Letter to Investors Urges “No Vote” Due to Critical and Persistent Weaknesses in the Company’s Pay Practices
Kara DenizEmail: [email protected] Phone: (202) 624-6911
(MEMPHIS, Tenn.) –Today, the International Brotherhood of Teamsters mailed a letter to FedEx Corp. (NYSE: FDX) shareholders urging a vote against the board’s “Say on Pay” proposal at the September 26, 2016 annual shareholder meeting.
The letter challenges FedEx’s reliance on a two-decade old approach to long-term pay, arguing that it is overly generous and ill-equipped to delivering long-term value in the current environment.
In the letter, Teamsters General Secretary-Treasurer Ken Hall details how FedEx executives benefit from lowballed earnings-per-share (EPS) growth targets that have remained unchanged for over two decades. This is even as analysts routinely project higher EPS growth for FedEx and investors increasingly question whether earning-per-share is an appropriate measure, particularly in capital intensive industries such as freight.
“It is ludicrous to think that an effective compensation plan can be operating under the same performance assumptions as two decades ago,” Hall said. “That’s an eternity in the worlds of both executive pay and freight. This Compensation Committee appears to have put its core responsibilities on autopilot.”
The letter also criticizes the FedEx Board’s Compensation Committee for increasingly aggressive adjustment of earnings measures used in its pay plans. Over the past two years, half a billion dollars of legal costs incurred from the company’s operational and employment practices at FedEx Ground have been excluded in the calculation of incentive payouts.
“If the long-term incentive plan is to support long-term value, it follows that it should fully internalize expenses associated with the operational and strategic decisions of the current management team,” Hall said.
Over the past three years, CEO Fred Smith has received nearly $45 million in compensation, more than 300 times that of the median FedEx employee, based on salary data from PayScale, Inc.
The International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. For more information, please visit www.teamster.org. Follow us on Twitter @Teamsters and “like” us on Facebook at www.facebook.com/teamsters.