SCHEDULE 14A INFORMATION

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

Filed by the Registrant [X]

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))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

FEDERAL EXPRESS CORPORATION
(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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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:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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FEDERAL EXPRESS CORPORATION
2005 CORPORATE AVENUE
MEMPHIS, TENNESSEE 38132
LOGO

----------------------------------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 1, 1996
----------------------------------------------------

To the Stockholders of Federal Express Corporation:

Notice is hereby given that the Annual Meeting of Stockholders of Federal
Express Corporation (the "Corporation") will be held at the Crowne Plaza
Memphis, 250 North Main Street, Memphis, Tennessee on Tuesday, October 1, 1996
at 10:00 a.m., Central Daylight Time, for the following purposes:

1. To elect the Class I Directors to serve for the next three
years;

2. To ratify the designation of Arthur Andersen LLP as
independent auditors of the Corporation for fiscal 1997;
and

3. To transact such other business as may properly come before
the meeting or any adjournment thereof.

Only stockholders of record at the close of business on August 5, 1996 will
be entitled to notice of, and to vote at, the meeting or any adjournment
thereof.

By order of the Board of
Directors,

/s/ Kenneth R. Masterson
Kenneth R. Masterson
August 8, 1996 Secretary

PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING. THE ENCLOSED RETURN ENVELOPE REQUIRES NO
ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES OR CANADA, AS APPLICABLE.

FEDERAL EXPRESS CORPORATION
2005 CORPORATE AVENUE
MEMPHIS, TENNESSEE 38132
1996 PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Federal Express Corporation (the
"Corporation") for use at the Annual Meeting of Stockholders to be held
October 1, 1996. Shares represented at the meeting by the enclosed form of
proxy will be voted by Mr. Theodore L. Weise, Executive Vice President-
Worldwide Operations, and Mr. Kenneth R. Masterson, Executive Vice President,
General Counsel and Secretary, in accordance with the directions noted
thereon. If no direction is given, the shares will be voted FOR election of
the Class I Directors and FOR proposal 2.

A stockholder giving a proxy may revoke it before it is voted by giving
written notice of such revocation to the Secretary of the Corporation or by
executing a later dated proxy. Attendance at the meeting by a stockholder who
has given a proxy will not have the effect of revoking it unless the
stockholder gives such written notice of revocation to the Secretary before
the proxy is voted.

The Corporation's confidential voting policy provides that stockholder
proxies, ballots and voting materials that identify the votes of specific
stockholders will be kept confidential, except (i) as required by law,
including in connection with the pursuit or defense of legal or regulatory
actions or proceedings; (ii) in the event a stockholder expressly requests
disclosure; or (iii) during a contested election for the Board of Directors.
In addition, the policy states that the tabulators and inspectors of election,
who may be the Corporation's transfer agent or its employees, shall be
independent and not the employees of the Corporation. As in the past, the
Corporation's transfer agent, First Chicago Trust Company of New York, will
tabulate the votes, and a representative of the transfer agent will serve as
inspector of election. Proxies will be returned in envelopes addressed to the
transfer agent and, except in the limited circumstances specified above, will
not be seen by or reported to the Corporation.

The Definitive Proxy Statement and accompanying form of proxy will be first
sent or given to stockholders on or about August 19, 1996.

The solicitation of proxies is made by the Corporation and the cost of
solicitation will be borne by the Corporation. In addition to the solicitation
of proxies by use of the mail and the Corporation's internal mail system,
proxies may be solicited by directors, officers and regularly engaged
employees of the Corporation. Brokers, nominees and other similar record
holders will be requested to forward solicitation materials and will be
reimbursed by the Corporation upon request for their out-of-pocket expenses.
The Corporation has retained Morrow & Co., Inc. to assist in the solicitation
of proxies for a fee of $8,000 plus reimbursement of expenses.

The Annual Report to Stockholders for the Corporation's fiscal year ended
May 31, 1996, including financial statements, is enclosed. Such Annual Report
is not a part of the proxy solicitation materials and is not incorporated
herein by reference.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

VOTING SECURITIES

Only stockholders of record at the close of business on August 5, 1996 will
be entitled to notice of and to vote at the meeting. Each share of Common
Stock is entitled to one vote for the election of the Class I Directors and
for all other matters before the meeting. As of August 5, 1996, the
Corporation had outstanding 56,945,354 shares of Common Stock.

Directors are elected by a plurality of the votes cast at the meeting. A
majority of the outstanding shares entitled to vote at the meeting will
constitute a quorum. Abstentions and broker non-votes will be counted for

purposes of determining the presence of a quorum. Abstentions will be included
in tabulations of the votes cast on the proposals presented in the same manner
as votes cast against such proposals. Broker non-votes will not be counted
either for or against the proposal when determining whether a particular
proposal has been approved.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth the amount of the Corporation's Common Stock
beneficially owned by each Director of the Corporation, each nominee to become
a Director, each of the executive officers named in the Summary Compensation
Table and by all Directors and executive officers as a group, as of August 5,
1996. Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.

AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------ -------------------- ----------------

Smith, Frederick W....................... 5,062,748(1) 8.78%
Allen, Robert H.......................... 9,704(2) *
Baker, Howard H., Jr..................... 8,000(2) *
Cox, Robert L............................ 33,000(3) *
DeNunzio, Ralph D........................ 9,000(2) *
Estrin, Judith L......................... 7,000(4) *
Greer, Philip............................ 29,678(2)(5) *
Hyde, J. R., III......................... 27,000(2)(6) *
Manatt, Charles T........................ 8,500(2) *
Mitchell, George J....................... 2,500(7) *
Smart, Jackson W., Jr.................... 29,234(2)(8) *
Smith, Joshua I.......................... 3,300(9) *
Walsh, Paul S............................ 0
Willmott, Peter S........................ 50,950(2) *
Weise, Theodore L........................ 105,042(10) *
Masterson, Kenneth R..................... 53,750(11) *
Taylor, Mary Alice....................... 54,463(12) *
Graf, Alan B., Jr........................ 65,100(13) *
All Directors and Executive Officers as a
group (29 persons)...................... 5,869,823(1)(2) 10.18%
(3)(4)(5)(6)(7)
(8)(9)(10)(11)
(12)(13)(14)

- ----------
(*) Less than 1% of issued and outstanding shares of Common Stock of the
Corporation.

(1) Includes 3,744,928 shares of Common Stock owned of record by Mr. Smith
(representing 6.49% of the outstanding Common Stock), 1,035,320 shares of
Common Stock owned of record by Frederick Smith Enterprise Company, Inc.
("Enterprise"), a family holding company, and 282,500 shares as to which
Mr. Smith has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within 60
days of August 5, 1996 under the Corporation's 1987, 1989 and 1993 Stock
Incentive Plans. First Tennessee Bank, N.A., Memphis, Tennessee, as Trustee
of a trust of which Mr. Smith is the lifetime beneficiary, holds 55% of
Enterprise's outstanding stock and Mr. Smith owns 45% directly. Mr. Cox is
a director of Enterprise.

(2) Includes 5,000 and 2,000 shares, respectively, of Common Stock as to which
each Director who is not also an employee of the Corporation has the right
to acquire beneficial ownership through the exercise of stock options which
are vested or will become vested within 60 days of August 5, 1996 under the
Corporation's 1989 and 1993 Stock Incentive Plans, respectively.

(3) Includes 30,000 shares of Common Stock owned by RLC Family Partners Ltd.,
a limited partnership of which Mr. Cox is the sole general partner and
1,000 and 2,000 shares, respectively, as to which Mr. Cox has the right to
acquire beneficial ownership through the exercise of stock options which
are vested or will become vested within 60 days of August 5, 1996 under
the Corporation's 1989 and 1993 Stock Incentive Plans, respectively, and
excludes 4,000 shares owned by Mr. Cox's wife as to which Mr. Cox
disclaims beneficial ownership.

(4) Includes 4,000 and 2,000 shares, respectively, of Common Stock as to which
Ms. Estrin has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within 60
days of August 5, 1996 under the Corporation's 1989 and 1993 Stock
Incentive Plans, respectively.

(5) Excludes 13,656 shares of Common Stock owned of record and beneficially by
members of Mr. Greer's family as to which Mr. Greer disclaims beneficial
ownership.

(6) Includes 4,000 shares of Common Stock owned by a family trust and members
of Mr. Hyde's family.

(7) Includes 1,000 shares of Common Stock as to which Mr. Mitchell has the
right to acquire beneficial ownership through the exercise of stock
options which will become vested within 60 days of August 5, 1996 under
the Corporation's 1993 Stock Incentive Plan.

(8) Includes 2,100 shares of Common Stock owned by Mr. Smart's wife.

(9) Includes 1,000 and 2,000 shares, respectively, of Common Stock as to which
Mr. Smith has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within 60
days of August 5, 1996 under the Corporation's 1989 and 1993 Stock
Incentive Plans, respectively.

(10) Includes 60,815 shares of Common Stock as to which Mr. Weise has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
5, 1996 under the Corporation's Stock Incentive Plans and 4,914 shares
owned by members of Mr. Weise's family.

(11) Includes 40,500 shares of Common Stock as to which Mr. Masterson has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
5, 1996 under the Corporation's Stock Incentive Plans.

(12) Includes 36,400 shares of Common Stock as to which Ms. Taylor has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
5, 1996 under the Corporation's Stock Incentive Plans.

(13) Includes 44,100 shares of Common Stock as to which Mr. Graf has the right
to acquire beneficial ownership through the exercise of stock options
which are vested or will become vested within 60 days of August 5, 1996
under the Corporation's Stock Incentive Plans.

(14) Includes 726,454 shares of Common Stock as to which the Directors and
Executive Officers as a group, have the right to acquire beneficial
ownership through the exercise of stock options which are vested or will
become vested within 60 days of August 5, 1996 under the Corporation's
Stock Incentive Plans.

Listed below are certain persons who owned beneficially, as of December 31,
1995, and in the case of PRIMECAP Management Company, as of August 10, 1995,
more than five percent of the Corporation's Common Stock. This information is
copied from the latest Schedule 13G filed by each beneficial owner with the
Securities and Exchange Commission.

AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ ---------------------- ----------------

The Capital Group Companies, Inc....... 7,112,240(1) 12.6%
333 South Hope Street
Los Angeles, California 90071

Sanford C. Bernstein & Co., Inc........ 4,952,424(2) 8.8
One State Street Plaza
New York, New York 10004

Southeastern Asset Management, Inc..... 3,511,735(3) 6.3
6075 Poplar Avenue, Suite 900
Memphis, Tennessee 38119

PRIMECAP Management Company............ 3,440,000(4) 6.1
225 South Lake Avenue
Pasadena, California 91101

- ----------
(1) Certain operating subsidiaries of The Capital Group Companies, Inc.,
exercised investment discretion over various institutional accounts which
held shares of the Corporation. Capital Guardian Trust Company, a bank,
and one of such operating companies, exercised investment discretion over
2,229,780 of the shares. Capital Research and Management Company, a
registered investment advisor, and Capital International Limited and
Capital International, S.A., other operating subsidiaries, had investment
discretion with respect to 4,650,000, 78,440 and 54,200 shares,
respectively, of the aggregate shares. The Capital Group Companies, Inc.
had sole power to vote or direct the vote with respect to 1,307,110
shares. Neither The Capital Group Companies, Inc. nor any of its
subsidiaries had the power to vote or to direct the vote of the remaining
shares. The Capital Group Companies, Inc. disclaimed beneficial ownership
of all such shares of the Corporation.

(2) Sanford Bernstein, a registered investment advisor, exercised sole
investment discretion with respect to the shares and sole voting power
with respect to 2,384,351 of such shares. Sanford Bernstein does not
disclaim beneficial ownership of any such shares.

(3) Southeastern Asset Management, Inc., a registered investment advisor,
exercised sole investment discretion over 2,403,785 of the aggregate
shares, and shared investment discretion with respect to 1,070,000 shares
with Longleaf Partners Fund, a series of Longleaf Partners Funds Trust, an
open-end registered management investment company. Southeastern had sole
power to vote or direct the vote with respect to 2,303,785 of the
aggregate shares, and shared voting power over 1,070,000 shares with
Longleaf Partners Fund. Neither Southeastern nor Longleaf Partners Fund
had the power to vote or to direct the vote of the remaining shares.
Southeastern does not disclaim beneficial ownership of any such shares;
however, Mr. O. Mason Hawkins, chairman and chief executive officer of
Southeastern, disclaims beneficial ownership of all of the shares in the
event he is or could be deemed to be a controlling person of Southeastern
as a result of his official positions with Southeastern or his ownership
of its voting securities.

(4) PRIMECAP Management Company, a registered investment advisor, exercised
sole investment discretion and sole voting power with respect to the
shares, and does not disclaim beneficial ownership of any such shares.

ELECTION OF DIRECTORS
(PROPOSAL NO. 1)

At the date of the Annual Meeting, the Board of Directors will consist of
fourteen members, divided into three classes. Four nominees (the "Class I
Directors") are to be elected at this Annual Meeting to serve for a term of
three years and until their successors are elected and qualified. The
remaining Directors will continue to serve as set forth below, with five
Directors (the "Class II Directors") having terms expiring at the 1997 Annual
Meeting and five Directors (the "Class III Directors") having terms expiring
at the 1998 Annual Meeting. Three of the nominees for election as Class I
Directors are now directors of the Corporation. Each nominee has consented to
being named in this Proxy Statement and agreed to serve if elected. The proxy
holders will vote the proxies received by them for the four Class I nominees
or, in the event of a contingency not presently foreseen, for different
persons as substitutes therefor unless authority is withheld.

The following sets forth, with respect to each nominee and each Director
continuing to serve, his or her name, age, principal occupation and employment
during the past five years, the year in which he or she first became a
Director of the Corporation and directorships held in other corporations.

NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR A
THREE-YEAR TERM EXPIRING AT THE 1999 ANNUAL MEETING

DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
-------------------- --- ---------------------------

Robert H. Allen 68 Private Investor and Managing Partner, Challenge
1977 Investment Partners, an investment firm, since May
1993. Director, GeoQuest International Holdings, Inc.,
Gulf Canada Resources Ltd., Nuevo Energy Company,
Texas Growth Fund Corporation and University of Texas
Investment Management Company. Trustee, Baylor College
of Medicine. Regent, Texas A&M University System.

Robert L. Cox 60 Partner, Waring Cox, a law firm, for more than the
1993 past five years; Secretary of the Corporation from
June 1971 to September 1993. Director, Delta Life
Corporation.

Paul S. Walsh 41 Chairman, President and Chief Executive Officer of The
Pillsbury Company, a wholly-owned subsidiary of Grand
Metropolitan PLC, a consumer food and beverage
company, since April 1996; Chief Executive Officer of
The Pillsbury Company from January 1992 to April 1996;
Chief Operating Officer of The Pillsbury Company from
June 1991 to January 1992. Director, Ceridian
Corporation and Grand Metropolitan PLC.

Peter S. Willmott 59 Chief Executive Officer and President of Zenith
1974 Electronics Corporation, an electronics manufacturing
company, since July 1996 and Chairman and Chief
Executive Officer of Willmott Services, Inc., a retail
and consulting firm, since June 1989; President and
Chief Operating Officer of the Corporation from
September 1980 to May 1983; Executive Vice President
of the Corporation from 1977 to 1980; Senior Vice
President-Finance and Administration of the
Corporation from 1974 to 1977. Director, Browning-
Ferris Industries, Inc., International Multifoods
Corporation, Mac Frugal's Bargains--Close-Outs, Inc.,
Maytag Corporation, Morgan Keegan & Co., Inc. and
Zenith Electronics Corporation.

CLASS II DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1997 ANNUAL MEETING

DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
-------------------- ---- ---------------------------

Ralph D. DeNunzio 64 President of Harbor Point Associates, Inc., a
1981 private investment and consulting firm, since
October 1987. Director, AMP Incorporated, Harris
Corporation and NIKE, Inc.

Charles T. Manatt 60 Senior Partner, Manatt, Phelps & Phillips, a law
1989 firm, for more than the past five years. Director,
ICN Pharmaceuticals, Inc. and COMSAT Corporation.

George J. Mitchell 62 Special Counsel to Verner, Liipfert, Bernhard,
1995 McPherson and Hand, a law firm, since January 1995;
Member of the United States Senate from May 1980 to
January 1995. Director, The Walt Disney Company,
UNUM Corporation and Xerox Corporation.

Jackson W. Smart, Jr. 65 Chairman, Executive Committee, First Commonwealth,
1976 Inc., a managed dental care company, since January
1996 and Chairman and Chief Executive Officer of MSP
Communications, Inc., a radio broadcasting company,
since October 1988. Trustee, Goldman Sachs -
Institutional Liquid Assets, Financial Square Money
Market Trust, Goldman Sachs Trust and Goldman Sachs
Equity Portfolios Inc. Director, Evanston Hospital
Corporation, First Commonwealth, Inc. and InRoads
Capital Partners L.P.

Joshua I. Smith 55 Chairman, President and Chief Executive Officer of
1989 The MAXIMA Corporation, an information and data
processing firm, since 1978. Director, Caterpillar,
Inc. and Inland Steel Industries, Inc.

CLASS III DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1998 ANNUAL MEETING

DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
-------------------- ---- ---------------------------

Howard H. Baker, Jr. 70 Partner, Baker, Donelson, Bearman & Caldwell, a law
1988 firm, since February 1995; Partner, Baker,
Worthington, Crossley & Stansberry from July 1988 to
February 1995. International Advisory Board, Barrick
Gold Corporation. Director, Pennzoil Company, United
Technologies Corporation and WMX Technologies, Inc.

Judith L. Estrin 41 President and Chief Executive Officer of Precept
1989 Software, Inc., a computer software company, since
March 1995; Consultant from September 1994 to March
1995; Chief Executive Officer and President of
Network Computing Devices, Inc., a company that
supplies display stations for network computing
environments, from September 1993 to September 1994;
Executive Vice President of Network Computing
Devices, Inc. from July 1988 to September 1993.
Director, Rockwell International Corporation and Sun
Microsystems, Inc.

Philip Greer 60 Senior Managing Principal of Weiss, Peck & Greer,
1974 L.L.C., an investment management firm, since 1995;
General Partner of Weiss, Peck & Greer from 1970 to
1995. Director, Network Computing Devices, Inc. and
Robert Mondavi Winery.

J. R. Hyde, III 53 Chairman and Chief Executive Officer of AutoZone,
1977 Inc., an auto parts retail chain, since 1986 and
Chairman of Malone & Hyde, Inc., a wholesale food
distributor and former parent company of AutoZone,
Inc., since 1972. Director, AutoZone, Inc.

Frederick W. Smith 51 Chairman, President and Chief Executive Officer of
1971 the Corporation since 1983; Chief Executive Officer
of the Corporation since 1977; Chairman of the
Corporation since 1975; President of the Corporation
from 1971 to 1975.

MEETINGS AND COMMITTEES

The Board of Directors of the Corporation conducted seven regular meetings
and one special meeting during fiscal 1996. Each Director, with the exception
of Mr. Hyde, attended at least 75% of the meetings of the Board and any
committees on which they served.

The Board of Directors has an Audit Committee and a Compensation Committee.
The members of the Audit Committee are Philip Greer (Chairman), Howard H.
Baker, Jr., Robert L. Cox, George J. Mitchell, Joshua I. Smith and Peter S.
Willmott. The basic responsibilities of the Audit Committee, as approved by
the Board of Directors, are to review significant financial information for
the purpose of giving added assurance that the information is accurate and
timely and that it includes all appropriate financial statement disclosures;
to ascertain the existence of effective accounting and internal control
systems; to oversee the entire audit function both internal and independent;
and to provide an effective communication link between the auditors (internal
and independent) and the Board of Directors. The Audit Committee met nine
times during fiscal 1996.

The members of the Compensation Committee are Jackson W. Smart, Jr.
(Chairman), Robert H. Allen, Ralph D. DeNunzio, J. R. Hyde, III and Charles T.
Manatt. The Compensation Committee determines the salaries, bonuses and other
remuneration and terms and conditions of employment of the officers of the
Corporation, administers the Corporation's Stock Incentive and Restricted
Stock Plans, oversees the administration of the Corporation's employee benefit
plans covering employees generally and makes recommendations to the Board of
Directors with respect to the Corporation's compensation policies. The
Compensation Committee held six meetings in fiscal 1996. The Board of
Directors does not have a nominating committee.

COMPENSATION OF DIRECTORS

For fiscal 1997, outside Directors are to be paid a quarterly retainer of
$8,000, $2,000 for each meeting of the Board attended and $1,000 for each
meeting of its Committees which they attend. Committee chairmen will be paid
an additional annual fee of $6,250. In addition, outside Directors will be
granted an option under the Corporation's 1993 Stock Incentive Plan for 1,000
shares of Common Stock on each of the five consecutive Annual Meeting dates
beginning September 26, 1994. Officers of the Corporation receive no
compensation for serving as Directors.

The Corporation has a Retirement Plan for Outside Directors to attract,
retain and motivate directors who are not also employees of the Corporation to
serve on the Corporation's Board of Directors. The plan is unfunded and
benefits provided thereunder are payable out of the assets of the Corporation
as a general, unsecured obligation of the Corporation. An outside Director who
has served at least five years on the Board of Directors is entitled to a
retirement benefit beginning as of the first day of the fiscal quarter of the
Corporation next following the date of termination of his or her directorship
or the date such Director attains age 60, whichever is later. The benefit will
be an annual amount, payable as a lump-sum distribution or in quarterly
installments for no less than ten years and no more than fifteen years
depending on years of service, equal to a percentage from 50% to 100% (as
determined by years of service) of the annual retainer fee being paid to the
outside Director at the time of his or her termination as a Director. A
Director must retire immediately before the Corporation's annual meeting of
stockholders during the calendar year in which the Director attains age 72.

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation awarded to, earned by or paid
to the Corporation's Chief Executive Officer and its four other most highly-
compensated executive officers for services rendered in all capacities during
the fiscal years ended May 31, 1996, 1995 and 1994.

LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ---------------------- ------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) SARS (#) PAYOUTS($) ($)(2)
- --------------------------- ---- ------- ------- ------------- ---------- ----------- ------------ -------------

Frederick W. Smith 1996 745,833 -- 131,742(3) -- -- 1,200,000 24,174
Chairman, President and 1995 700,000 515,500 96,541(3) -- 50,000 -- 22,232
Chief Executive Officer 1994 650,121 470,000 84,016(3) -- 100,000 -- 5,573

Theodore L. Weise 1996 449,604 37,500(4) 974,734(5) 1,333,500 11,500 352,388 12,947
Executive Vice President 1995 417,994 188,480 58,016(6) -- 27,500 -- 12,021
Worldwide Operations 1994 399,360 214,675 105,720(5) 162,500 25,000 -- 4,440

Kenneth R. Masterson 1996 396,688 37,500(4) 764,729(7) 1,044,500 11,500 364,875 10,743
Executive Vice President, 1995 378,478 138,880 -- -- 22,500 -- 10,617
General Counsel and 1994 357,162 180,428 -- -- 20,000 -- 4,175
Secretary

Mary Alice Taylor 1996 387,034 25,000(8) 658,956(7) 900,000 11,500 361,988 10,295
Senior Vice President 1995 357,178 150,176 -- -- 22,500 -- 9,752
U.S. and Canada 1994 296,670 156,090 -- -- 20,000 -- 3,761

Alan B. Graf, Jr. 1996 375,421 25,000(4) 843,160(7) 1,152,875 11,500 362,250 10,312
Executive Vice President 1995 347,477 137,640 -- -- 25,000 -- 9,578
and Chief Financial
Officer 1994 320,530 156,630 -- -- 34,000 -- 4,210

- ---------
(1) The amounts in the table represent the closing market value of the shares
awarded at the date of grant. At May 31, 1996, the number and value of the
aggregate restricted stock holdings of the named individuals were as
follows:

NAME NUMBER OF SHARES HELD VALUE
---- --------------------- ----------

F.W. Smith............................ -- --
T.L. Weise............................ 18,084 $1,385,687
K.R. Masterson........................ 13,250 1,015,281
M.A. Taylor........................... 14,063 1,077,577
A.B. Graf, Jr......................... 16,000 1,226,000

The restrictions on the shares awarded to Mr. Weise lapse ratably over three
years after the date of award with respect to 834 shares granted in October
1993 and lapse ratably over five years after the date of award with respect
to 11,250 shares granted in October 1995 and 6,000 shares granted in April
1996. The restrictions on the shares awarded to Mr. Masterson lapse ratably
over five years after the date of award with respect to 11,250 shares
granted in December 1995 and lapse ratably over two years after the date of
award with respect to 2,000 shares granted in April 1996. The restrictions
on the shares awarded to Ms. Taylor lapse ratably over five years after the
date of award with respect to 1,250 shares granted in September 1991 and
11,250 shares granted in October 1995 and lapse ratably over four years
after the date of award with respect to 1,563 shares granted in October
1992. The restrictions on the shares awarded to Mr. Graf lapse ratably over
five years after the date of award with respect to 11,250 shares granted in
October 1995 and 3,500 shares granted in April 1996 and lapse over five
years after the date of award with respect to 1,250 shares granted in
December 1991.

Holders of restricted shares are entitled to receive any dividends declared
on such shares. The Corporation has never declared a dividend on its shares
because its policy has been to reinvest earnings in the business of the
Corporation.

(2) These amounts represent profit sharing payments to the named executive
officers and contributions under the Corporation's Profit Sharing Plan.

(3) Of the amounts shown for 1996, 1995 and 1994, $95,174, $69,437 and
$65,328, respectively, represent personal use of corporate aircraft
treated as taxable income to Mr. Smith.

(4) These amounts represent bonuses received by each officer upon promotion to
Executive Vice President and, in the case of Mr. Masterson, an additional
special recognition award. No amounts are included for annual performance
bonuses because no such bonuses were awarded for fiscal 1996.

(5) The amounts shown for Mr. Weise in 1996 and 1994 represent tax
reimbursements related to restricted stock awards.

(6) Of the amount shown for 1995, $55,018 is for financial counseling.

(7) The amounts shown for Messrs. Masterson and Graf and Ms. Taylor in 1996
represent tax reimbursements related to restricted stock awards.

(8) This amount represents a Five Star Award, the Corporation's highest
special achievement award, received by Ms. Taylor.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding grants of stock options
during the fiscal year ended May 31, 1996 made to the named executive officers
under the Corporation's Stock Incentive Plans. The amounts shown for each of
the named executive officers as potential realizable values are based on
arbitrarily assumed annualized rates of stock price appreciation of five
percent and ten percent over the full ten-year term of the options, which
would result in stock prices of approximately $134.08 and $213.50,
respectively, for the options with an exercise price of $82.3125. No gain to
the optionees is possible without an increase in stock price which will
benefit all stockholders proportionately. These potential realizable values
are based solely on arbitrarily assumed rates of appreciation required by
applicable Securities and Exchange Commission regulations. Actual gains, if
any, on option exercise and common stock holdings are dependent on the future
performance of the Corporation's Common Stock and overall stock market
conditions. There can be no assurance that the potential realizable values
shown in this table will be achieved.

INDIVIDUAL GRANTS
------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH)(*) DATE 5% ($) 10% ($)
- ---- ------------ ------------ ----------- ---------- ---------------------------

F.W. Smith.............. -- -- -- -- -- --
T.L. Weise.............. 11,500 1.28 82.3125 9/25/2005 595,326 1,508,656
K.R. Masterson.......... 11,500 1.28 82.3125 9/25/2005 595,326 1,508,656
M.A. Taylor............. 11,500 1.28 82.3125 9/25/2005 595,326 1,508,656
A.B. Graf, Jr........... 11,500 1.28 82.3125 9/25/2005 595,326 1,508,656

- ----------
(*) The option exercise price of the options granted to the individuals shown
above was the fair market value of the Corporation's Common Stock at the
date of grant of the option. The options are subject to a vesting schedule
as follows: 20% after one year from the date of grant; 40% after two
years; 60% after three years; 80% after four years; and 100% after five
years. The options may not be transferred in any manner other than by will
or the laws of descent and distribution and may be exercised during the
lifetime of the optionee only by the optionee. During the fiscal year
ended May 31, 1996, options for a total of 896,000 shares were granted to
various employees of the Corporation.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

The following table summarizes for each of the named executive officers
certain information relating to stock options exercised by them during the
fiscal year ended May 31, 1996. Value realized upon exercise is the difference
between the fair market value of the underlying stock on the exercise date and
the exercise or base price of the option. The value of an unexercised, in-the-
money option at fiscal year-end is the difference between its exercise or base
price and the fair market value of the underlying stock on May 31, 1996, which
was $76.6875 per share. These values, unlike the amounts set forth in the
column "Value Realized," have not been, and may never be, realized. The
options have not been, and may not be, exercised; and actual gains, if any, on
exercise will depend on the value of the Corporation's Common Stock on the
date of exercise. There can be no assurance that these values will be
realized. Unexercisable options are those which have not yet vested.

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
SHARES VALUE FY-END (#) OPTIONS/SARS AT FY-END ($)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----- ------------ -------- ----------- ------------- ----------- -------------

F.W. Smith.............. -- -- 252,500 100,000 8,000,000 857,500
T.L. Weise.............. 4,000 102,250 51,215 55,800 1,383,395 602,281
K.R. Masterson.......... 12,000 487,625 35,900 48,600 868,369 513,569
M.A. Taylor............. 4,000 85,750 27,600 47,900 663,156 491,000
A.B. Graf, Jr........... 6,250 209,756 34,500 64,400 622,281 764,831

LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR

The following table sets forth estimates of the possible future payouts to
each of the named executive officers under the Corporation's long-term
performance bonus plans.

ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
NUMBER OF OTHER PERIOD ---------------------------------
SHARES, UNITS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME OR OTHER RIGHTS (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
- ---- ------------------- ---------------- --------- ---------- ----------

F.W. Smith.............. N/A 5/31/97 $500,000 $1,000,000 $1,500,000
N/A 5/31/98 500,000 1,000,000 1,500,000
N/A 5/31/99 500,000 1,000,000 1,500,000

T.L. Weise.............. N/A 5/31/97 158,334 316,667 475,000
N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000

K.R. Masterson.......... N/A 5/31/97 158,334 316,667 475,000
N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000

M.A. Taylor............. N/A 5/31/97 125,000 250,000 375,000
N/A 5/31/98 125,000 250,000 375,000
N/A 5/31/99 125,000 250,000 375,000

A.B. Graf, Jr........... N/A 5/31/97 158,334 316,667 475,000
N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000

In 1995 the Compensation Committee established a long-term performance bonus
plan to provide a long-term cash bonus opportunity to members of upper
management, including executive officers, at the conclusion of fiscal year
1997 if the Corporation achieves certain earnings per share targets
established by the Committee

with respect to the three-fiscal year period 1995 through 1997. However, no
amounts can be earned until fiscal 1997 because it is only after the
conclusion of that year that the Committee can determine the extent of
achievement of the three-year earnings per share objectives. The Committee has
established similar plans for the three-fiscal year periods 1996 through 1998
and 1997 through 1999 providing bonus opportunities for 1998 and 1999,
respectively, if certain earnings per share targets are achieved with respect
to those periods. No amounts can be earned for the 1996 through 1998 and 1997
through 1999 plans until 1998 and 1999, respectively, since achievement of the
earnings per share objectives can only be determined following the conclusion
of the applicable three-fiscal year period. Each successive plan has earnings
per share targets which are higher than the previous plans.

Under each plan, the average percentage of an individual's achievement of
individual objectives under the Corporation's annual performance bonus plan
(discussed on page 12 of the Proxy Statement) for the three-fiscal year period
of each of the long-term performance bonus plans will be used as an individual
performance measure when calculating individual bonuses, except for Mr. Smith
whose payout will be determined by the Compensation Committee. The estimated
individual future payouts set forth in the table above are set dollar amounts
ranging from threshold amounts if the objectives are minimally achieved, up to
maximum amounts if the plan targets are substantially exceeded. Individual
bonuses may be adjusted downward from these amounts if the individual's
average individual achievement percentage is less than 100% for the three-
fiscal year period of each of the plans. There can be no assurance that the
estimated future payouts shown in this table will be achieved.

PENSION PLAN TABLE

The following table shows the estimated annual pension benefits payable to
participants upon retirement on a single life annuity basis in specified
remuneration classes and years of credited service under the Federal Express
Corporation Employees' Pension Plan and the Federal Express Corporation
Retirement Parity Pension Plan which provides 100 percent of the benefit that
would otherwise be denied certain participants by reason of Internal Revenue
Code limitations on qualified plan benefits. The benefits listed in the table
are not subject to any reduction for Social Security or other offset amounts.

YEARS OF SERVICE
---------------------------------------
REMUNERATION 10 15 20 25 30
- ------------ ------- ------- ------- ------- -------

300,000............................... 60,000 90,000 120,000 150,000 150,000
350,000............................... 70,000 105,000 140,000 175,000 175,000
400,000............................... 80,000 120,000 160,000 200,000 200,000
450,000............................... 90,000 135,000 180,000 225,000 225,000
500,000............................... 100,000 150,000 200,000 250,000 250,000
600,000............................... 120,000 180,000 240,000 300,000 300,000
700,000............................... 140,000 210,000 280,000 350,000 350,000
800,000............................... 160,000 240,000 320,000 400,000 400,000
900,000............................... 180,000 270,000 360,000 450,000 450,000
1,000,000............................... 200,000 300,000 400,000 500,000 500,000

The remuneration specified in the Pension Plan Table includes Salary and
Bonus as reported in the Summary Compensation Table (p. 8). Since the covered
compensation is the average over the five-year period preceding retirement,
the amount differs from that set forth in the Summary Compensation Table and
is stated below together with the credited years of service achieved.

YEARS OF
NAME COVERED COMPENSATION SERVICE
- ---- -------------------- --------

F.W. Smith........................................ $820,547 24
T.L. Weise........................................ 476,431 24
K.R. Masterson.................................... 423,574 16
M.A. Taylor....................................... 353,937 16
A.B. Graf, Jr..................................... 352,639 16

REPORT ON EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The compensation of the Corporation's executives comprises three basic
components: base salary, annual and long-term performance bonus plans, and
long-term equity incentives. The Compensation Committee (the "Committee") of
the Board of Directors determines the compensation of the executive officers
of the Corporation, approves the objectives for the annual and long-term
performance bonus plans, establishes the funding of the plans, determines the
awards of long-term equity incentives and the individuals to whom such awards
are made, and recommends to the Board of Directors the compensation of the
chief executive officer of the Corporation.

Base Salary. The establishment of competitive base compensation for the
Corporation's executives is the primary objective in setting base salaries.
The starting point for this process is to determine the relative importance of
an executive officer's position, the extent of accountability of the position
and the skills required to perform the duties of the position. In addition,
the Corporation utilizes compensation surveys published by three major
consulting firms of companies in general industry with $5 billion or more in
annual sales. The Committee believes that general industry is an appropriate
comparison category in determining competitive compensation because the
Corporation's executives can be recruited from, and by, businesses outside the
Corporation's industry peer group. In addition, in its 1996 executive
compensation review, the Committee considered compensation information on the
five highest paid executive officers of other companies available from the
proxy statements of a group of 19 transportation companies and a group of 34
companies in general industry with annual sales of $8--$12 billion. The
transportation companies comprise most of the companies in the Standard &
Poor's Transportation Index and the Dow Jones Transportation Average, but also
include several other companies not in these indices. Base salaries are
generally targeted at the median (or 50th percentile) of base salaries for
comparable positions in the comparison surveys mentioned above.

None of the factors mentioned above is given any particular weight in
determining base compensation. Other factors may also influence such
determination, such as the relative extent of an individual's experience or a
desire to retain a valuable executive. The Committee's target for Mr. Smith is
the 50th percentile as is the case with the other executive officers. Mr.
Smith's base salary was increased in 1996; however, his base salary remains at
about the 25th percentile of base salaries of chief executive officers in the
comparison surveys.

Performance Bonus Plans. Under the Corporation's annual performance bonus
plan, a bonus opportunity is established at the beginning of each fiscal year
for management and certain professional employees based on the degree of
attainment of both corporate and individual goals for the year. Each position
eligible for such bonus, including all executive officers but excluding Mr.
Smith, is assigned a number of points based on salary grade. Individual
objectives for each position are established and points are allocated to the
objectives by each participant and his or her immediate superior. A
participant earns points by achieving his or her individual objectives. The
amount of a participant's bonus is determined by the number of points earned,
multiplied by the dollar value, if any, assigned to each point by the
Committee according to the extent of achievement of plan objectives.

If both the individual and plan objectives are achieved, the plan is
designed to produce a bonus ranging, on a sliding scale, from a threshold
amount if the plan objectives are minimally achieved up to a maximum amount if
such objectives are substantially exceeded. For 1996, the threshold bonus
target was established at an amount which, when added to base salary, would be
less than the 50th percentile of total salary and bonus for comparable
positions in the comparison surveys discussed above under Base Salary. Thus,
total salary and bonus for executive officers (assuming achievement of all
individual objectives) is designed to range from less than the 50th up to the
75th percentile of total salary and bonus for comparable positions in the
comparison surveys according to the degree to which plan objectives are met or
exceeded.

The plan objectives established for 1996 were (i) a pretax income goal and
(ii) an internal measure reflecting a targeted level of service quality. No
annual bonuses were awarded to executive officers (or Mr. Smith) for 1996
because plan targets for pretax income for the entire fiscal year and the
service quality index goal were not achieved.

Mr. Smith's bonus is not determined by a number of points specifically
assigned to his position as is the case with other management personnel, but
by whether corporate business plan objectives are met or exceeded. If such
objectives are met, the Committee determines and recommends to the Board of
Directors a bonus which, when combined with base salary, may be up to the 75th
percentile of total salary and bonus for chief executive officers in the
comparison surveys discussed above under Base Salary. In addition to the
comparison surveys, the Committee also considered publicly available proxy
statement information on the compensation of chief executive officers of two
groups of other public companies, as described above under Base Salary, in
determining Mr. Smith's total salary and bonus. Mr. Smith did not receive an
annual bonus for 1996.

In 1994, the Committee established a long-term performance bonus plan to
provide a long-term cash bonus opportunity to members of upper management,
including executive officers, at the conclusion of fiscal year 1996 if the
Corporation achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1994 through 1996.
Bonuses were awarded under the long-term plan in 1996 to upper management,
including the named executive officers, based on achievement of maximum plan
targets for the three-fiscal year period. The Committee has established
similar plans for the three-fiscal year periods 1995 through 1997, 1996
through 1998 and 1997 through 1999 providing bonus opportunities for 1997,
1998 and 1999, respectively, if certain earnings per share targets are
achieved with respect to those periods. The Long-Term Incentive Plans Table on
page 10 of this Proxy Statement sets forth the estimated future payouts under
these plans if the three-year earnings per share objectives are achieved.

Long-Term Equity Incentives. Stock options were granted as long-term
incentives in 1996 to certain key employees of the Corporation, including
executive officers, under certain of the Corporation's Stock Incentive Plans.
Under the terms of the plans, the Corporation may grant options to key
employees (determined by the Committee) to purchase such number of shares of
the Common Stock of the Corporation as is determined by the Committee.

The number of shares for which options are granted to executive officers is
generally determined by the Committee based on the respective officer's senior
officer status. However, no set criteria are used and other factors may
influence the Committee's determination with respect to the number of shares
granted, such as the promotion of an individual to a higher position, a desire
to retain a valued executive or the number of shares then available for grant
under one or more of the plans. The stock option holdings of an individual at
the time of a grant are generally not considered in determining the size of a
grant to that individual.

Under the terms of the Corporation's Restricted Stock Plans, the Corporation
may award restricted stock to key employees as determined by the Committee. No
set criteria are used to determine the amount of restricted stock awarded;
however, the Committee's determination may be influenced with respect to the
number of shares awarded by factors such as the respective officer's senior
officer status, the promotion of an individual to a higher position, a desire
to retain a valued executive, a desire to recognize a particular officer's
contribution to the Corporation or the number of shares then available for
award. In 1996, 175,250 shares of restricted stock were awarded.

Section 162(m) of the Internal Revenue Code limits deductibility of certain
compensation for the chief executive officer and the four other highest paid
executive officers to $1,000,000 per year, unless certain requirements are met.
The policy of the Corporation is generally to design its compensation plans and
programs to ensure full deductibility. The Committee attempts to balance this
policy with compensation programs designed to motivate management to maximize
stockholder wealth. There are times when it is determined that the interests of
the stockholders are best served by the implementation of compensation policies
that do not restrict the Committee's ability to exercise its discretion in
crafting compensation packages even though such policies may result in certain
non-deductible compensation expenses.

The Corporation's Stock Incentive Plans comply with Section 162(m);
therefore, compensation recognized by the five highest paid executive officers
under these plans will qualify for appropriate tax deductions. The
Corporation's annual and long-term performance bonus plans and its 1995
Restricted Stock Plan do not meet all of the conditions for qualification under
Section 162(m). Therefore, compensation received under these plans will be
subject to the $1,000,000 deductibility limit.

COMPENSATION COMMITTEE MEMBERS

Jackson W. Smart, Jr.--Chairman

Robert H. Allen Ralph D. DeNunzio J.R. Hyde, III Charles T. Manatt

MAY 31, 1996

TRANSACTIONS WITH MANAGEMENT AND OTHERS

Pursuant to the provisions of the Corporation's Stock Incentive Plans, the
Corporation has made interest-free demand loans to certain officers, fully
secured by Common Stock of the Corporation, to assist them in exercising non-
incentive stock options and paying any tax liability associated with such
exercise. Such loans are repayable on demand or upon termination of employment
for any reason. The following table shows the highest balance of such loans
outstanding during the period June 1, 1995 through August 5, 1996 and the
balance of such loans outstanding at August 5, 1996, for those executive
officers with loan balances which exceeded $60,000.

HIGHEST BALANCE BALANCE AT
EXECUTIVE OFFICER DURING PERIOD AUGUST 5, 1996
- ----------------- --------------- --------------

Theodore L. Weise,
Executive Vice
President(1)
Worldwide Operations.. $ 619,031 $355,373
William J. Razzouk,
Executive Vice
President(1)
Worldwide Customer
Operations............ 1,416,188 --
Gilbert D. Mook, Senior
Vice President
Air Operations........ 70,283 --

- --------
(1) Mr. Razzouk resigned effective February 18, 1996 and Mr. Weise became
Executive Vice President-Worldwide Operations on February 1, 1996.

The law firm of Baker, Donelson, Bearman & Caldwell represented the
Corporation during fiscal year 1996. Mr. Baker, a Director and nominee, is a
named partner in that firm. Mr. Baker also represented the Corporation pursuant
to a retainer arrangement during fiscal 1996 for a fee of $200,000. The law
firm of Waring Cox represented the Corporation during fiscal year 1996. Mr.
Cox, a Director, is a named partner in that firm. The Corporation expects to
utilize the services of these firms during fiscal year 1997. Mr. Mitchell, a
Director, represented the Corporation pursuant to a retainer arrangement during
fiscal 1996 for a fee of $100,000. Mr. Manatt, a Director, represented the
Corporation pursuant to a retainer arrangement during fiscal 1996 for a fee of
$100,000, and the Corporation has utilized the services of Manatt, Phelps &
Phillips from time to time. The Corporation expects to utilize the services of
Messrs. Baker, Manatt and Mitchell during fiscal 1997.

STOCK PERFORMANCE GRAPH

The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Corporation
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.

The following graph shows changes over the past five fiscal years in the
value of $100 invested on May 31, 1991 in: (1) the Corporation's Common Stock;
(2) the Standard & Poor's 500 Composite Index; and (3) the Standard & Poor's
Transportation Index.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
(FDX, S&P 500 COMPOSITE INDEX AND S&P TRANSPORTATION INDEX)

[GRAPH APPEARS HERE]

1991 1992 1993 1994 1995 1996
- ---------------------------------------------------------------------------------

FDX 100 102 122 191 149 191
- ---------------------------------------------------------------------------------
S & P 500 Composite Index 100 110 123 128 154 197
- ---------------------------------------------------------------------------------
S & P Transportation Index 100 124 140 143 146 189

The total return assumes that all dividends were reinvested. No dividends
were paid on the Corporation's Common Stock during the period.

CHANGE IN CONTROL ARRANGEMENT

The Corporation's Stock Incentive Plans provide that in the event of a
change in control each holder of an unexpired option under any of the plans
has the right to exercise such option without regard to the date such option
would first be exercisable, except that no option may be exercised less than
six months from the date of grant. This right continues, with respect to
holders whose employment with the Corporation terminates following a change in
control, for a period of twelve months after such termination or until the
option's expiration date, whichever is sooner. The instruments pursuant to
which restricted stock is granted under the Corporation's Restricted Stock
Plans provide that the restricted shares will be canceled and the Corporation
will make a cash payment, in an amount determined under the plan, to each
holder in the event of a change in control.

AUDITORS
(PROPOSAL NO. 2)

Arthur Andersen LLP have been the auditors for the Corporation since 1972.
Upon the recommendation of the Audit Committee, the Board of Directors has
designated Arthur Andersen LLP to be the independent auditors of the
Corporation for the year ending May 31, 1997. The Board of Directors will
offer a resolution at the Annual Meeting to ratify this designation. It is
anticipated that representatives of Arthur Andersen LLP will be present at the
meeting to respond to appropriate questions, and they will have an
opportunity, if they desire, to make a statement.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws of the United States, the Corporation's Directors
and executive officers are required to report their initial ownership of the
Corporation's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established by the Commission and the Corporation is required to disclose
in this Proxy Statement any late filings or failure to file. Mr. Manatt made a
late filing of a Form 4 because of a failure to file two Form 4s involving two
separate transactions in the Corporation's Common Stock. Mr. Greer made a late
filing of two Form 5s because of a failure to file two Form 5s involving two
transactions in the Corporation's Common Stock.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at the Corporation's 1997
Annual Meeting of Stockholders must be received by the Corporation on or prior
to April 10, 1997 to be eligible for inclusion in the Corporation's proxy
statement and form of proxy to be used in connection with the 1997 Annual
Meeting of Stockholders.

OTHER BUSINESS

The Board of Directors knows of no other business which will be presented at
the meeting. If, however, other matters are properly presented, the persons
named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.

By order of the Board of
Directors,

/s/ Kenneth R. Masterson
KENNETH R. MASTERSON
Secretary

PROXY FEDERAL EXPRESS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS OCTOBER 1, 1996

The undersigned hereby constitutes and appoints KENNETH R. MASTERSON and
THEODORE L. WEISE, and each of them, his or her true and lawful agent and
proxies with full power of substitution in each, to represent the undersigned
and to vote all of the shares of stock of the undersigned in Federal Express
Corporation at the Annual Meeting of Stockholders of said Corporation to be
held at the Crowne Plaza Memphis, 250 North Main Street, Memphis, Tennessee on
Tuesday, October 1, 1996, and at any adjournments thereof, on Items 1 and 2 as
specified on the reverse side hereof (with discretionary authority under Item 1
to vote for a new nominee if any nominee has become unavailable) and on such
other matters as may properly come before said meeting.

ELECTION OF CLASS I DIRECTORS. NOMINEES: COMMENTS
Robert H. Allen ------------------------------------------
Robert L. Cox ------------------------------------------
Paul S. Walsh ------------------------------------------
Peter S. Willmott ------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING SEE REVERSE
THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED SIDE
NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. MR.
MASTERSON AND MR. WEISE CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD.

FOLD AND DETACH HERE
1996 ANNUAL MEETING GUIDELINES

In the interest of an orderly and constructive meeting, the following
guidelines will apply for Federal Express Corporation's Annual Meeting of
Stockholders.

1. The business of the meeting is set forth in the Notice of Annual
Meeting of Stockholders and Proxy Statement dated August 8, 1996
and will be published in the Program for the meeting. If you do not
return your proxy prior to the meeting you may sign, date and hand
your proxy card to the Inspector of Election or any of the
individuals at the registration table. If you wish to change your
vote or vote by ballot, a ballot will be distributed to you during
the meeting.

2. If you wish to comment on any of the proposals which will be voted
on at the meeting or ask an appropriate question about the business
of the Corporation at the end of the meeting, please register your
intention to do so on the sign-up sheet at the registration table.

3. Please register your attendance at the meeting on the sign-up sheet
at the registration table. Briefcases, purses and parcels may be
examined or searched before you are admitted to the meeting. No
signs, placards, banners or similar materials may be brought into
the meeting.

4. The use of cameras or sound recording equipment of any kind is
prohibited, except those employed by the Corporation to provide a
record of the proceedings.

5. Time has been reserved at the end of the meeting for stockholder
questions that relate to the business of the Corporation. After you
have registered and at the appropriate time, please go to the
microphone, state your name and confirm that you are a stockholder
or employee before asking your question. Please direct all comments
or questions to the Chairman. Comments or questions from the floor
are limited to two minutes to provide an opportunity for as many
stockholders as possible.

6. Personal grievances or claims are not appropriate subjects for the
meeting.

7. The Chairman in his sole discretion shall have authority to conduct
the meeting and rule on any questions or procedures that may arise.

Voting results announced by the Inspector of Election at the meeting are
preliminary. Final results will be included in the summary of the results of
the meeting included in the Corporation's first quarter Report on Form 10-Q.

/X/ Please mark your 6408
votes as in this
example.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF THE
CLASS I DIRECTORS AND FOR PROPOSAL 2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.

FOR WITHHELD
1. Election of / / / / Comments on / /
Class I Reverse Side
Directors.

For, except vote withheld from the I request my name be / /
following nominee(s): disclosed with my vote
and comments, if any.

- -----------------------------------

FOR AGAINST ABSTAIN

2. Approval of Independent Accountants. / / / / / /

The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.

NOTE: Please sign exactly as name appears on this card. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.

- -------------------------------------------

- -------------------------------------------
SIGNATURE(S) DATE

FOLD AND DETACH HERE

LOCATION OF 1996 ANNUAL MEETING

Crowne Plaza Memphis
250 North Main Street
Memphis, Tennessee
Tuesday, October 1, 1996 at 10:00 a.m. CDT

[MAP APPEARS HERE]