.

THE BOARD’S ROLE AND RESPONSIBILITIES

FedEx Corporate Governance

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

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

The following sections summarize our corporate governance policies and practices, including our Board leadership structure and the responsibilities and activities of our Board and its committees. Our corporate governance documents, including our Corporate Governance Guidelines, our Board committee charters and our Code of Business Conduct and Ethics, are available on the Governance & Citizenship page of the Investor Relations section of our website at http://investors.fedex.com.

Board Risk Oversight

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

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

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

             
   
  The Audit Committee reviews and discusses with management the company’s major financial and other risk exposures and the steps management has taken to monitor and control such exposures and the implementation and effectiveness of the company’s compliance and ethics programs, including the Code of Business Conduct and Ethics and the employee hotline program. In addition, the Audit Committee is responsible for reviewing and discussing with management the guidelines and policies that govern the processes by which the company assesses and manages its exposure to all risk, including our ERM process. The ERM process culminates in an annual presentation to the Audit Committee on the key enterprise risks facing FedEx. The Information Technology Oversight Committee reviews and discusses with management the company’s cybersecurity risks and the technologies, policies, processes and practices for managing and mitigating such risks, and it reviews and discusses with management the quality and effectiveness of the company’s information technology systems and processes, including the extent to which those systems and processes protect the company from technology-related risks.  
     
     
   
  The Compensation Committee reviews and discusses with management the relationship between the company’s compensation policies and practices and the company’s risk management, including the extent to which those policies and practices create or decrease risks for the company. The Nominating & Governance Committee reviews and discusses with management, in light of the company’s risk exposure, the composition, structure, processes and practices of the Board and the Board committees. In addition, the Nominating & Governance Committee reviews and discusses with management the company’s corporate social responsibility strategies and programs, including the management of sustainability-related risks.  
     

Board Oversight of Sustainability and Corporate Social Responsibility Matters

FedEx is well recognized as a leader, not only in the transportation industry and for technological innovation, but also in global corporate social responsibility (“CSR”). We understand that a sustainable global business is tied to our global citizenship, and we are committed to connecting the world responsibly and resourcefully.

The FedEx Enterprise Sustainability Council is responsible for setting and implementing our company-wide sustainability strategy and is chaired by our Chief Sustainability Officer. The Chief Sustainability Officer also oversees the company-wide implementation of our environmental management system and reviews performance on an annual basis. The Chief Sustainability Officer gives periodic presentations to the full Board on our sustainability programs.

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In addition, during fiscal 2019, the Board amended the Nominating & Governance Committee charter to reflect that the committee would review and discuss with management, at least annually, the company’s (i) CSR strategies and programs, including with respect to sustainability, and (ii) management of sustainability-related risks.

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

FedEx publishes a global CSR report describing how we think about our responsibilities in the area of global CSR that includes important goals and metrics demonstrating our commitment to fulfilling these responsibilities. Our 2019 Global Citizenship Report is available at http://csr.fedex.com. The Global Citizenship Report is not incorporated by reference in, and does not form a part of, this proxy statement.

Corporate Culture and Strategy

We believe that maintaining a sound corporate culture furthers our corporate mission to produce superior financial returns for our shareowners by providing high value-added logistics, transportation and related business services through our focused operating companies. At FedEx, we view our greatest asset as our people, and we are committed to providing a workplace where our team members feel respected, satisfied and appreciated, which includes promoting a diverse and inclusive workplace. We see the diversity of backgrounds, perspectives and experiences that our team members bring to the company as essential to fostering exceptional business results. We are committed to strengthening our team members’ careers and their general health and well-being, offering programs that help team members advance in their careers and providing training, mentoring and networking opportunities, as well as health and wellness programs, including competitive health benefits. Our 2019 Global Citizenship Report, which is available at http://csr.fedex.com, provides information regarding the initiatives we have in place to support our team members, including those relating to workplace safety, recruitment and retention, learning and development, diversity and inclusion and quality of life.

Further emphasizing our commitment to sound corporate culture and its relationship to corporate strategy, in fiscal 2019 the Board amended the Corporate Governance Guidelines to reflect its role in oversight of the company’s culture. As described in the applicable guideline, the Board is responsible for reviewing and overseeing the company’s culture and evaluating management’s efforts to align corporate culture with the company’s stated values and long-term strategy. The Board has delegated to each of its committees responsibility for the oversight of specific aspects of the company’s culture that fall within the committee’s areas of responsibility (e.g., the Audit Committee reviews the implementation and effectiveness of the company’s corporate integrity and compliance programs). In furtherance of its oversight responsibilities, the Board will periodically discuss with the Chairman of the Board and Chief Executive Officer and other members of management (i) the implementation and effectiveness of the company’s policies, practices, programs and initiatives that promote a culture consistent with the company’s stated values and (ii) how the company’s culture supports the achievement of its long-term strategic objectives.

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

Stockholder Engagement

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

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

Executive Management Succession Planning

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

BOARD STRUCTURE

Board Leadership Structure

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

The leadership structure of our Board of Directors includes:

                                                                              

A combined Chairman of the Board and Chief Executive Officer.

Independent, active and effective directors of equal importance and rights, who all have the same opportunities and responsibilities in providing vigorous oversight of the effectiveness of management policies.

A Lead Independent Director. The Chairperson of the Nominating & Governance Committee, who is elected annually by a majority of the independent Board members, serves as the Lead Independent Director.

The Board believes that FedEx has been and continues to be well served by having the company’s founder, Frederick W. Smith, serve as both Chairman of the Board and Chief Executive Officer. The current Board leadership model, when combined with the composition of the Board, the strong leadership of our independent directors, Board committees and Lead Independent Director, and the highly effective corporate governance structures and processes in place, strikes an appropriate balance between consistent leadership and independent oversight of FedEx’s business and affairs. As set forth in our Corporate Governance Guidelines, the Lead Independent Director has the following responsibilities and authority:

Presides at all meetings of the Board of Directors at which the Chairman of the Board and Chief Executive Officer is not present, including executive sessions of the independent Board members;
Serves as a liaison between the Chairman of the Board and Chief Executive Officer and independent Board members, it being understood that all Board members have complete and open access to any member of management;

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Reviews and approves Board meeting agendas and Board meeting schedules and consults with the Chairman of the Board and Chief Executive Officer with regard to other information sent to the Board of Directors in connection with Board meetings or other Board action, it being understood that all Board members may place items on the agenda for Board meetings;
Calls meetings of the independent Board members, as necessary or appropriate; and
Communicates with stockholders of the company, as appropriate, if requested by such stockholders.

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

DIRECTORS STAND FOR
ELECTION ANNUALLY BY
MAJORITY VOTE.

     

Under our Bylaws, all members of our Board of Directors are elected annually. In addition, our Bylaws require that we use a majority-voting standard in uncontested director elections in which a director nominee must receive more votes cast “for” than “against” in order to be elected.

OUR INDEPENDENT
DIRECTORS HOLD REGULAR
EXECUTIVE SESSIONS.

Our independent Board members meet at regularly scheduled executive sessions without management present in conjunction with each in-person Board meeting. The Lead Independent Director conducts and presides at these meetings. In addition, the Lead Independent Director may call such meetings of the independent Board members as he or she deems necessary or appropriate, may be designated to preside at any Board or stockholder meeting and presides at all Board meetings at which the Chairman of the Board and Chief Executive Officer is not present.

BOARD MEMBERS MAY
SUBMIT AGENDA ITEMS AND
INFORMATION REQUESTS.

Each Board member may place items on the agenda for Board meetings, raise subjects that are not on the agenda for that meeting or request information that has not otherwise been provided to the Board. Additionally, the Lead Independent Director reviews and approves all Board meeting schedules and agendas and consults with the Chairman of the Board and Chief Executive Officer regarding other information sent to the Board in connection with Board meetings or other Board action.

OUR BOARD MEMBERS
INTERACT WITH MANAGEMENT.

Consistent with our philosophy of empowering each member of our Board of Directors, each Board member has complete and open access to any member of management and to the chairperson of each Board committee for the purpose of discussing any matter related to the work of such committee. The Lead Independent Director also serves as a liaison, but not a buffer, between the Chairman of the Board and Chief Executive Officer and independent Board members.

OUR DIRECTORS ARE
ENCOURAGED TO INTERACT
WITH STOCKHOLDERS.

If any of our major stockholders asks to speak with any Board member on a matter related to FedEx, we encourage that director to make himself or herself available and will facilitate such interaction. Additionally, the Lead Independent Director is available to communicate with stockholders, as appropriate, if requested by such stockholders.

OUR DIRECTORS CAN REQUEST
SPECIAL BOARD MEETINGS.

Special meetings of the Board can be called by the Chairman of the Board and Chief Executive Officer or at the request of two or more directors.

THE BOARD OR ANY BOARD
COMMITTEE CAN RETAIN
INDEPENDENT ADVISORS.

The Board and each Board committee have the authority to retain independent legal, financial and other advisors as they deem appropriate.

OUR BYLAWS PROVIDE
STOCKHOLDERS A MEANINGFUL
PROXY ACCESS RIGHT.

In March 2016, the Board of Directors amended our bylaws to implement proxy access. The bylaw includes the following terms: a 3% ownership threshold and 3-year holding period requirement; a cap on the number of director nominees at two directors or 20% of the Board, whichever is greater; and a stockholder group aggregation limit of 20.


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Board Committees

The Board of Directors has a standing Audit Committee, Compensation Committee, Information Technology Oversight Committee and Nominating & Governance Committee. Each committee’s written charter, as adopted by the Board of Directors, is available on the Investor Relations section of our website at http://investors.fedex.com on the Governance & Citizenship page under “Committee Charters.” Committee memberships are currently as follows:

Audit Committee
   

COMMITTEE MEMBERS

JOHN A. EDWARDSON*
(CHAIRMAN)

Kimberly A. Jabal
Shirley Ann Jackson
R. Brad Martin*
Joshua Cooper Ramo

FY19 MEETINGS HELD
9

COMMITTEE REPORT
page 94

Audit Committee
Financial Expert

COMMITTEE FUNCTIONS:

Oversees the independent registered public accounting firm’s qualifications, independence and performance;
Assists the Board of Directors in its oversight of (i) the integrity of FedEx’s financial statements, (ii) the effectiveness of FedEx’s disclosure controls and procedures and internal control over financial reporting, and (iii) the performance of the internal auditors;
Preapproves all audit and allowable non-audit services to be provided by FedEx’s independent registered public accounting firm;
Reviews and discusses with management and the Board of Directors (i) the guidelines and policies that govern the processes by which the company assesses and manages its exposure to risk and (ii) the company’s major financial and other risk exposures and the steps management has taken to monitor and control such exposures; and
Oversees FedEx’s compliance with legal and regulatory requirements and the implementation and effectiveness of FedEx’s corporate integrity and compliance programs.
 
 
Compensation Committee
 

COMMITTEE MEMBERS

PAUL S. WALSH
(CHAIRMAN)

Marvin R. Ellison
John C. (“Chris”) Inglis
Shirley Ann Jackson
Susan C. Schwab

FY19 MEETINGS HELD
5

COMMITTEE REPORT
page 35

COMMITTEE FUNCTIONS:

Evaluates, together with the independent members of the Board, the performance of FedEx’s Chairman of the Board and Chief Executive Officer and recommends his compensation for approval by the independent directors;
Helps discharge the Board’s responsibilities relating to the compensation of executive management;
Reviews and discusses with management the Compensation Discussion and Analysis and produces a report recommending whether the Compensation Discussion and Analysis should be included in the proxy statement; and
Oversees the administration of FedEx’s equity compensation plans and reviews the costs and structure of key employee benefit and fringe-benefit plans and programs.

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Information Technology Oversight Committee
 

COMMITTEE MEMBERS

JOHN C. (“CHRIS”) INGLIS
(CHAIRMAN)

Marvin R. Ellison
Susan Patricia Griffith
Kimberly A. Jabal
Joshua Cooper Ramo
Susan C. Schwab

FY19 MEETINGS HELD
6

COMMITTEE FUNCTIONS:

Reviews major information technology (“IT”) related projects and technology architecture decisions;
Assesses whether FedEx’s IT programs effectively support FedEx’s business objectives and strategies;
Assists FedEx’s Board of Directors in oversight of cybersecurity risks and FedEx management’s efforts to monitor and mitigate those risks; and
Advises FedEx’s senior IT management team and the Board of Directors on IT-related matters.
 
 
Nominating & Governance Committee
 

COMMITTEE MEMBERS

DAVID P. STEINER
(CHAIRMAN)

Marvin R. Ellison
Susan Patricia Griffith
John C. (“Chris”) Inglis
Shirley Ann Jackson
R. Brad Martin

FY19 MEETINGS HELD
5

COMMITTEE FUNCTIONS:

Identifies individuals qualified to become Board members;
Recommends to the Board director nominees to be proposed for election at the annual meeting of stockholders;
Recommends to the Board directors for appointment to Board committees;
Assists the Board in developing and implementing effective corporate governance programs;
Reviews and discusses with management the company’s political activities and the company’s Policy on Political Contributions; and
Reviews and discusses with management the company’s CSR strategies and programs, including the management of sustainability-related risks.

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

In response to a stockholder demand letter, one special committee of the Board has been formed, comprised of Messrs. Edwardson and Steiner and Ms. Jabal. The special committee held four meetings during fiscal 2019.

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The Board of Directors has approved reconstituting the committees so that, immediately following the annual meeting, if all of the director nominees are elected, committee memberships will be as follows:


AUDIT COMMITTEE

R. Brad Martin
(Chairman)
Marvin R. Ellison
Kimberly A. Jabal
Shirley Ann Jackson
Joshua Cooper Ramo

COMPENSATION
COMMITTEE

Paul S. Walsh
(Chairman)
John A. Edwardson
Marvin R. Ellison
Shirley Ann Jackson
Susan C. Schwab

INFORMATION
TECHNOLOGY OVERSIGHT
COMMITTEE

John C. (“Chris”) Inglis
(Chairman)
Susan Patricia Griffith
Kimberly A. Jabal
Joshua Cooper Ramo
Susan C. Schwab

NOMINATING &
GOVERNANCE
COMMITTEE

David P. Steiner
(Chairman)
John A. Edwardson
Susan Patricia Griffith
John C. (“Chris”) Inglis

Board Meetings and Meeting Attendance

During fiscal 2019, the Board of Directors held six regular meetings and one special meeting. The average attendance of all directors at Board and committee meetings was 96%. Each director attended at least 87% of the aggregate meetings of the Board and any committees on which he or she served that were held during the periods that he or she served as a director. Our policy on director attendance at meetings can be found in our Corporate Governance Guidelines, which are available on the Governance & Citizenship page under “Policies & Guidelines” of the Investor Relations section of our website at http://investors.fedex.com.

Attendance at Annual Meeting of Stockholders

FedEx expects all Board members to attend annual meetings of stockholders. Each then-current member of the Board of Directors attended the 2018 annual meeting of stockholders.

BOARD PROCESSES AND POLICIES

Director Mandatory Retirement

FedEx’s Corporate Governance Guidelines provide that a non-management director must retire immediately before the annual meeting of FedEx’s stockholders during the calendar year in which he or she attains age 75. Under this policy, a non-management director may not be nominated to a new term if he or she would be age 75 or older at the end of the calendar year in which the election is held.

Policy on Poison Pills

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

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Policy on Review and Preapproval of Related Person Transactions

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

Interfere with the objectivity and independence of any related person’s judgment or conduct in carrying out his or her duties and responsibilities to FedEx;

Not be fair as to FedEx; or

Otherwise be opposed to the best interests of FedEx and its stockholders.

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

Communications with Directors

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

Policy Regulating Trading by Insiders

We have comprehensive and detailed policies (memorialized in the FedEx Securities Manual) that regulate trading by our insiders, including Board members. The Securities Manual includes information regarding quiet periods, explains when transactions in FedEx stock are permitted and contains a mandatory pre-clearance policy for transactions in FedEx securities by certain insiders, including Board members. The Securities Manual prohibits insiders, including Board members, from trading (or tipping others to trade) in FedEx securities on the basis of “material, non-public information” until the information has been disclosed to the public. The policy explains the principles governing “material, non-public information” and provides examples of the types of events or information that may be considered material. The Securities Manual, including the examples and contextual information contained therein, are reviewed regularly and updated, as applicable. For instance, following increased sophistication and prevalence of cyberattacks, the list of potentially material items was updated to include “a significant data breach, cyberattack, cyber-intrusion or other disruption to FedEx’s information technology infrastructure.”

The Securities Manual and our Corporate Governance Guidelines also set forth certain types of transactions that are always prohibited, even when permitted by law, in order to further align the interests of our executives and directors with our stockholders’ interests. Specifically, (1) publicly traded (or exchange-traded) options, such as puts, calls and other derivative securities; (2) short sales, including “sales against the box”; and (3) hedging or monetization transactions designed to limit the financial risk of ownership, including prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar transactions, are prohibited. The Securities Manual and our Corporate Governance Guidelines also prohibit margin accounts and pledges; however, our Lead Independent Director and General Counsel, acting together, may grant an exception to the prohibition against holding FedEx securities in a margin account or pledging FedEx securities on a case-by-case basis to any member of the Board of Directors or the Chairman of the Board and Chief Executive Officer if he or she clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities.

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Stock Ownership Goal for Directors and Senior Officers

In order to encourage significant stock ownership by our directors and senior officers, and to further align their interests with the interests of FedEx’s stockholders, the Board of Directors has established a goal that (a) each non-management director serving as of March 13, 2017 own FedEx shares valued at (i) three times his or her annual retainer fee within four years after joining the Board and (ii) five times his or her annual retainer fee by December 31, 2020, (b) each non-management director who joins the Board after March 13, 2017 own FedEx shares valued at five times his or her annual retainer fee within five years after joining the Board, and (c) within five years after being appointed to his or her position, each member of senior management own FedEx shares valued at the following multiple of his or her annual base salary:

Senior Management Position

Ownership Goal

Chairman of the Board and Chief Executive Officer            

6x annual base salary

President and Chief Operating Officer

5x annual base salary

Other FedEx Executive Officers, including the Chief Executive Officers of FedEx Express, FedEx Ground and FedEx Freight

3x annual base salary

Executive Vice Presidents of FedEx Express, FedEx Ground, FedEx Freight and FedEx Services

2x annual base salary

Certain Other Senior Officers

1x annual base salary

For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock options are not. The Board also recommends that each director and senior officer retain shares acquired upon stock option exercises until his or her goal is met. The stock ownership goal is included in FedEx’s Corporate Governance Guidelines. As of July 29, 2019, each director who was a Board member as of March 13, 2017, other than Ms. Jabal and Mr. Ellison, and each executive officer owned sufficient shares to comply with this goal.

DIRECTORS’ COMPENSATION

Outside Directors’ Compensation

During fiscal 2019, non-management (outside) directors were paid an annual retainer of $132,000. Chairpersons of the Compensation, Nominating & Governance and Information Technology Oversight Committees were paid an additional annual fee of $15,000. The Audit Committee chairperson was paid an additional annual fee of $25,000. In addition, each outside director who was elected at FedEx’s 2018 annual meeting received a stock option for 2,780 shares of FedEx common stock.

In response to a stockholder demand letter, a special committee has been formed. Members of the special committee (Messrs. Edwardson and Steiner and Ms. Jabal) are paid $2,000 for each in-person meeting attended and $1,500 for each telephonic meeting attended.

Frederick W. Smith, the only director who is also a FedEx employee, receives no additional compensation for serving as a director.

The Compensation Committee annually reviews director compensation, including, among other things, comparing FedEx’s director compensation practices with those of other companies with annual revenues between $25 billion and $100 billion (this year’s comparison group included 114 companies, which are listed on Appendix A hereto, and was based on proxy statement data provided by a third-party compensation data provider). Before making a recommendation regarding director compensation to the Board, the Compensation Committee considers that the directors’ independence may be compromised if compensation exceeds appropriate levels or if FedEx enters into other arrangements beneficial to the directors.

Beginning in fiscal 2020, non-employee directors may elect to receive their annual retainer in all cash, all shares or 50% in cash and 50% in shares. Any such shares issued in September 2019 will be issued under the FedEx Corporation 2010 Omnibus Stock Incentive Plan, as amended.

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Retirement Plan for Outside Directors

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

The plan benefit payable to the one individual who served on the Board during fiscal 2019 and has not yet received any plan benefits will be paid as a single lump-sum distribution. The lump-sum distribution is payable on or before the fifteenth business day of the month immediately following the later of the date of the director’s retirement and the date he attains age 60. In the event of the outside director’s death, his surviving spouse shall be entitled to receive the lump-sum payment. The following table sets forth, for the one director entitled to receive future benefits under the plan who served on the Board during fiscal 2019, the amount payable to him assuming a hypothetical retirement date of June 1, 2019.

Name       Lump Sum
Payment Amount
($)
P.S. Walsh 69,704(1)
(1) Discounted from the age 60 normal retirement date provided for in the plan.

Fiscal 2019 Director Compensation

The following table sets forth information regarding the compensation of FedEx’s non-employee (outside) directors for the fiscal year ended May 31, 2019:

Name       Fees Earned
or Paid in
Cash
($)(1)
      Option
Awards
($)(2)(3)
      All Other
Compensation
($)
      Total
($)
J.L. Barksdale(4) 513 513
J.A. Edwardson 163,000 168,374 331,374
M.R. Ellison 132,000 168,374 300,374
S.P. Griffith 132,000 168,374 300,374
J.C. Inglis 147,000 168,374 315,374
K.A. Jabal 138,000 168,374 306,374
S.A. Jackson 132,000 168,374 300,374
R.B. Martin 132,000 168,374 300,374
J.C. Ramo 132,000 168,374 300,374
S.C. Schwab 132,000 168,374 300,374
D.P. Steiner 153,000 168,374 321,374
P.S. Walsh 147,000 168,374 315,374
(1)

Includes retainer payments and committee chairperson fees (as applicable). Also includes special committee meeting fees for Messrs. Edwardson and Steiner and Ms. Jabal. See “— Outside Directors’ Compensation” above.

(2)

On September 24, 2018, each outside director elected at the 2018 annual meeting received a stock option for 2,780 shares of common stock. The grant date fair value of each such option was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 and is set forth in this column. Assumptions used in the calculation of these amounts are included in note 10 to our audited consolidated financial statements for the fiscal year ended May 31, 2019, included in our Annual Report on Form 10-K for fiscal 2019. Stock options granted to the outside directors generally vest fully one year after the grant date.


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(3)

The following table sets forth the aggregate number of outstanding stock options held by each current outside director listed in the above table as of May 31, 2019:


Name Options
Outstanding
J.A. Edwardson 19,620
M.R. Ellison 15,920
S.P. Griffith 4,123
J.C. Inglis 8,775
K.A. Jabal 5,795
S.A. Jackson 5,795
R.B. Martin 30,310
J.C. Ramo 25,950
S.C. Schwab 41,350
D.P. Steiner 24,340
P.S. Walsh 41,350
(4)

James L. Barksdale retired as a director immediately before the 2018 annual meeting. The amount in the “All Other Compensation” column for Mr. Barksdale includes $311 for a retirement gift and a $202 tax payment relating to the gift.


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Executive Compensation

PROPOSAL 2

Advisory Vote to Approve
Named Executive Officer
Compensation
Your Board of Directors recommends that you vote “FOR” this proposal.

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

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

This annual advisory vote is not intended to address any specific element of executive compensation, but instead is intended to address the overall compensation of the named executive officers as disclosed in this proxy statement.

Our executive compensation program is designed not only to retain and attract highly qualified and effective executives, but also to motivate them to substantially contribute to FedEx’s future success for the long-term benefit of stockholders and reward them for doing so. Accordingly, our Board of Directors and Compensation Committee believe that there should be a strong relationship between pay and corporate performance (both financial results and stock price), and our executive compensation program reflects this belief. As more fully discussed in the Compensation Discussion and Analysis beginning on page 36:

Annual and long-term incentive payments and stock options represent a significant portion of our executive compensation program. This variable compensation is “at risk” and directly dependent upon the achievement of corporate financial-performance goals or stock price appreciation. In fiscal 2019, 91% of the Chairman and Chief Executive Officer’s target total direct compensation consisted of variable, at-risk components. With respect to the other named executive officers, 56% to 64% of their fiscal 2019 target total direct compensation consisted of variable, at-risk components.
Annual bonus payments for fiscal 2019 were tied to meeting aggressive business plan goals for adjusted consolidated operating income. In response to challenging business conditions, the fiscal 2019 annual incentive compensation (“AIC”) program was amended to provide that no officers or managing/staff directors across the enterprise, including the named executive officers, would receive an AIC payout.
Long-term incentive (“LTI”) payouts are tied to meeting pre-established aggregate earnings-per-share (“EPS”) goals over a three-fiscal-year period. Strong adjusted EPS growth in fiscal 2018 offset weaker than expected adjusted EPS performance in fiscal 2019. As a result, aggregate adjusted EPS growth over the past three fiscal years resulted in above-target payouts under the LTI program for fiscal 2019.
The exercise price of stock options granted under our equity incentive plans is equal to the fair market value of our common stock on the date of grant, so the options will yield value to the executive only if the stock price appreciates. The exercise price for the fiscal 2019 annual option grant to executive officers exceeded the closing price of FedEx common stock on July 29, 2019.
Our stock ownership goal effectively promotes meaningful and significant stock ownership by our executive officers and further aligns their interests with those of our stockholders. As of July 29, 2019, each of our executive officers exceeded the stock ownership goal.

We urge you to read the Compensation Discussion and Analysis, as well as the Summary Compensation Table and related compensation tables and narrative appearing on pages 36 through 78, which provides detailed information on our compensation philosophy, policies and practices and the compensation of our named executive officers.


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EFFECT OF THE PROPOSAL

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

VOTE REQUIRED FOR APPROVAL

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

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors, and the Board approved, that the Compensation Discussion and Analysis be included in this proxy statement and in FedEx’s Annual Report on Form 10-K for the fiscal year ended May 31, 2019.

COMPENSATION COMMITTEE MEMBERS

PAUL S. WALSH
Chairman
MARVIN R.
ELLISON
JOHN C. (“CHRIS”)
INGLIS
SHIRLEY ANN JACKSON SUSAN C.
SCHWAB

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COMPENSATION DISCUSSION AND ANALYSIS

In this section we discuss and analyze the compensation of our principal executive officer, principal financial officer, our three other most highly compensated executive officers, and David J. Bronczek and David L. Cunningham, Jr. (the “named executive officers”) for the fiscal year ended May 31, 2019. Mr. Bronczek retired as FedEx Corporation’s President and Chief Operating Officer effective February 28, 2019, and Mr. Cunningham retired as President and Chief Executive Officer of FedEx Express effective December 31, 2018. Messrs. Bronczek and Cunningham each entered into separation and release agreements with FedEx, the terms of which are described beginning on page 77. For additional information regarding compensation of the named executive officers, see “— Summary Compensation Table” and other compensation-related tables and disclosure below.

Executive Summary

Fiscal 2019 was a year of both challenge and change for FedEx. We continued to focus on finding ways to improve efficiency and rationalize capacity, and we continued investing in critical, long-term projects, including the integration of TNT Express. During fiscal 2019, international macroeconomic conditions shifted and there was a slowdown in the global economy that, along with other factors, created a revenue shortfall for FedEx. As a result, fiscal 2019 adjusted consolidated operating income was below our threshold objective under our fiscal 2019 annual incentive compensation (“AIC”) program. In response to the challenging business conditions, the fiscal 2019 AIC program was amended to provide that no officers or managing/staff directors across the enterprise, including the named executive officers, would receive an AIC payout.

Under our long-term incentive compensation (“LTI”) program, which is tied to financial performance over a three-year period (fiscal 2017 through fiscal 2019 for the FY2017–FY2019 LTI plan), above-target payouts were earned in fiscal 2019 by all participants, including our named executive officers. We exceeded the earnings-per-share (“EPS”) goal required for a target payout, as the company’s strong adjusted EPS results in fiscal 2018 more than offset weaker than expected adjusted EPS results in fiscal 2019.

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

COMPENSATION HIGHLIGHTS

       

FY2015

FY2016

FY2017

FY2018

FY2019

AIC plan paid below target 
No FY2013-FY2015 LTI plan payout
AIC plan paid below target (slightly below target payout for FedEx Express CEO) 
FY2014-FY2016 LTI plan paid at maximum
AIC plan paid below target 
FY2015-FY2017 LTI plan paid at maximum
AIC plan paid below target 
FY2016-FY2018 LTI plan paid at maximum
No AIC plan payout for named executive officers 
FY2017-FY2019 LTI plan paid above target

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PHILOSOPHY

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

Each of the named executive officers is (or was) a longstanding member of our management, and our Chairman of the Board and Chief Executive Officer, Frederick W. Smith, founded the company and pioneered the express transportation industry over 45 years ago. As a result, our named executive officers are especially knowledgeable about our business and our industry and thus particularly valuable to the company and our shareowners.

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

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

                   
Increasing EPS by
10% to 15%
per year;
Growing profitable
revenue;
Achieving a
10%+
operating margin;
Improving cash flow;
a
nd
Increasing returns,
such as return on
invested capital.

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

2018 Say-on-Pay Advisory Vote Outcome

The Compensation Committee annually considers the results of the most recent advisory vote by shareowners to approve named executive officer compensation. In the 2018 advisory vote, 95.3% of the voted shares supported the compensation of FedEx’s named executive officers, and the Compensation Committee and the Board of Directors interpret this strong level of support as affirmation of the current design, purposes and direction of FedEx’s executive compensation programs. In its ongoing evaluation of FedEx’s executive compensation programs and practices, the Compensation Committee will continue to consider the results from future shareowner advisory votes to approve named executive officer compensation.

At our 2018 annual meeting of stockholders, our say on pay proposal received support from 95.3% of votes cast.


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Compensation Objectives and Design-Related Features

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

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

COMMITMENT TO RETAIN AND ATTRACT

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

MARKET REFERENCING

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

For the fiscal 2019 executive compensation review, we considered survey data published by two major consulting firms engaged by the company: Willis Towers Watson and Aon Hewitt. Each consulting firm provided target compensation data for general industry companies (excluding financial services companies), including U.S. and multinational companies, in its respective database with annual revenues between $25 billion and $100 billion. These companies are listed on Appendix B hereto.

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General industry companies, including U.S. and multinational companies, is the appropriate comparison category because our executives are recruited by and from businesses outside of FedEx’s industry peer group. Moreover, our industry peer group does not provide a sufficient number of companies that are of a comparable size to FedEx. Using a robust data sample (127 companies for fiscal 2019) mitigates the impact of outliers, year-over-year volatility of compensation levels and the risk of selection bias, and increases the likelihood of comparing with companies with executive officer positions similar to ours. Because the annual revenues of these companies vary significantly, each consulting firm used regression analysis to allow for the inclusion of data from a large number of both larger and smaller companies. The data results provided by each firm were then averaged to arrive at blended market compensation data for general industry executives.

When we evaluate the elements of compensation of our executive officers in light of the referenced survey data, we consider total direct compensation (“TDC”) as illustrated below:

ELEMENTS OF TDC

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

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

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

PAY FOR PERFORMANCE

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

Fiscal 2019 AIC payouts for all plan participants, including the named executive officers, were tied to meeting aggressive goals for adjusted consolidated operating income, as well as individual performance objectives as described further below. Due to challenging business conditions, adjusted consolidated operating income (which excluded several items that did not reflect core business performance, as described in detail below) fell below the threshold objective for annual financial performance for fiscal 2019. Additionally, in response to the challenging business conditions, the fiscal 2019 AIC program was amended to provide that no officers or managing/staff directors across the enterprise, including the named executive officers, would receive an AIC payout.

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LTI payouts are tied to meeting pre-established aggregate EPS goals over a three-fiscal-year period. Strong fiscal 2018 adjusted EPS growth offset weaker than expected adjusted EPS performance in fiscal 2019. As a result, aggregate adjusted EPS growth over the past three years resulted in above-target payouts under the FY2017-FY2019 LTI plan.
The exercise price of stock options granted under our equity incentive plans is equal to the fair market value of our common stock on the date of grant, so the options will yield value to the executive only if the stock price appreciates.

The following chart illustrates for each named executive officer the allocation of fiscal 2019 target TDC between base salary and incentive and equity-oriented compensation elements (the restricted stock value includes the related tax payment):

FISCAL 2019 TARGET TDC COMPONENTS

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

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The following chart illustrates for each named executive officer the allocation of fiscal 2019 target TDC between short-term components — base salary and AIC — and long-term incentives — LTI, stock options and restricted stock, including the related tax payment:

FISCAL 2019 SHORT-TERM VS. LONG-TERM COMPENSATION

TDC for our named executive officers includes AIC and LTI at target. The actual compensation paid out in a given year may vary widely from target levels because compensation earned under the AIC and LTI programs is variable and commensurate with the level of achievement of financial-performance goals. When we fall short of our business objectives, payments under these variable programs decrease correspondingly. Conversely, when we achieve superior results, we reward our executives accordingly under the terms of these programs. As noted above, there was no payout under the fiscal 2019 AIC plan and the FY2017-FY2019 LTI plan paid above target. In addition, with regard to the stock-option component of TDC, officers realize value from the stock options recognized in the TDC calculation only if the stock price appreciates after the grant date. The exercise price for the fiscal 2019 annual option grant to executive officers exceeded the closing price of FedEx common stock on July 29, 2019.

ALIGN MANAGEMENT AND SHAREOWNER INTERESTS

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

In addition, as discussed above, payout under our LTI program is dependent upon achievement of a pre-established aggregate EPS goal for a three-fiscal-year period. EPS was selected as the financial measure for the LTI plan because growth in our EPS strongly correlates to long-term stock price appreciation.

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The following graph illustrates the relationship between FedEx’s EPS growth and stock price appreciation (based on the fiscal year-end stock price and adjusted for stock splits) from 1978 to 2019:

* Fiscal 2016, 2017, 2018 and 2019 adjusted EPS of $10.80, $12.02, $15.47 and $15.14, respectively, are included in the adjusted EPS line. As discussed in detail below, the Board of Directors, upon recommendation of the Compensation Committee, approved certain adjustments to fiscal 2016, 2017, 2018 and 2019 EPS for LTI plan purposes in order to ensure that payouts, if any, under the applicable LTI plans more accurately reflect core financial performance. See Appendix C for a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures.

Stock Ownership Goal for Senior Officers

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

6x for the Chairman of the Board and Chief Executive Officer;
5x for the President and Chief Operating Officer; and
3x for the other executive officers.

For purposes of meeting this goal, unvested restricted stock is counted, but unexercised stock options are not. Until the ownership goal is met, the officer is encouraged to retain “net profit shares” resulting from the exercise of stock options. Net profit shares are the shares remaining after payment of the option exercise price and taxes owed upon the exercise of options. As of July 29, 2019, each executive officer exceeded the stock ownership goal.

Policy Against Hedging and Pledging Transactions

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

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

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our Corporate Governance Guidelines also prohibit margin accounts and pledges; however, our Lead Independent Director and General Counsel, acting together, may grant an exception to the prohibition against holding FedEx securities in a margin account or pledging FedEx securities on a case-by-case basis to any member of the Board of Directors or the Chairman of the Board and Chief Executive Officer if he or she clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities.

Based upon this criterion, such an exception has been granted with respect to the shares that are disclosed in this proxy statement as having been pledged as security by Frederick W. Smith, FedEx’s Chairman of the Board and Chief Executive Officer, and Frederick Smith Enterprise Company, Inc. (“Enterprise”). See “Stock Ownership — Directors and Executive Officers.” As a result of the stock price decline during fiscal 2019, Mr. Smith was granted approval to pledge additional shares in December 2018. With respect to the shares pledged by Mr. Smith and Enterprise as of July 29, 2019:

None of the shares pledged were acquired through a FedEx equity compensation plan.
The pledged shares are not used to shift or hedge any economic risk in owning FedEx shares. These shares collateralize loans used to fund outside personal business ventures and prior purchases of FedEx shares. If Mr. Smith had been unable to pledge these shares, he may have been forced to sell the shares in order to obtain the necessary funds.
The pledged shares represent 1.5% of FedEx’s outstanding shares as of July 29, 2019, and therefore, do not present any appreciable risk for investors or the company.
Mr. Smith is FedEx’s founder and one of the company’s largest shareowners. Mr. Smith has pledged only 20.1% of his total share ownership, and there has been a net decrease of 1,388,000 shares pledged by Mr. Smith and Enterprise over the last seven years. Based on the fiscal year-end stock price ($154.28), the value of his pledged shares was approximately $604 million. Mr. Smith’s total stock ownership increased by 46,242 shares since July 29, 2018. Excluding the pledged shares, as of July 29, 2019, Mr. Smith’s stock ownership is 324 times what he is required to hold under the company’s stock ownership goal.
In accordance with our policy, Mr. Smith has established his financial capacity to repay the loan without resorting to the pledged shares. In the unlikely event such a sale was necessary, based on the 30-day average trading volume for FedEx shares as of July 29, 2019, it would take two days for the pledged shares to be sold in the open market. Furthermore, Mr. Smith’s unpledged share ownership is very substantial and would likely be able to prevent any margin call.

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

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

Clawback Policy

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

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RESTRICTED STOCK PROGRAM

FedEx’s restricted stock program has been in place for over 25 years and has encouraged FedEx executives to own and retain company stock. Although none of our largest shareowners have raised any concerns to us regarding our restricted stock program, during fiscal 2019 the Compensation Committee again reviewed our restricted stock program and, for all of the following reasons, determined that it continues to be appropriate for FedEx.

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

This methodology prevents the need for an officer to make a disposition of FedEx stock to cover the tax consequences of a restricted stock award and dilute his or her interest in FedEx. Conversely, absent the tax payment, the number of shares received in each award would be larger by an amount equal in value to the forgone tax payment, thereby having a dilutive effect on our shareowners’ equity interest in FedEx. While SEC disclosure rules require that these payments be included with tax reimbursement payments and reported as “other compensation” in the Summary Compensation Table, we do not believe these payments are “tax gross-ups” in the traditional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients. The following chart illustrates this principle, using the target value for the fiscal year 2019 restricted stock awards granted to our Chief Financial Officer, General Counsel and Chief Information Officer (as in previous years, Mr. Smith did not receive a restricted stock award in fiscal 2019):

TARGET VALUE OF RESTRICTED STOCK AWARD

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

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

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

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

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

In furtherance of the Compensation Committee’s responsibility, the Committee has engaged Steven Hall & Partners (the “consultant”) to assist the Committee in evaluating FedEx’s executive compensation, including during fiscal 2019. In connection with this engagement, the consultant reports directly and exclusively to the Committee. The consultant participates in Committee meetings, reviews Committee materials and provides advice to the Committee upon its request. For example, the consultant: updates the Committee on trends and issues in executive compensation and comments on the competitiveness and reasonableness of FedEx’s executive compensation program; assists the Committee in the development and review of FedEx’s AIC and LTI programs, including commenting on performance measures and the goal-setting process; and reviews and provides advice to the Committee for its consideration in reviewing compensation-related proxy statement disclosure, including this Compensation Discussion and Analysis, and on any new equity compensation plans or plan amendments proposed for adoption.

Other than services provided to the Compensation Committee, the consultant does not perform any services for FedEx. Additionally, the consultant has robust policies and procedures in place to prevent conflicts of interest; the fees received by the consultant from FedEx in the consultant’s most recently completed fiscal year represented less than 5% of the consultant’s revenues; neither the consultant nor any adviser of the consultant had a business or personal relationship with any member of the Compensation Committee or any executive officer of FedEx during fiscal 2019; and no adviser of the consultant directly owns, or directly owned during fiscal 2019, any FedEx stock. Accordingly, the Compensation Committee has determined the consultant to be independent from the company and that no conflicts of interest exist related to the consultant’s services provided to the Committee. Compensation Committee pre-approval is required for any services to be provided to the company by the Committee’s independent compensation consultant. This ensures that the consultant maintains the highest level of independence from the company, in both appearance and fact.

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

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

The other executive officers do not have a role in determining their own compensation, other than discussing their annual individual performance objectives and results achieved with the Chairman of the Board and Chief Executive Officer or the President and Chief Operating Officer, as applicable.

Compensation Elements and Fiscal 2019 Amounts

BASE SALARY

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

Effective in October 2018, Mr. Smith’s annual base salary was increased by 2.5%, and each other named executive officer’s annual base salary was increased by 3%. As a result, the base salaries of FedEx’s named executive officers are as follows:

Name       Annual
Base Salary
($)
F.W. Smith 1,384,820
A.B. Graf, Jr. 1,117,704
R.B. Carter 858,720
M.R. Allen 621,864
H.J. Maier 922,848
D.J. Bronczek(1) n/a
D.L. Cunningham, Jr.(1) n/a
(1) Messrs. Bronczek and Cunningham, who retired effective February 28, 2019 and December 31, 2018, respectively, no longer receive an annual base salary from FedEx. Messrs. Bronczek and Cunningham have each entered into a separation and release agreement with FedEx, the terms of which are summarized beginning on page 77.

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CASH PAYMENTS UNDER AIC PROGRAM

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

Target AIC payouts are established as a percentage of the executive officer’s base salary actually paid during the fiscal year. Payouts above target levels are based exclusively upon the company’s financial performance. Accordingly, the executive officer receives above-target payouts only if the company exceeds the AIC target objective for annual financial performance.

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

Fiscal 2019 AIC Plan Design

In order to continue motivating management to improve the company’s overall financial performance, the performance measure for all participants in the fiscal 2019 AIC plan was adjusted consolidated operating income. In order to ensure that payouts under the fiscal 2019 AIC plan accurately reflected the company’s core financial performance, the Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of the following items from fiscal 2019 consolidated operating income for purposes of the fiscal 2019 AIC plan: (i) fiscal 2019 TNT Express integration expenses (including any restructuring charges at TNT Express); (ii) costs related to business realignment activities, including the company’s U.S.-based voluntary employee buyout program; (iii) 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 (iv) the reversal of certain charges accrued in connection with U.S. Customs and Border Protection matters involving FedEx Logistics (formerly FedEx Trade Networks) that have been fully resolved. A more detailed rationale for the exclusion of each of these items, which apply equally for purposes of the fiscal 2019 AIC plan, is included below under the heading “— LTI Mark-to-Market Retirement Plan Accounting and Other Adjustments to EPS for LTI Plan Purposes.”

As adopted in June 2018, the adjusted consolidated operating income target objective under the fiscal 2019 AIC program was lower than the fiscal 2019 business plan objective for adjusted consolidated operating income (the target and business plan objectives for consolidated operating income excluded fiscal 2019 TNT Express integration expenses). In order to achieve above-target payouts under the fiscal 2019 AIC plan, performance was required to exceed the fiscal 2019 business plan objective. The maximum payout opportunity under the plan was 200% of the target amount. The plan, as adopted in June 2018, also provided for a minimum funding level of 50% of the target amount, independent of the company’s financial performance.

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

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The fiscal 2019 AIC target payouts for the named executive officers, as a percentage of their respective base salary actually paid during fiscal 2019, were as follows:

Name       Target Payout
(as a percentage of base salary)
F.W. Smith 165 %
A.B. Graf, Jr. 120 %
R.B. Carter 120 %
M.R. Allen 120 %
H.J. Maier 90 %
D.J. Bronczek 140 %
D.L. Cunningham, Jr. 120 %

The maximum fiscal 2019 AIC payout opportunity for each named executive officer was 200% of his target bonus.

In response to challenging business conditions that arose after the AIC plan’s adoption, the Board of Directors, upon recommendation of the Compensation Committee, took the following actions with regard to the fiscal 2019 AIC plan: (i) approved a modification to the target objective so that the target objective was the same as the corresponding business plan objective for fiscal 2019 adjusted consolidated operating income; (ii) approved removing the 50% funding floor from the plan; and (iii) removed officers and managing/staff directors, including the named executive officers, from the fiscal 2019 AIC plan. Because officers and managing/staff directors were removed from the fiscal 2019 AIC plan, none of the named executive officers were eligible to receive a payout under the plan.

Chairman of the Board and Chief Executive Officer

Mr. Smith’s fiscal 2019 AIC payout opportunity was based on the achievement of corporate objectives for adjusted consolidated operating income, as described above. Mr. Smith’s minimum AIC payout opportunity was zero, as a result of the independent directors’ ability to adjust his bonus amount downward based on his annual performance evaluation, as described below.

Mr. Smith’s target AIC payout is set as a percentage of his base salary, and his maximum AIC payout is set as a multiple of the target payout. The independent members of the Board of Directors, upon the recommendation of the Compensation Committee, approve these percentages. The actual AIC payout ranges on a sliding scale based upon the performance of the company against our company financial-performance goals.

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

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

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None of these factors is given any particular weight in determining whether to adjust Mr. Smith’s bonus amount. Because officers and managing/staff directors were removed from the fiscal 2019 AIC plan, the results of Mr. Smith’s fiscal 2019 performance evaluation had no impact on his AIC payout, which was zero.

Non-CEO Named Executive Officers

The fiscal 2019 AIC payout opportunity for each of the non-CEO named executive officers was based on the achievement of corporate objectives for adjusted consolidated operating income, as described above. The minimum AIC payout opportunity for each of the non-CEO named executive officers was zero, as a result of the ability of Mr. Smith or Rajesh Subramaniam, the company’s President and Chief Operating Officer, as applicable, to adjust the officer’s bonus amount downward based on his achievement of individual performance objectives, as described below.

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

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

Provide leadership to support the achievement of financial goals;
Guide and support key strategic initiatives;
Enhance the FedEx customer experience and meet goals related to internal metrics that measure customer satisfaction and service quality;
Recruit and develop executive talent and ensure successors exist for all management positions; and
Implement and document good faith efforts designed to ensure inclusion of females and minorities in the pool of qualified applicants for open positions and promotional opportunities, and otherwise promote FedEx’s commitment to diversity, tolerance and inclusion in the workplace.

Individual performance objectives are designed to further the company’s business objectives. Achievement of individual performance objectives is generally within each officer’s control or scope of responsibility, and the objectives are intended to be achieved with an appropriate level of effort and effective leadership by the officer. The achievement level of each non-CEO named executive officer’s individual performance objectives is based on Mr. Smith’s or Mr. Subramaniam’s evaluation (as applicable) at the conclusion of the fiscal year, which is reviewed by the Compensation Committee. Because officers and managing/staff directors were removed from the fiscal 2019 AIC plan, the achievement of the non-CEO named executive officer’s fiscal 2019 individual performance objectives had no impact on their AIC payouts, which were zero.

Fiscal 2019 AIC Performance and Payouts

Due to the international macroeconomic weakness and revenue shortfall for FedEx, the fiscal 2019 actual adjusted consolidated operating income was below the threshold objective for adjusted consolidated operating income under the company’s fiscal 2019 AIC plan. The following table presents the threshold, target and maximum objectives for adjusted consolidated operating income under our fiscal 2019 AIC program, and our actual adjusted consolidated operating income for fiscal 2019 (in millions):

Company Performance Measure          Threshold          Target          Maximum          Actual
Adjusted Consolidated Operating Income(1) $5,301 $6,098 $6,671 $5,218
(1) As discussed above, the Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of certain items from the adjusted consolidated operating income objectives and actual adjusted consolidated operating income for purposes of the fiscal 2019 AIC plan. See Appendix C for a reconciliation of fiscal 2019 adjusted consolidated operating income to the most directly comparable GAAP measure.

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As described above, because officers and managing/staff directors were removed from the plan, payouts to the named executive officers under the fiscal 2019 AIC program were zero. The following table demonstrates the actual AIC payout for each named executive officer as compared to the target AIC payout:

Name          Target AIC Payout
($)
         Actual AIC Payout
($)
F.W. Smith             $ 2,266,376 $0
A.B. Graf, Jr. $ 1,328,222 $0
R.B. Carter $ 1,020,461 $0
M.R. Allen $ 738,991 $0
H.J. Maier $ 822,499 $0
D.J. Bronczek $ 1,269,969 $0
D.L. Cunningham, Jr. $ 586,246 $0

Fiscal 2020 AIC Plan Design

In order to continue motivating management to improve the company’s overall financial performance, the performance measure for all participants in the fiscal 2020 AIC program is adjusted consolidated operating income. In order to ensure that payouts under the fiscal 2020 AIC plan accurately reflect the company’s core financial performance, the Board of Directors, upon the recommendation of the Compensation Committee, has approved excluding the impact of fiscal 2020 TNT Express integration expenses (including any restructuring charges at TNT Express) from fiscal 2020 consolidated operating income for purposes of the plan.

The adjusted consolidated operating income threshold objective under the fiscal 2020 AIC plan is equal to the fiscal 2020 business plan objective for adjusted consolidated operating income, and the target objective under the AIC plan is higher than the fiscal 2020 business plan objective for adjusted consolidated operating income (the AIC plan and business plan objectives for consolidated operating income exclude fiscal 2020 TNT Express integration expenses). Actual adjusted consolidated operating income performance that exceeds the fiscal 2020 target objective for adjusted consolidated operating income under the AIC plan will result in an above-target payout opportunity, up to the maximum payout amount. The maximum payout opportunity under the plan is 200% of the target amount. However, the actual payout for plan participants, including the non-CEO named executive officers, depends on the achievement level of their respective individual performance objectives. The AIC payout amount for the Chairman and CEO is not based on individual performance objectives, but may be adjusted by the independent Board members based on their annual evaluation of his performance, as described above.

The fiscal 2020 AIC payout opportunity for each of Messrs. Smith, Graf, Carter, Allen and Maier will be based on the achievement of corporate objectives for adjusted consolidated operating income, as described above. The minimum payout opportunity under the plan for Mr. Smith will be zero, as a result of the independent directors’ ability to adjust Mr. Smith’s bonus amount downward based on his annual performance evaluation, as described above. The minimum payout opportunity for each non-CEO named executive officer also will be zero, as a result of Mr. Smith’s ability (with respect to Messrs. Graf, Carter and Allen) and Mr. Subramaniam’s ability (with respect to Mr. Maier) to adjust each applicable officer’s payout amount downward based on his achievement of individual performance objectives established at the beginning of the fiscal year. In other words, the fiscal 2020 AIC plan does not have a funding floor for the named executive officers. Mr. Smith or Mr. Subramaniam, as applicable, will determine the achievement level of the officer’s individual objectives at the conclusion of fiscal 2020.

The fiscal 2020 AIC target payouts for the named executive officers (other than Messrs. Bronczek and Cunningham, who both retired before the beginning of fiscal 2020), as a percentage of their respective base salary actually paid during fiscal 2020, are as follows:

Name       Target Payout
(as a percentage of base salary)
F.W. Smith 165 %
A.B. Graf, Jr. 120 %
R.B. Carter 120 %
M.R. Allen 120 %
H.J. Maier 90 %

The maximum fiscal 2020 AIC payout opportunity for each named executive officer will be 200% of his target bonus.

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CASH PAYMENTS UNDER LTI PROGRAM

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

     

LTI PAYOUT OPPORTUNITY
(as a percentage of target)

Three-Year Average Annual EPS Growth

As illustrated by the above chart, the LTI program provides for:

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

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

The Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of certain items from fiscal 2017, fiscal 2018 and fiscal 2019 EPS for purposes of FedEx’s FY2017–FY2019, FY2018–FY2020 and FY2019–FY2021 LTI plans, and for establishing the base-year EPS for the FY2018–FY2020, FY2019–FY2021 and FY2020–FY2022 LTI plans, as applicable. The Board determined that, by excluding each of these items, payouts, if any, under the LTI plans will more accurately reflect FedEx’s core financial performance in fiscal 2017, 2018 and 2019, as applicable. More specifically, the annual MTM Adjustment, which reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans, can vary dramatically from year-to-year, as it is significantly impacted by changes in interest rates and the financial markets. As a result, the Board previously determined that the MTM Adjustment will be excluded from EPS calculations under all LTI plans. Additionally, the company has incurred and expects to incur significant expenses through fiscal 2021, and may incur additional expenses thereafter, in connection with the integration of TNT Express. The Board approved the exclusion of TNT Express integration expenses from fiscal 2017, 2018 and 2019 EPS for the applicable LTI plans because the company generally would not incur such expenses as part of its continuing operations. The Board has also approved the exclusion from fiscal 2018 EPS of the provisional benefit from the remeasurement of its net U.S. deferred tax liability as of the date of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) and from fiscal 2019 EPS of the revision to the provisional benefit for the applicable LTI plans, because the provisional benefit resulted from the non-recurring impact of a significant change in the U.S. federal statutory income tax rate due to the enactment of the TCJA on the company’s overall deferred tax position, which accumulated over many reporting periods prior to enactment. The Board approved the exclusion of each of the other adjustments described below from fiscal 2017, 2018 and 2019 EPS for the applicable LTI plans because they are unrelated to the company’s core financial performance.

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The EPS impact of each adjustment for the applicable fiscal year is set forth in the narrative below. The table following the narrative sets forth the adjusted EPS measures for the 2017, 2018 and 2019 fiscal years that are used for each applicable LTI plan, as compared against the corresponding GAAP EPS measures. A full reconciliation showing the individual adjustments to the GAAP EPS measure for the applicable fiscal year, as compared against the non-GAAP EPS measure used for each applicable LTI plan, is set forth in Appendix C.

Fiscal 2017 EPS was adjusted for purposes of the applicable plans to exclude: (i) the MTM Adjustment ($(0.02) per diluted share); (ii) fiscal 2017 TNT Express integration expenses (including any restructuring charges at TNT Express) ($0.91 per diluted share); (iii) charges accrued in connection with pending U.S. Customs and Border Protection matters involving FedEx Logistics (formerly FedEx Trade Networks) ($0.09 per diluted share); and (iv) expenses related to the settlement of and certain expected losses relating to independent contractor litigation matters involving FedEx Ground ($0.05 per diluted share).

Similarly, fiscal 2018 EPS was adjusted for purposes of the applicable plans to exclude: (i) the MTM Adjustment ($(0.03) per diluted share); (ii) fiscal 2018 TNT Express integration expenses (including any restructuring charges at TNT Express) ($1.36 per diluted share); (iii) goodwill and other asset impairment charges at FedEx Supply Chain ($1.39 per diluted share); (iv) the cost of accelerated 2018 annual pay increases for certain hourly team members to April 2018 from October 2018, following the passage of the TCJA ($0.16 per diluted share); (v) expenses in connection with certain pending U.S. Customs and Border Protection matters involving FedEx Logistics (formerly FedEx Trade Networks) ($0.02 per diluted share); and (vi) the provisional benefit from the remeasurement of the company’s net U.S. deferred tax liability following the passage of the TCJA ($(4.22) per diluted share).

Fiscal 2019 EPS was also adjusted for purposes of the applicable plans to exclude: (i) the MTM Adjustment ($11.22 per diluted share); (ii) fiscal 2019 TNT Express integration expenses (including any restructuring charges at TNT Express) ($1.18 per diluted share); (iii) costs related to business realignment activities, including the company’s U.S.-based voluntary employee buyout program ($0.91 per diluted share); (iv) costs related to FedEx Ground’s settlement of pending lawsuits with the City and State of New York arising from FedEx Ground’s alleged shipments of cigarettes to New York residents ($0.16 per diluted share); (v) the revision of the provisional benefit associated with the remeasurement of the company’s net U.S. deferred tax liability following the passage of the TCJA ($0.02 per diluted share); and (vi) the reversal of certain charges accrued in connection with U.S. Customs and Border Protection matters involving FedEx Logistics (formerly FedEx Trade Networks) that have been fully resolved (no impact per diluted share).

The Board of Directors, upon the recommendation of the Compensation Committee, has also approved the exclusion of TNT Express integration expenses (including any restructuring charges at TNT Express) from fiscal 2020 EPS for purposes of the FY2018-FY2020, FY2019-FY2021 and FY2020-FY2022 LTI plans, as applicable, for the reasons described above.

The table below sets forth the adjusted EPS for the 2017, 2018 and 2019 fiscal years that are used for each applicable LTI plan, as compared against the reported GAAP EPS. See Appendix C for a reconciliation of the applicable non-GAAP EPS measure to the corresponding GAAP EPS measure.

2017 EPS 2018 EPS 2019 EPS
LTI Plan          GAAP EPS          Adjusted EPS          GAAP EPS          Adjusted EPS          GAAP EPS          Adjusted EPS
FY2017–FY2019 $11.07           $12.02 (1) $16.79  $15.47 $2.03(3) $15.14(4)
FY2018–FY2020 $11.07 $12.09 (2) $16.79 $15.47 $2.03(3) $15.14(4)
FY2019–FY2021 n/a n/a $16.79           $15.47 (2)  $2.03(3) $15.14(4)
FY2020–FY2022 n/a n/a n/a n/a $2.03(3) $15.52(2)
(1) As described in more detail below, adjusted fiscal 2017 EPS of $12.09 is further adjusted to $12.02 for this plan to account for the effect of stock repurchases.
(2) This is the base-year EPS for the applicable LTI plan.
(3) The MTM Adjustment negatively impacted fiscal 2019 EPS by $11.22.
(4) As described in more detail below, adjusted fiscal 2019 EPS of $15.52 is further adjusted to $15.14 for this plan to account for the effect of stock repurchases in excess of that which offset dilution from equity awards.

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

During fiscal 2017 and fiscal 2019, the company repurchased 3.0 million shares and 6.6 million shares, respectively, as part of our stock repurchase program. Because the positive impact on EPS resulting from these stock repurchases did not reflect core business performance, the Board of Directors, upon the recommendation of the Compensation Committee, approved the exclusion of the impact of the fiscal 2017 stock repurchases (net of interest expense on debt issued to fund a portion of the stock repurchase programs) ($(0.07) per diluted share) on fiscal 2017 EPS for purposes of the FY2017-FY2019 plan and approved the exclusion of the fiscal 2019 stock repurchase impact in excess of that which offset dilution from equity awards ($(0.38) per diluted share) from fiscal 2019 EPS for purposes of the FY2017-FY2019, FY2018-FY2020 and FY2019-FY2021 LTI plans. During fiscal 2018, the company’s stock repurchases approximately offset dilution arising from the grant of equity awards throughout the year. As a result, no adjustments were made to fiscal 2018 earnings for LTI plan purposes due to stock repurchases.

As a result, adjusted fiscal 2017 EPS of $12.02, rather than adjusted fiscal 2017 EPS of $12.09 (as set forth in the table above), is being used for purposes of the FY2017-FY2019 LTI plan. Additionally, adjusted fiscal 2019 EPS of $15.14, rather than adjusted fiscal 2019 EPS of $15.52 (as set forth in the table above), is being used for purposes of the FY2017-FY2019, FY2018-FY2020 and FY2019-FY2021 LTI plans. See Appendix C for a reconciliation of the applicable non-GAAP EPS measure to the corresponding GAAP EPS measure.

Fiscal 2019 LTI Performance and Payouts

Typically, the base-year number over which the three-year average annual EPS growth rate goals are measured for an LTI plan is the final full-year EPS of the preceding fiscal year. For the FY2017–FY2019 LTI plan, however, the base-year number is $10.80, not fiscal 2016 EPS of $6.51. For purposes of establishing the base-year EPS for the FY2017-FY2019 LTI Plan, fiscal 2016 EPS was adjusted to exclude: (i) the MTM Adjustment ($3.39 per diluted share); (ii) expenses associated with the acquisition, financing and integration of TNT Express, net of any tax impact, and TNT Express’s fiscal 2016 financial results ($0.45 per diluted share); (iii) the favorable income tax benefit from an internal corporate legal entity restructuring to facilitate the integration of FedEx Express and TNT Express ($(0.27) per diluted share); (iv) expenses incurred in connection with the settlement of and certain expected losses relating to independent contractor litigation matters involving FedEx Ground, net of recognized immaterial insurance recovery ($0.57 per diluted share); and (v) expenses related to the settlement of a U.S. Customs and Border Protection matter involving FedEx Logistics (formerly FedEx Trade Networks), net of recognized immaterial insurance recovery ($0.15 per diluted share). See Appendix C for a reconciliation of the fiscal 2016 GAAP EPS to the non-GAAP EPS used for purposes of the FY2017-FY2019 LTI Plan.

The Board of Directors, upon the recommendation of the Compensation Committee, determined that, by excluding these items, any payouts under the FY2017-FY2019 LTI plan would more accurately reflect FedEx’s core financial performance. More specifically, the Board approved the exclusion of the MTM Adjustment from fiscal 2016 EPS for purposes of the plan for the reasons described above. The Board approved the exclusion of the TNT Express expense items, as well as the income tax impact of an internal corporate legal entity restructuring to facilitate the integration of FedEx Express and TNT Express, from fiscal 2016 EPS for purposes of the plan because these items are not related to the company’s core operating performance. TNT Express operating results from the date of acquisition were excluded from fiscal 2016 EPS for purposes of the plan because TNT Express was acquired on May 25, 2016 (six days before the end of the company’s fiscal year), and its financial results were immaterial from the date of acquisition and not presented as a separate segment. The Board approved the exclusion of each of the other adjustments from fiscal 2016 EPS for purposes of the plan because they are unrelated to the company’s core financial performance.

The following table presents the aggregate EPS threshold (minimum), target and maximum under our FY2017–FY2019 LTI plan, which was established by the Board of Directors in 2016, and our actual adjusted aggregate EPS under the plan for the three-year period ended May 31, 2019:

Performance Measure        Threshold        Target        Maximum        Actual
FY2017-FY2019 Aggregate Adjusted EPS $35.75 $41.20 $43.13 42.63*
* The actual aggregate adjusted EPS consists of $12.02 for fiscal 2017 (which excludes the $0.07 net impact of stock repurchases as discussed above), $15.47 for fiscal 2018 and $15.14 for fiscal 2019 (which excludes the $0.38 impact of stock repurchases in excess of that which offset dilution from equity awards as discussed above). See Appendix C for a reconciliation of the applicable non-GAAP EPS measure to the corresponding GAAP EPS measure.

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Based upon this above-target performance, we made the following LTI payouts to the named executive officers under the FY2017–FY2019 LTI plan — as illustrated by the following table (compared to the threshold, target and maximum payout opportunities):

Name       Threshold
LTI Payout
($)
      Target LTI
Payout
($)
      Maximum
LTI Payout
($)
      Actual LTI
Payout
($)
F.W. Smith 1,150,000 4,600,000 6,900,000 6,302,000
A.B. Graf, Jr. 343,750 1,375,000 2,062,500 1,883,750
R.B. Carter 343,750 1,375,000 2,062,500 1,883,750
M.R. Allen(1) 252,083 1,008,333 1,512,500 1,381,416
H.J. Maier 287,500 1,150,000 1,725,000 1,575,500
D.J. Bronczek(2) 448,438 1,793,750 2,690,625 2,457,438
D.L. Cunningham, Jr.(3) 299,648 1,198,592 1,797,888 1,642,071

(1) Mr. Allen’s payout opportunity under the FY2017-FY2019 LTI plan was prorated based on the applicable fiscal years during which he served as Senior Vice President – Legal International of FedEx Express (fiscal 2017) and Executive Vice President, General Counsel and Secretary of FedEx (fiscal 2018 and 2019).
(2) Mr. Bronczek’s payout opportunity under the FY2017–FY2019 LTI plan was prorated based on the applicable fiscal years (and portions thereof) during which he served as President and CEO of FedEx Express (fiscal 2017) and President and Chief Operating Officer of FedEx (fiscal 2018 and 2019).
(3) Mr. Cunningham’s payout opportunity under the FY2017–FY2019 LTI plan was prorated based on the applicable fiscal years (and portions thereof) during which he served as Executive Vice President and Chief Operating Officer of FedEx Express (fiscal 2017) and President and CEO of FedEx Express (fiscal 2018 and 2019).

LTI Payout Opportunities

The Board of Directors has established LTI plans for the three-fiscal-year periods 2018 through 2020, 2019 through 2021 and 2020 through 2022, providing cash payment opportunities upon the conclusion of fiscal 2020, 2021 and 2022, respectively, if certain EPS goals are achieved with respect to those periods.

Typically, the base-year EPS number over which the three-year average annual EPS growth rate goals are measured for an LTI plan is the final full-year EPS of the preceding fiscal year. However, the base-year EPS amounts over which the three-year average annual EPS growth rate goals will be measured for the FY2018-FY2020, FY2019-FY2021 and FY2020-FY2022 LTI plans are $12.09, $15.47 and $15.52, respectively (as discussed above).

As described above, adjusted fiscal 2018 EPS of $15.47 is being used for purposes of the FY2018-FY2020 LTI plan. Additionally, adjusted fiscal 2019 EPS of $15.14 is being used for purposes of the FY2018-FY2020 and FY2019-FY2021 LTI plans. The following table presents the aggregate EPS thresholds, targets and maximums under the FY2018-FY2020 and FY2019-FY2021 LTI plans and our progress toward these goals as of May 31, 2019:

Performance Period       Aggregate
EPS
Threshold
      Aggregate
EPS
Target
      Aggregate
EPS
Maximum
      Actual Aggregate
Adjusted EPS
As of May 31,
2019*
FY2018-FY2020 $40.02 $46.11 $48.28 $30.61*
FY2019-FY2021 $51.19 $59.01 $61.78 $15.14*

* See Appendix C for a reconciliation of the applicable non-GAAP measure to the corresponding GAAP measure.

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The following table sets forth the potential threshold, target and maximum payouts for the named executive officers under the FY2018-FY2020, FY2019-FY2021 and FY2020-FY2022 LTI plans.

Potential Future Payouts
Name       Performance
Period
      Threshold
($)
      Target
($)
      Maximum
($)
F.W. Smith FY2018–FY2020 1,150,000 4,600,000 6,900,000
FY2019–FY2021 1,150,000 4,600,000 6,900,000
FY2020–FY2022 1,150,000 4,600,000 6,900,000
A.B. Graf, Jr. FY2018–FY2020 343,750 1,375,000 2,062,500
FY2019–FY2021 343,750 1,375,000 2,062,500
FY2020–FY2022 343,750 1,375,000 2,062,500
R.B. Carter FY2018–FY2020 343,750 1,375,000 2,062,500
FY2019–FY2021 343,750 1,375,000 2,062,500
FY2020–FY2022 343,750 1,375,000 2,062,500
M.R. Allen FY2018–FY2020 343,750 1,375,000 2,062,500
FY2019–FY2021 343,750 1,375,000 2,062,500
FY2020–FY2022 343,750 1,375,000 2,062,500
H.J. Maier FY2018–FY2020 287,500 1,150,000 1,725,000
FY2019–FY2021 287,500 1,150,000 1,725,000
FY2020–FY2022 287,500 1,150,000 1,725,000
D.J. Bronczek(1) FY2018–FY2020 302,604 1,210,417 1,815,626
FY2019–FY2021 129,688 518,750 778,125
FY2020–FY2022 n/a n/a n/a
D.L. Cunningham, Jr.(1) FY2018–FY2020 230,898 923,592 1,385,388
FY2019–FY2021 85,065 340,258 510,387
FY2020–FY2022 n/a n/a n/a

(1) Messrs. Bronczek and Cunningham, who retired in February 2019 and December 2018, respectively, are eligible for prorated payouts under each of the FY2018–FY2020 and FY2019-FY2021 LTI plans based on the portion of the applicable three-fiscal-year periods during which they were employed.

RETENTION AWARDS FOR CHIEF FINANCIAL OFFICER

On July 17, 2017, the Board of Directors, upon the recommendation of the Compensation Committee, approved a performance-based cash award for Mr. Graf. The award has a target value of $574,661 that is tied to the achievement of a fiscal 2020 EPS goal (excluding the MTM Adjustment and TNT Express integration expenses (including any restructuring charges at TNT Express) and subject to any adjustments that may be approved by the Board, upon the recommendation of the Compensation Committee). The cash award will be paid in its entirety if the fiscal 2020 EPS goal is met or exceeded. If fiscal 2020 EPS is less than 80% of the goal, no cash award will be paid. If fiscal 2020 EPS is between 80% and 100% of the goal, the Chairman of the Board will determine the actual award paid (but in no event will it exceed $574,661). To remain eligible for the award, Mr. Graf must remain FedEx’s Chief Financial Officer through the end of fiscal 2020. In the event of death or permanent disability prior to the end of fiscal 2020, payment will be made in accordance with the timing and payout criteria described above. On July 17, 2017, Mr. Graf was also granted a restricted stock award of 1,785 shares with a four-year ratable vesting period.

LONG-TERM EQUITY INCENTIVES — STOCK OPTIONS AND RESTRICTED STOCK

Our primary objective in providing long-term equity incentives to executive officers is to further align their interests with those of our shareowners by facilitating significant ownership of FedEx stock by the officers. This creates a direct link between their compensation and long-term shareowner return.

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Amount

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

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

Target TDC levels and referenced survey data — as discussed above, we include the total target value of all equity-based awards (including tax payments for restricted stock awards) in our calculation of target TDC, and in evaluating the fiscal 2019 target TDC levels for our named executive officers, we referred to multiple market reference points for comparable positions in the referenced surveys;
The total number of shares then available to be granted; and
Potential shareowner dilution. As of July 29, 2019, the total number of shares underlying options and shares of restricted stock outstanding or available for future grant under our equity compensation plans represented 9.5% of the sum of shares outstanding plus the shares underlying options outstanding or available for future grant plus shares of restricted stock available for future grant.

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

Timing

In selecting dates for awarding equity-based compensation, we do not consider, nor have we ever considered, the price of FedEx’s common stock or the timing of the release of material, non-public information about the company. Stock option and restricted stock awards are generally made to executive officers on an annual basis according to a pre-established schedule.

When the Compensation Committee approves a special grant outside of the annual-grant framework, such grants are made at a regularly scheduled meeting and the grant date of the awards is the approval date or the next business day, if the meeting does not fall on a business day. If the grant is made in connection with the promotion of an individual or the election of an officer, the grant date may be the effective date of the individual’s promotion or the officer’s election, if such effective date is after the approval date.

Pricing

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

Vesting

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

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Tax Payments for Restricted Stock Awards

As discussed previously, FedEx pays the taxes resulting from a restricted stock award on behalf of the recipient. This prevents the need for the officer to sell a portion of a stock award to pay the corresponding tax obligation and thus encourages and facilitates FedEx stock ownership by our officers, thereby further aligning their interests with those of our shareowners. The total target value of the award is the same as it would be if there were no tax payments.

Voting and Dividend Rights on Restricted Stock

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

Fiscal 2019 Awards

On June 11, 2018, the named executive officers were granted stock option and restricted stock awards as follows:

Name       Number of
Stock Options
      Number of Shares of
Restricted Stock
F.W. Smith 115,890 0
A.B. Graf, Jr. 14,380 2,815
R.B. Carter 14,380 2,815
M.R. Allen 14,380 2,815
H.J. Maier 9,960 2,830
D.J. Bronczek 24,575 (1)  4,290 (2)
D.L. Cunningham, Jr. 18,695 (1) 3,635 (3)

(1) These options were forfeited upon Messrs. Bronczek’s and Cunningham’s retirements on February 28, 2019 and December 31, 2018, respectively.
(2) In accordance with the terms of FedEx’s 2010 Omnibus Stock Incentive Plan, the restrictions applicable to these shares lapsed upon Mr. Bronczek’s retirement on February 28, 2019.
(3) In accordance with the terms of FedEx’s 2010 Omnibus Stock Incentive Plan, because Mr. Cunningham retired after age 55 but before age 60, the restrictions applicable to his restricted shares will continue until the specified expiration of the restriction period.

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

The target value of stock options and restricted stock awarded in fiscal 2019 to each named executive officer remained substantially the same compared to the fiscal 2018 target value. The amount reported for restricted stock awards in the Summary Compensation Table reflects the average of the high and low prices of FedEx common stock on the NYSE on the grant date, which may vary from the stock price assumption used when determining the target grant levels.

PERQUISITES, TAX PAYMENTS AND OTHER ANNUAL COMPENSATION

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

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

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

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

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

With respect to Mr. Smith, consistent with FedEx’s executive security procedures, the Board of Directors requires him to use FedEx corporate aircraft for all travel, including personal travel. In addition, FedEx provides certain physical and personal security services for Mr. Smith, including on-site residential security at his primary residence. The Board of Directors believes that Mr. Smith’s personal safety and security are of the utmost importance to FedEx and its shareowners and, therefore, the costs associated with such security are appropriate and necessary business expenses.

POST-EMPLOYMENT COMPENSATION

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

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

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Partial payouts under applicable LTI plans based on the portion of the three-fiscal-year periods during which the executive was employed and the executive’s employment terminated as a result of his or her retirement, death or permanent disability; and
A prorated payout under the applicable AIC plan based on the portion of the fiscal year during which the executive was employed and the executive’s employment terminated as a result of his or her retirement, death or permanent disability.

In addition, Messrs. Bronczek and Cunningham have entered into separation and release agreements with FedEx, each in connection with his retirement. The terms of these agreements are described under the caption “Retirements of David J. Bronczek and David L. Cunningham, Jr.” beginning on page 77.

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

Risks Arising from Compensation Policies and Practices

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

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code limits the income tax deduction by FedEx for compensation paid to the Chief Executive Officer, Chief Financial Officer and the three other highest-paid executive officers to $1,000,000 per year. Prior to enactment of the TCJA, this limitation did not generally apply to compensation paid to the Chief Financial Officer or individuals who were no longer named executive officers, or to compensation paid based on achievement of pre-established performance goals if certain requirements were met. Following passage of the TCJA, Section 162(m) only exempts qualifying performance-based compensation with respect to taxable years beginning on or before December 31, 2017 and payable pursuant to a binding written agreement in effect on November 2, 2017, provided that the agreement is not modified in any material respect after that date. As a result, beginning in fiscal 2019, FedEx is generally no longer able to take a deduction for any compensation paid to its current or former named executive officers in excess of $1 million, with the exception of performance-based awards outstanding on November 2, 2017 or awarded thereafter pursuant to a binding written agreement which can be exempt from the deduction limit if applicable requirements are met.

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SUMMARY COMPENSATION TABLE

In this section, we provide certain tabular and narrative information regarding the compensation of our principal executive and financial officers, our three other most highly compensated executive officers, and David J. Bronczek and David L. Cunningham, Jr. (who retired as FedEx Corporation’s President and Chief Operating Officer effective February 28, 2019 and as President and Chief Executive Officer of FedEx Express effective December 31, 2018, respectively) for the fiscal year ended May 31, 2019, and for each of the previous two fiscal years (except as noted).

Name and Principal Position    Year    Salary
($)
   Bonus
($)
(1)
   Stock
Awards
($)(2)
   Option
Awards
($)(2)
    Non-Equity
Incentive Plan
Compensation
($)(3)
   Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
   All Other
Compensation
($)(5)
   Total
($)
Frederick W. Smith 2019 1,373,561 0 0 7,747,212   6,302,000 539,201 15,961,974
Chairman and Chief Executive 2018 1,342,212 0 0 7,134,484   7,656,161 532,541 16,665,398
Officer (Principal Executive Officer) 2017 1,311,688 0 0 6,564,913   7,215,948 513,048 15,605,597
Alan B. Graf, Jr. 2019 1,106,851 0 736,911 961,299   1,883,750 3,412 645,135 5,337,358
Executive Vice President 2018 976,920 0 1,019,453 885,398   2,735,889 894,874 6,512,534
and Chief Financial Officer 2017 948,468 0 591,851 814,678   2,531,468 630,587 5,517,052
(Principal Financial Officer)  
Robert B. Carter 2019 850,384 0 736,911 961,299   1,883,750 948,822 582,380 5,963,546
Executive Vice President, 2018 825,616 0 637,463 885,398   2,472,299 816,295 638,434 6,275,505
FedEx Information Services 2017 801,564 0 591,851 814,678   2,312,023 785,840 592,757 5,898,713
and Chief Information Officer  
Mark R. Allen(6) 2019 615,826 50,000 736,911 961,299   1,381,416 94,453 949,272 4,789,177
Executive Vice President,  
General Counsel and Secretary  
Henry J. Maier(7) 2019 913,888 0 740,837 665,823   1,575,500 184,974 640,559 4,721,581
President and Chief Executive  
Officer, FedEx Ground  
David J. Bronczek(8) 2019 907,121 0 1,123,036 1,642,831 (9)  2,457,438 3,333,693 9,464,119
President and 2018 1,122,016 75,000 971,224 1,513,026 (9)  3,775,774 789,951 8,246,991
Chief Operating Officer 2017 1,023,280 75,000 763,626 1,058,850 (9)  3,176,694 702,997 6,800,447
David L. Cunningham, Jr.(10) 2019 488,538 0 951,570 1,249,755 (11)  1,642,071 1,229,335 2,443,252 8,004,521
President and Chief Executive 2018 721,184 62,500 823,001 1,150,864 (11)  2,219,783 303,560 695,683 5,976,575
Officer, FedEx Express  
(1) The amounts reported in this column reflect promotional bonuses received by Messrs. Allen, Bronczek and Cunningham that were paid in fiscal years 2019, 2018 and 2017, as applicable.
(2) The amounts reported in these columns reflect the aggregate grant date fair value of restricted stock and option awards granted to the named executive officer during each year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. These amounts reflect our calculation of the value of these awards on the grant date and do not necessarily correspond to the actual value that may ultimately be realized by the officer.
The fair value of restricted stock awards is equal to the fair market value of FedEx’s common stock (the average of the high and low prices of the stock on the NYSE) on the date of grant multiplied by the number of shares awarded.
For accounting purposes, we use the Black-Scholes option pricing model to calculate the grant date fair value of stock options. Assumptions used in the calculation of the amounts in the “Option Awards” column are included in note 10 to our audited consolidated financial statements for the fiscal year ended May 31, 2019, included in our Annual Report on Form 10-K for fiscal 2019. See the “Grants of Plan-Based Awards During Fiscal 2019” table for information regarding restricted stock and option awards to the named executive officers during fiscal 2019.

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(3) Reflects cash payouts, if any, under FedEx’s fiscal 2019, 2018 and 2017 AIC plans and FY17–FY19, FY16–FY18 and FY15–FY17 LTI plans, as follows (for further discussion of the fiscal 2019 AIC plan and the FY17–FY19 LTI plan, see “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2019 Amounts — Cash Payments Under AIC Program” and “— Cash Payments Under LTI Program” above):

       Name       Year       AIC Payout
($)
      LTI Payout
($)
      Total Non-Equity
Incentive Plan
Compensation
($)
F.W. Smith 2019 0 6,302,000 6,302,000
2018 1,656,161 6,000,000 7,656,161
2017 1,215,948 6,000,000 7,215,948
A.B. Graf, Jr. 2019 0 1,883,750 1,883,750
2018 935,889 1,800,000 2,735,889
2017 731,468 1,800,000 2,531,468
R.B. Carter 2019 0 1,883,750 1,883,750
2018 672,299 1,800,000 2,472,299
2017 512,023 1,800,000 2,312,023
M.R. Allen 2019 0 1,381,416 1,381,416
H.J. Maier 2019 0 1,575,500 1,575,500
D.J. Bronczek* 2019 0 2,457,438 2,457,438
2018 1,238,274 2,537,500 3,775,774
2017 926,694 2,250,000 3,176,694
D.L. Cunningham, Jr.* 2019 0 1,642,071 1,642,071
2018 744,783 1,475,000 2,219,783
      * Messrs. Bronczek and Cunningham, who retired effective February 28, 2019 and December 31, 2018, respectively, received payouts under the FY17-FY19 LTI plan based on the portion of the three-fiscal-year period during which they were employed.
(4) Reflects the actuarial increase in the present value of the named executive officer’s benefits under the Pension Plan and the Parity Plan (as each such term is defined under “— Fiscal 2019 Pension Benefits — Overview of Pension Plans”). The present value of the benefits under the Pension Plan and Parity Plan for Messrs. Smith and Bronczek decreased as follows: (a) between fiscal 2019 and 2018 — $366,901 and $416,720, respectively; (b) between fiscal 2018 and 2017 — $495,708 and $156,754, respectively; and (c) between fiscal 2017 and 2016 — $479,543 and $165,154, respectively. The present value of the benefits under the Pension Plan and Parity Plan for Mr. Graf decreased as follows: (a) between fiscal 2018 and 2017 — $110,555; and (b) between fiscal 2017 and 2016 — $116,057. The amounts in the table and this footnote were determined using assumptions (e.g., for interest rates and mortality rates) consistent with those used in the audited consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended May 31, 2019. See “— Fiscal 2019 Pension Benefits” below.
(5) Includes:
the aggregate incremental cost to FedEx of providing perquisites and other personal benefits;
group term life insurance premiums paid by FedEx;
company-matching contributions under FedEx’s tax-qualified, defined contribution 401(k) retirement savings plan called the FedEx Corporation Retirement Savings Plan;
tax payments relating to restricted stock awards, certain business-related use of corporate and commercial aircraft, and prior overseas service on behalf of the company. FedEx pays the taxes resulting from a restricted stock award on behalf of the recipient to prevent the need for the officer to sell a portion of a stock award to pay the corresponding tax obligation. While SEC disclosure rules require that these payments be included with tax reimbursement payments and reported as “other compensation” in the Summary Compensation Table, we do not believe these payments are “tax gross-ups” in the traditional sense, since their value is fully reflected in the number of shares ultimately delivered to recipients. See “— Compensation Discussion and Analysis — Compensation Objectives and Design-Related Features — Restricted Stock Program” above; and
with respect to Messrs. Bronczek and Cunningham for fiscal 2019, amounts paid pursuant to their separation and release agreements, as discussed below.

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The following table shows the amounts included for each such item:

Name       Year       Perquisites and
Other Personal
Benefits
($)
(a)
      Life
Insurance
Premiums
($)
      Company
Contributions
Under 401(k) Plan
($)
      Tax
Reimbursement
Payments
($)(a)
      Other
($)(b)
      Total
($)
F.W. Smith 2019 527,873 1,509 9,819 0 0 539,201
2018 521,078 1,807 9,656 0 0 532,541
2017 500,777 3,060 9,211 0 0 513,048
A.B. Graf, Jr. 2019 155,208 2,289 9,527 478,111 0 645,135
2018 108,870 2,740 9,484 773,780 0 894,874
2017 169,003 3,060 9,300 449,224 0 630,587
R.B. Carter 2019 84,423 2,289 9,802 485,866 0 582,380
2018 133,527 2,740 9,629 492,538 0 638,434
2017 127,473 3,060 9,206 453,018 0 592,757
M.R. Allen 2019 434,031 2,265 9,800 503,176 0 949,272
H.J. Maier 2019 59,677 1,167 9,800 569,915 0 640,559
D.J. Bronczek 2019 83,443 1,716 9,191 728,631 2,510,712 3,333,693
2018 37,547 2,740 12,491 737,173 0 789,951
2017 113,294 3,060 7,040 579,603 0 702,997
D.L. Cunningham, Jr. 2019 40,394 1,335 0 626,283 1,775,240 2,443,252
2018 53,264 2,740 11,663 628,016 0 695,683
(a) See the following two tables for additional details regarding the amounts included in each item.
(b) The amounts for Messrs. Bronczek and Cunningham for fiscal 2019 reflect payments made pursuant to their separation and release agreements referred to in notes 8 and 10 below, which are discussed further under the caption “Retirements of David J. Bronczek and David L. Cunningham, Jr.” beginning on page 77.

During fiscal 2019, 2018, and 2017, unless otherwise noted below, FedEx provided the following perquisites and other personal benefits to the named executive officers:

Personal use of corporate aircraft: FedEx maintains a fleet of corporate aircraft that is used primarily for business travel by FedEx employees. FedEx has a written policy that sets forth guidelines and procedures regarding personal use of FedEx corporate aircraft. The policy requires officers to pay FedEx two times the cost of fuel for personal trips, plus applicable passenger ticket taxes and fees. These payments are intended to approximate the incremental cost to FedEx of personal corporate aircraft usage.
Mr. Smith is not required to pay FedEx for any travel on corporate aircraft by his family members or guests when they are accompanying him and he is on business travel. Mr. Smith is required to pay FedEx, however, for any personal travel by him and any personal travel by his family members or guests when they are accompanying him and he is on personal travel or when they are traveling without him.
Compensation is included in the table above for personal corporate aircraft travel (which for this purpose includes travel to attend a board or stockholder meeting of an outside company or organization for which the officer serves as a director or trustee) by a named executive officer and his family members and guests to the extent, if any, that the aggregate incremental cost to FedEx of all such travel exceeds the amount the officer paid FedEx for such travel. The incremental cost to FedEx of personal use of corporate aircraft is calculated based on the variable operating cost to FedEx, which includes the cost of fuel, aircraft maintenance, crew travel, landing fees, ramp fees and other smaller variable costs. Because FedEx corporate aircraft are used primarily for business travel, fixed costs that do not change based on usage, such as pilots’ salaries and purchase and lease costs, are excluded from this calculation.
In addition, when an aircraft is already flying to a destination for business purposes and the officers or their family members or guests ride along on the aircraft for personal travel, there is no additional variable operating cost to FedEx associated with the additional passengers, and thus no compensation is included in the table above for such personal travel. With the exception of Mr. Smith, the officer is still required to pay FedEx for such personal travel if persons on business travel occupy less than 50% of the total available seats on the aircraft. The amount of such payment is a pro rata portion (based on the total number of passengers) of the fuel cost for the flight, multiplied by two, plus applicable passenger ticket taxes and fees.
For tax purposes, income is imputed to each named executive officer for personal travel and “business-related” travel (travel by the officer’s spouse or adult guest who accompanies the officer on a business trip for the primary purpose of assisting the officer with the business purpose of the trip) for the excess, if any, of the Standard Industrial Fare Level (SIFL) value of all such flights during a calendar year over the aggregate fuel payments made by the officer during that calendar year. The Board of Directors and the FedEx executive security procedures require Mr. Smith to use FedEx corporate aircraft for all travel, including personal travel. Accordingly, FedEx reimburses Mr. Smith for taxes relating to any imputed income for his personal travel and the personal travel of his family members and guests when they are accompanying him (no such reimbursement payments have been made during the last three fiscal years). FedEx reimburses the other named executive officers for taxes relating to imputed income for business-related travel.

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Security services and equipment: Pursuant to FedEx’s executive security procedures, the named executive officers are provided security services and equipment. To the extent the services and equipment are provided by third parties (e.g., out-of-town transportation and other security-related expenses and home security system installation, maintenance and monitoring), we have included in the table above the amounts paid by FedEx for such services and equipment. For Mr. Smith, these amounts totaled $60,981, $146,856, and $28,661 for fiscal 2019, 2018, and 2017, respectively. The amount for fiscal 2018 includes costs for replacing outdated systems at Mr. Smith’s primary residence. To the extent the security services are provided by FedEx employees, we have included amounts representing: (a) the number of hours of service provided to the officer by each such employee multiplied by (b) the total hourly compensation cost of the employee (including, among other things, pension and other benefit costs). For Mr. Smith, these amounts totaled $274,755, $198,304, and $240,374 for fiscal 2019, 2018, and 2017, respectively. For additional information regarding executive security services provided to Mr. Smith, see “— Compensation Discussion and Analysis — Compensation Elements and Fiscal 2019 Amounts — Perquisites, Tax Payments and Other Annual Compensation” above.
Tax return preparation services: FedEx requires officers to have their income tax returns prepared by a qualified third party (other than our independent registered public accounting firm) and pays all reasonable and customary costs for such services.
Financial counseling services: FedEx reimburses officers for certain financial counseling services, subject to various caps.
Umbrella insurance premiums: FedEx pays umbrella insurance premiums on behalf of officers.
Physical examinations: FedEx pays for officers to have comprehensive annual physical examinations.
Travel privileges: FedEx provides certain executive officers and their spouses with travel privileges on certain airline partners. There is a small per-trip ticketing fee incurred by FedEx in connection with these privileges. FedEx reimburses an executive officer for taxes relating to imputed income for business-related travel.
Supplemental disability benefits: FedEx provides executive officers with salary continuation benefits for short-term disability (100% of base salary for 28 weeks) and supplemental long-term disability benefits. Both benefit programs are self-funded (i.e., no premiums are paid to a third-party insurer) and thus there is no incremental cost to FedEx to provide these benefit programs.

In addition, during fiscal 2019, certain payments were made with respect to Mr. Allen’s prior overseas service on behalf of the company and certain information technology services were provided to each of Messrs. Bronczek and Cunningham in connection with his retirement.

The following table shows the amounts (the aggregate incremental cost to FedEx) included in the perquisites and other personal benefits column in the table above for each such item:

Name       Year       Personal Use
of Corporate
Aircraft
($)
(a)
      Security
Services and
Equipment
($)
      Tax Return
Preparation
Services
($)
      Financial
Counseling
Services
($)
      Umbrella
Insurance
Premiums
($)
      Other
($)(b)
      Total
($)
F.W. Smith 2019 96,208 335,736 43,186 50,000 2,743 0 527,873
2018 77,293 345,160 46,005 50,000 2,620 0 521,078
2017 134,281 269,035 44,854 50,000 2,607 0 500,777
A.B. Graf, Jr. 2019 132,979 9,337 8,348 1,801 2,743 0 155,208
2018 62,965 32,744 8,062 2,479 2,620 0 108,870
2017 133,916 11,441 8,891 12,148 2,607 0 169,003
R.B. Carter 2019 38,682 32,858 9,200 700 2,743 240 84,423
2018 21,803 61,809 9,700 37,355 2,620 240 133,527
2017 20,221 86,806 3,250 14,445 2,607 144 127,473
M.R. Allen 2019 0 24,819 1,500 24,927 2,743 380,042 434,031
H.J. Maier 2019 46,244 0 0 10,690 2,743 0 59,677
D.J. Bronczek 2019 27,170 8,074 0 45,422 2,057 720 83,443
2018 20,093 7,446 7,100 0 2,620 288 37,547
2017 55,114 11,483 14,200 29,578 2,607 312 113,294
D.L. Cunningham, Jr. 2019 1,710 20,907 1,500 13,530 1,600 1,147 40,394
2018 0 30,548 1,500 18,596 2,620 0 53,264
(a) The amounts shown include the following amounts for use of corporate aircraft to attend board or stockholder meetings of outside companies or organizations for which the officers serve as directors for fiscal 2019: Mr. Graf — $103,966, Mr. Carter — $36,972, and Mr. Maier — $29,025; for fiscal 2018: Mr. Graf — $53,158 and Mr. Carter — $18,031; and for fiscal 2017: Mr. Graf — $101,164 and Mr. Carter — $19,486.
(b) The fiscal 2019 amount for Mr. Allen is for certain payments relating to his prior overseas service. The fiscal 2019 amount for Mr. Cunningham is for certain information technology services in connection with his retirement. The fiscal 2019, 2018 and 2017 amounts for Messrs. Carter and Bronczek include ticketing fees for airline travel privileges. The fiscal 2019 amount for Mr. Bronczek also includes certain information technology services in connection with his retirement.

FEDEX.COM     63


Table of Contents

Executive Compensation – Summary Compensation Table

The following table shows the tax payments relating to the items listed, which are included in the table:

Name         Year         Restricted
Stock
($)
        Business-Related
Use of Corporate
and Commercial
Aircraft
($)
        Other*
($)
        Total
($)
F.W. Smith 2019 0 0 0 0
2018 0 0 0 0
2017 0 0 0 0
A.B. Graf, Jr. 2019 478,111 0 0 478,111
2018 773,780 0 0 773,780
2017 449,224 0 0 449,224
R.B. Carter 2019 478,111 7,755 0 485,866
2018 483,844 8,694 0 492,538
2017 449,224 3,794 0 453,018
M.R. Allen 2019 478,111 0 25,065 503,176
H.J. Maier 2019 569,915 0 0 569,915
D.J. Bronczek 2019 728,631 0 0 728,631
2018 737,173 0 0 737,173
2017 579,603 0 0 579,603
D.L. Cunningham, Jr. 2019 617,383 7,927 973 626,283
2018 624,670 2,773 573 628,016
* These are tax reimbursement payments for expenses related to Messrs. Allen’s and Cunningham’s prior overseas service on behalf of the company. In the case of Mr. Cunningham, the tax reimbursement payments related exclusively to tax preparation fees for prior overseas service, which fees are included in the tax return preparation services column in the preceding table.
(6) Mr. Allen was not a named executive officer in fiscal 2018 or 2017. Accordingly, the table includes Mr. Allen’s compensation only for fiscal 2019.
(7) Mr. Maier was not a named executive officer in fiscal 2018 or 2017. Accordingly, the table includes Mr. Maier’s compensation only for fiscal 2019.
(8) Mr. Bronczek retired on February 28, 2019. In connection with his retirement, Mr. Bronczek and FedEx entered into a separation and release agreement, which is discussed under the caption “Retirements of David J. Bronczek and David L. Cunningham, Jr.” beginning on page 77.
(9) In connection with his retirement, Mr. Bronczek forfeited an aggregate of 64,603 stock options that had not yet vested, including 24,575, 22,122 and 12,598 options that were granted in fiscal 2019, 2018 and 2017, respectively.
(10) Mr. Cunningham was not a named executive officer in fiscal 2017. Accordingly, the table includes Mr. Cunningham’s compensation only for fiscal 2019 and 2018. Mr. Cunningham retired on December 31, 2018. In connection with his retirement, Mr. Cunningham and FedEx entered into a separation and release agreement, which is discussed under the caption “Retirements of David J. Bronczek and David L. Cunningham, Jr.” beginning on page 77.
(11) In connection with his retirement, Mr. Cunningham forfeited an aggregate of 44,924 stock options that had not yet vested, including 18,695, 16,827 and 6,613 options that were granted in fiscal 2019, 2018 and 2017, respectively.

64     

 2019 PROXY STATEMENT



Table of Contents

Executive Compensation – Grants of Plan-Based Awards During Fiscal 2019

GRANTS OF PLAN-BASED AWARDS DURING FISCAL 2019

The following table sets forth information regarding grants of plan-based awards made to the named executive officers during the fiscal year ended May 31, 2019:




Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
All-Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
All Other
Option
Awards:
Number of
Securities
 Underlying
Options
(#)

Exercise
or Base
Price of
Option
Awards
($/Sh)
(1)

Closing
Price on
Grant
Date
($/Sh)

Grant
Date Fair
Value of
Stock and
Option
Awards
($)(2)
Name    Type of
Plan/Award
   Grant
Date
   Approval
Date
   Threshold
($)
   Target
($)
   Maximum
($)
              
F.W. Smith Stock Option (3)  06/11/2018 06/10/2018 115,890 261.78 261.97 7,747,212
FY19 AIC (4)  0 2,266,376 4,532,752
FY19–FY21 LTI (5)  1,150,000 4,600,000 6,900,000
A.B. Graf, Jr. Restricted Stock (6)  06/11/2018 06/10/2018 2,815 736,911
Stock Option (3)  06/11/2018 06/10/2018 14,380 261.78 261.97 961,299
FY19 AIC (4)  0 1,328,222 2,656,444
FY19–FY21 LTI (5)  343,750 1,375,000 2,062,500
R.B. Carter Restricted Stock (6)  06/11/2018 06/10/2018 2,815 736,911
Stock Option (3)  06/11/2018 06/10/2018 14,380 261.78 261.97 961,299
FY19 AIC (4)  0 1,020,461 2,040,922
FY19–FY21 LTI (5)  343,750 1,375,000 2,062,500
M.R. Allen Restricted Stock (6)  06/11/2018 06/10/2018 2,815 736,911
Stock Option (3)  06/11/2018 06/10/2018 14,380 261.78 261.97 961,299
FY19 AIC (4)  0 738,991 1,477,982
FY19–FY21 LTI (5)  343,750 1,375,000 2,062,500
H.J. Maier Restricted Stock (6)  06/11/2018 06/10/2018 2,830 740,837
Stock Option (3)  06/11/2018 06/10/2018 9,960 261.78 261.97 665,823
FY19 AIC (4)  0 822,499 1,644,998
FY19–FY21 LTI (5)  287,500 1,150,000 1,725,000
D.J. Bronczek Restricted Stock (6)(7)  06/11/2018 06/10/2018 4,290 1,123,036
Stock Option (3)(8)  06/11/2018 06/10/2018 24,575 261.78 261.97 1,642,831
FY19 AIC (4)(9)  0 1,269,969 2,539,938
FY19–FY21 LTI (5)(10)  129,688