1
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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] 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
Section 240.14a-12
</Table>
FEDEX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] 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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2
(FEDEX CORPORATION LOGO)
-----------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 24, 2001
-----------------------------------------------------------------------
To Our Stockholders:
We invite you to attend the annual meeting of FedEx's stockholders. The
meeting will take place at The Peabody Hotel, 149 Union Avenue, Memphis,
Tennessee 38103, on Monday, September 24, 2001, at 10:00 a.m., local time. The
purpose of the meeting is to:
1. Elect five directors, each for a term of three years;
2. Ratify the appointment of Arthur Andersen LLP as FedEx's independent
auditors for fiscal year 2002;
3. Act upon a stockholder proposal concerning the procedure for
nominating directors; and
4. Transact any other business that may properly come before the
meeting.
Only stockholders of record at the close of business on July 30, 2001 may
vote at the meeting or any adjournments or postponements of the meeting.
By order of the Board of Directors,
/s/ Kenneth R. Masterson
KENNETH R. MASTERSON
SECRETARY
August 13, 2001
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD OR VOTE
ELECTRONICALLY VIA THE INTERNET OR BY TELEPHONE. THE ENCLOSED RETURN ENVELOPE
REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN EITHER THE UNITED STATES OR CANADA.
IF YOU VOTE ON THE INTERNET, YOU MAY ELECT TO HAVE NEXT YEAR'S PROXY
STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS DELIVERED TO YOU VIA THE INTERNET.
WE STRONGLY ENCOURAGE YOU TO ENROLL IN INTERNET DELIVERY. IT IS A COST-EFFECTIVE
WAY FOR US TO SEND YOU PROXY MATERIALS AND ANNUAL REPORTS.
YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING.
3
2001 PROXY STATEMENT
---------------------
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
INFORMATION ABOUT THE ANNUAL MEETING........................ 2
What is the purpose of the annual meeting?................ 2
Who is entitled to vote?.................................. 2
Am I entitled to vote if my shares are held in "street
name"?................................................. 2
How many shares must be present to hold the meeting?...... 2
What if a quorum is not present at the meeting?........... 2
How do I vote?............................................ 2
Can I change my vote after I submit my proxy?............. 3
Will my vote be kept confidential?........................ 3
Who will count the votes?................................. 3
How does the Board of Directors recommend I vote on the
proposals?............................................. 3
What if I do not specify how my shares are to be voted?... 4
Will any other business be conducted at the meeting?...... 4
How many votes are required to elect the director
nominees?.............................................. 4
What happens if a nominee is unable to stand for
election?.............................................. 4
How many votes are required to ratify the appointment of
FedEx's independent auditors?.......................... 4
How many votes are required to adopt the resolution set
forth in the stockholder proposal?..................... 4
How will abstentions be treated?.......................... 4
How will broker nonvotes be treated?...................... 4
STOCK OWNERSHIP............................................. 5
Directors and Executive Officers.......................... 5
Section 16(a) Beneficial Ownership Reporting Compliance... 6
Significant Stockholders.................................. 6
PROPOSAL 1 -- ELECTION OF DIRECTORS......................... 7
Current Nominees.......................................... 7
Continuing Directors...................................... 8
MEETINGS AND COMMITTEES..................................... 10
Meetings.................................................. 10
Committees................................................ 10
COMPENSATION OF DIRECTORS................................... 11
SUMMARY COMPENSATION TABLE.................................. 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR....................... 13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES......................... 14
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR..... 15
PENSION PLAN TABLE.......................................... 16
REPORT ON EXECUTIVE COMPENSATION OF THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS....................... 17
CHANGE-IN-CONTROL ARRANGEMENTS.............................. 19
Stock Incentive and Restricted Stock Plans................ 19
Management Retention Agreements........................... 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 20
Loans to Management....................................... 20
Transactions with Management and Others and Certain
Business Relationships................................. 20
STOCK PERFORMANCE GRAPH..................................... 21
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS..... 22
</Table>
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<Table>
<Caption>
PAGE
----
AUDITOR FEES................................................ 23
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS.................................................. 23
PROPOSAL 3 -- STOCKHOLDER PROPOSAL.......................... 24
Proponent's Statement in Support.......................... 24
Board of Directors' Statement in Opposition............... 24
OTHER MATTERS............................................... 26
ADDITIONAL INFORMATION...................................... 26
Proxy Solicitation........................................ 26
Stockholder Proposals for 2002 Annual Meeting............. 26
APPENDIX A -- AUDIT COMMITTEE CHARTER....................... A-1
</Table>
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FEDEX CORPORATION
942 SOUTH SHADY GROVE ROAD
MEMPHIS, TENNESSEE 38120
2001 PROXY STATEMENT
The Board of Directors of FedEx is furnishing you this proxy statement in
connection with the solicitation of proxies on its behalf for the 2001 Annual
Meeting of Stockholders. The meeting will be held at The Peabody Hotel, 149
Union Avenue, Memphis, Tennessee 38103, on Monday, September 24, 2001, at 10:00
a.m., local time. At the meeting, stockholders will vote on the election of
directors, the ratification of FedEx's independent auditors and a stockholder
proposal. Stockholders also will consider any other matters that may properly
come before the meeting, although the Board of Directors knows of no other
business to be presented.
By submitting your proxy (either by signing and returning the enclosed
proxy card or by voting electronically on the Internet or by telephone), you
authorize Kenneth R. Masterson, FedEx's Executive Vice President, General
Counsel and Secretary, and Alan B. Graf, Jr., FedEx's Executive Vice President
and Chief Financial Officer, to represent you and vote your shares at the
meeting in accordance with your instructions. They also may vote your shares to
adjourn the meeting and will be authorized to vote your shares at any
adjournments or postponements of the meeting.
FedEx's Annual Report to Stockholders for the fiscal year ended May 31,
2001, which includes FedEx's audited annual financial statements, accompanies
this proxy statement. Although the Annual Report is being distributed with this
proxy statement, it does not constitute a part of the proxy solicitation
materials and is not incorporated by reference into this proxy statement.
We are first sending this proxy statement and the accompanying materials to
stockholders on or about August 13, 2001.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE PROMPTLY SUBMIT YOUR PROXY EITHER IN THE ENCLOSED ENVELOPE, VIA THE
INTERNET OR BY TELEPHONE.
1
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INFORMATION ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, the stockholders will be asked to:
- elect five directors, each for a term of three years;
- ratify the appointment of Arthur Andersen LLP as FedEx's independent
auditors; and
- act on a stockholder proposal concerning the procedure for nominating
directors.
Stockholders also will transact any other business that may properly come before
the meeting. Members of FedEx's management team will be present at the meeting
to respond to appropriate questions from stockholders.
WHO IS ENTITLED TO VOTE?
The record date for the meeting is July 30, 2001. Only stockholders of
record at the close of business on that date are entitled to vote at the
meeting. The only class of stock entitled to be voted at the meeting is FedEx's
common stock. Each outstanding share of common stock is entitled to one vote for
all matters before the meeting. At the close of business on the record date
there were 297,533,098 shares of FedEx common stock outstanding.
AM I ENTITLED TO VOTE IF MY SHARES ARE HELD IN "STREET NAME"?
If you are the beneficial owner of shares held in "street name" by a bank
or brokerage firm, your bank or brokerage firm, as the record holder of the
shares, is required to vote those shares in accordance with your instructions.
If you do not give instructions to your bank or brokerage firm, it will
nevertheless be entitled to vote the shares with respect to certain
"discretionary" items, but will not be permitted to vote your shares with
respect to "non-discretionary" items. In the case of non-discretionary items,
the shares will be treated as "broker nonvotes."
HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A quorum must be present at the meeting for any business to be conducted.
The presence at the meeting, in person or by proxy, of the holders of a majority
of the shares of common stock outstanding on the record date will constitute a
quorum. Proxies received but marked as abstentions or broker nonvotes will be
included in the calculation of the number of shares considered to be present at
the meeting.
WHAT IF A QUORUM IS NOT PRESENT AT THE MEETING?
If a quorum is not present at the scheduled time of the meeting, the
stockholders who are represented may adjourn the meeting until a quorum is
present. The time and place of the adjourned meeting will be announced at the
time the adjournment is taken, and no other notice will be given.
HOW DO I VOTE?
1. YOU MAY VOTE BY MAIL. If you properly complete and sign the
accompanying proxy card and return it in the enclosed envelope, it will be voted
in accordance with your instructions. The enclosed envelope requires no
additional postage if mailed either in the United States or Canada.
2. YOU MAY VOTE BY TELEPHONE OR ON THE INTERNET. If you are a registered
stockholder (that is, if you hold your stock in your own name) or if your shares
are held in any employee benefit plan of FedEx or its subsidiaries, you may vote
by telephone or on the Internet
2
7
by following the instructions included on the proxy card. If you vote by
telephone or on the Internet, you do not have to mail in your proxy card.
If your shares are held in "street name," you still may be eligible to vote
your shares electronically by telephone or on the Internet. A large number of
banks and brokerage firms participate in a program provided through ADP Investor
Communications Services that offers telephone and Internet voting options. If
your shares are held in an account at a bank or brokerage firm that participates
in the ADP program, you may vote those shares electronically by telephone or on
the Internet by following the instructions set forth on the voting form provided
to you.
NOTE: IF YOU VOTE ON THE INTERNET, YOU MAY ELECT TO HAVE NEXT YEAR'S PROXY
STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS DELIVERED TO YOU VIA THE
INTERNET. WE STRONGLY ENCOURAGE YOU TO ENROLL IN INTERNET DELIVERY. IT IS A
COST-EFFECTIVE WAY FOR US TO SEND YOU PROXY MATERIALS AND ANNUAL REPORTS.
3. YOU MAY VOTE IN PERSON AT THE MEETING. If you are a registered
stockholder and attend the meeting, you may deliver your completed proxy card in
person. Additionally, FedEx will pass out written ballots to registered
stockholders who wish to vote in person at the meeting. Beneficial owners of
shares held in "street name" who wish to vote at the meeting will need to obtain
a proxy form from the institution that holds their shares.
CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY?
Yes, you may revoke your proxy and change your vote at any time before the
polls close at the meeting:
- by signing another proxy with a later date;
- by voting by telephone or on the Internet (your latest telephone or
Internet vote is counted); or
- if you are a registered stockholder, by giving written notice of such
revocation to the Secretary of FedEx prior to or at the meeting or by
voting in person at the meeting.
Your attendance at the meeting itself will not revoke your proxy unless you give
written notice of revocation to the Secretary before the polls are closed.
WILL MY VOTE BE KEPT CONFIDENTIAL?
Yes, your vote will be kept confidential and not disclosed to FedEx unless:
- required by law;
- you expressly request disclosure on your proxy; or
- there is a contested election for the Board of Directors.
WHO WILL COUNT THE VOTES?
FedEx's transfer agent, EquiServe Trust Company, N.A., will tabulate and
certify the votes. A representative of the transfer agent will serve as the
inspector of election.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
Your Board recommends that you vote:
- FOR the election of the five nominees to the Board of Directors;
- FOR the ratification of the appointment of Arthur Andersen LLP as FedEx's
independent auditors; and
- AGAINST the stockholder proposal.
3
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WHAT IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED?
If you submit a proxy but do not indicate any voting instructions, your
shares will be voted:
- FOR the election of the five nominees to the Board of Directors;
- FOR the ratification of the appointment of Arthur Andersen LLP as FedEx's
independent auditors; and
- AGAINST the stockholder proposal.
WILL ANY OTHER BUSINESS BE CONDUCTED AT THE MEETING?
The Board of Directors knows of no other business that will be presented at
the meeting. If any other proposal properly comes before the stockholders for a
vote at the meeting, however, the proxy holders will vote your shares in
accordance with their best judgment.
HOW MANY VOTES ARE REQUIRED TO ELECT THE DIRECTOR NOMINEES?
The affirmative vote of a plurality of the votes cast at the meeting is
required to elect the five nominees as directors. This means that the five
nominees will be elected if they receive more affirmative votes than any other
person. If you vote "Withheld" with respect to one or more nominees, your shares
will not be voted with respect to the person or persons indicated, although they
will be counted for purposes of determining whether there is a quorum.
WHAT HAPPENS IF A NOMINEE IS UNABLE TO STAND FOR ELECTION?
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 will vote your
shares for the substitute nominee, unless you have withheld authority.
HOW MANY VOTES ARE REQUIRED TO RATIFY THE APPOINTMENT OF FEDEX'S INDEPENDENT
AUDITORS?
The ratification of the appointment of Arthur Andersen LLP as FedEx's
independent auditors requires the affirmative vote of a majority of the shares
present at the meeting in person or by proxy and entitled to vote.
HOW MANY VOTES ARE REQUIRED TO ADOPT THE RESOLUTION SET FORTH IN THE STOCKHOLDER
PROPOSAL?
The adoption of the resolution set forth in the stockholder proposal
requires the affirmative vote of a majority of the shares present at the meeting
in person or by proxy and entitled to vote.
HOW WILL ABSTENTIONS BE TREATED?
Abstentions will be treated as shares present for quorum purposes and
entitled to vote on each proposal, so they will have the same practical effect
as votes against the proposal.
HOW WILL BROKER NONVOTES BE TREATED?
Broker nonvotes will be treated as shares present for quorum purposes, but
not entitled to vote, so they will not affect the outcome of any proposal.
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STOCK OWNERSHIP
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the amount of FedEx's common stock
beneficially owned by each director, each executive officer named in the Summary
Compensation Table below and all directors and executive officers as a group, as
of July 30, 2001. Unless otherwise indicated, beneficial ownership is direct and
the person indicated has sole voting and investment power.
<Table>
<Caption>
AGGREGATE NUMBER
OF SHARES SHARES ACQUIRABLE PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED WITHIN 60 DAYS(1) CLASS(2)
- ------------------------ ------------------ ----------------- ----------
Smith, Frederick W. ............................. 19,930,992(3) 1,590,000 6.66%
Barksdale, James L. ............................. 14,800(4) 16,000 *
Cox, Robert L. .................................. 120,000(5) 44,000 *
DeNunzio, Ralph D. .............................. 16,000 48,000 *
Estrin, Judith L. ............................... 16,000 44,000 *
Garrison, F. S. ................................. 5,636,460(6) 424,896 1.89%
Greer, Philip.................................... 74,462(7) 52,000 *
Hyde, J. R., III................................. 88,000(8) 52,000 *
Jackson, Shirley A. ............................. 1,000 16,000 *
Mitchell, George J. ............................. 8,000 36,000 *
Smith, Joshua I.................................. 1,200 20,000 *
Walsh, Paul S. .................................. 6,000 30,000 *
Willmott, Peter S. .............................. 176,300 44,000 *
Masterson, Kenneth R. ........................... 66,250 351,200 *
Graf, Alan B., Jr................................ 152,002 261,000 *
Glenn, T. Michael................................ 240,892 112,108 *
Carter, Robert B. ............................... 39,296 61,704 *
All directors and executive officers as a group
(18 persons)................................... 26,609,790 3,296,908 8.85%
</Table>
- ---------------
* Less than 1% of FedEx's outstanding common stock.
(1) Reflects the number of shares of common stock that can be acquired at July
30, 2001 or within 60 days thereafter through the exercise of options
granted under FedEx's Stock Incentive Plans.
(2) Based on 297,533,098 shares of common stock outstanding on July 30, 2001
plus shares of common stock subject to options held by each respective
person and exercisable at July 30, 2001 or within 60 days thereafter.
(3) Includes 15,789,712 shares of common stock owned of record by Mr. Smith and
4,141,280 shares of common stock beneficially owned by Frederick Smith
Enterprise Company, Inc. ("Enterprise"), a family holding company. 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.
Mr. Smith's business address is 942 South Shady Grove Road, Memphis,
Tennessee 38120.
(4) Includes 2,000 shares of common stock held in a managed account of which Mr.
Barksdale is trustee and 12,800 shares of common stock held in other managed
accounts.
(5) Includes 100,000 shares of common stock owned by RLC Family Partners, L.P.,
a limited partnership of which Mr. Cox is the President. Excludes 16,000
shares owned by Mr. Cox's wife as to which shares Mr. Cox disclaims
beneficial ownership.
(6) Includes 1,606,638 shares of common stock owned of record and beneficially
by Mr. Garrison's wife and a family trust.
5
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(7) Excludes 49,524 shares of common stock owned of record and beneficially by
members of Mr. Greer's family as to which shares Mr. Greer disclaims
beneficial ownership.
(8) Includes 16,000 shares of common stock owned by a family trust and members
of Mr. Hyde's family.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
FedEx's directors and executive officers and persons who own more than ten
percent of FedEx's common stock to file with the Securities and Exchange
Commission initial reports of beneficial ownership (Form 3) and reports of
subsequent changes in their beneficial ownership (Form 4 or Form 5) of FedEx's
common stock. FedEx's directors, executive officers and greater-than-ten-
percent stockholders are required to furnish FedEx with copies of the Section
16(a) reports they file. The Securities and Exchange Commission has established
specific due dates for these reports, and FedEx is required to disclose in this
proxy statement any late filings or failures to file.
Based solely upon a review of the copies of the Section 16(a) reports (and
their amendments) furnished to FedEx and written representations from certain
reporting persons that no additional reports were required, FedEx believes that
its directors, executive officers and greater-than-ten-percent stockholders
complied with all these filing requirements for the fiscal year ended May 31,
2001.
SIGNIFICANT STOCKHOLDERS
The following table lists certain persons who owned beneficially, as of
March 31, 2001, more than five percent of FedEx's common stock.
<Table>
<Caption>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ -------------------- ----------------
PRIMECAP Management Company............................... 23,279,975(1) 7.8%
225 South Lake Avenue, Suite 400
Pasadena, California 91101
Southeastern Asset Management, Inc........................ 17,155,161(2) 5.8%
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
</Table>
- ---------------
(1) PRIMECAP Management Company, a registered investment adviser, has sole
voting power over 4,214,675 shares and sole investment power over 23,279,975
shares.
(2) Southeastern Asset Management, Inc., a registered investment adviser, (i)
has sole voting power over 9,742,061 shares, (ii) has shared voting and
investment power over 5,615,000 shares owned by Longleaf Partners Fund, a
series of Longleaf Partners Funds Trust, a registered open-end management
investment company, and (iii) has sole investment power over 11,482,961
shares. Southeastern has no voting power with respect to 1,798,100 shares
and no investment power with respect to 57,200 shares (these figures do not
include 413,000 shares held by completely non-discretionary accounts over
which Southeastern has neither voting nor investment power and for which it
disclaims beneficial ownership). Mr. O. Mason Hawkins, Chairman of the Board
and Chief Executive Officer of Southeastern, disclaims beneficial ownership
of all the shares in the event he could be deemed a controlling person of
Southeastern as a result of his official positions with Southeastern or his
ownership of its voting securities. Mr. Hawkins expressly disclaims the
existence of such control.
6
11
PROPOSAL 1 -- ELECTION OF DIRECTORS
CURRENT NOMINEES
The Board of Directors of FedEx currently consists of thirteen directors
divided into three classes (Class I, Class II and Class III). Directors in each
class are elected to serve for three-year terms that expire in successive years.
The terms of the Class III directors will expire at the upcoming annual meeting.
FedEx has nominated Judith L. Estrin, Philip Greer, J. R. Hyde, III, Shirley A.
Jackson and Frederick W. Smith for election as Class III directors for
three-year terms expiring at the annual meeting of stockholders to be held in
2004 and until their successors are elected and qualified. Each nominee
currently serves as a Class III director.
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 will vote your shares for the substitute nominee, unless you have
withheld authority.
The affirmative vote of a plurality of the votes cast at the meeting is
required to elect the five nominees as directors.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
FIVE NOMINEES.
The following table sets forth with respect to each nominee, 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 FedEx (or its predecessor
Federal Express Corporation) and directorships held in other companies.
NOMINEES FOR ELECTION AS
CLASS III DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 2004 ANNUAL MEETING
<Table>
<Caption>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
Judith L. Estrin 46 President and Chief Executive Officer of Packet Design, LLC,
1989 an Internet technology company, since May 2000; Senior Vice
President and Chief Technology Officer of Cisco Systems,
Inc., a networking systems company, from April 1998 to April
2000; President and Chief Executive Officer of Precept
Software, Inc., a computer software company, from March 1995
to April 1998. Director, Sun Microsystems, Inc. and The Walt
Disney Company.
Philip Greer 65 Senior Managing Director of Weiss, Peck & Greer, L.L.C., an
1974 investment management firm, since 1995; General Partner of
Weiss, Peck & Greer from 1970 to 1995. Director, The Robert
Mondavi Corporation.
J. R. Hyde, III 58 Chairman of Pittco Management, LLC, an investment management
1977 company, since January 1998; President of Pittco, Inc., an
investment company, since April 1989; Chairman of AutoZone,
Inc., an auto parts retail chain, from May 1986 to March
1997; Chief Executive Officer of AutoZone, Inc. from May
1986 to December 1996. Director, AutoZone, Inc.
</Table>
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<Table>
<Caption>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
Shirley A. Jackson 55 President of Rensselaer Polytechnic Institute, a
1999 technological university, since July 1999; Chairwoman and
Commissioner of the United States Nuclear Regulatory
Commission from July 1995 to June 1999; Commissioner of the
United States Nuclear Regulatory Commission from May 1995 to
July 1995; Professor of Physics at Rutgers University from
July 1991 to May 1995. Director, AT&T Corp., Newport News
Shipbuilding Inc., Public Service Enterprise Group
Incorporated, SCI Systems, Inc., Sealed Air Corporation and
USX Corporation.
Frederick W. Smith 56 Chairman, President and Chief Executive Officer of FedEx
1971 since January 1998; Chairman of Federal Express Corporation
since 1975; Chairman, President and Chief Executive Officer
of Federal Express Corporation from 1983 to January 1998;
Chief Executive Officer of Federal Express Corporation from
1977 to January 1998; President of Federal Express
Corporation from 1971 to 1975.
</Table>
CONTINUING DIRECTORS
The terms of FedEx's four Class I directors expire at the annual meeting of
stockholders to be held in 2002. The terms of FedEx's four Class II directors
expire at the annual meeting of stockholders to be held in 2003. The following
tables set forth, with respect to each Class I and Class II director, his name,
age, principal occupation and employment during the past five years, the year in
which he first became a director of FedEx (or its predecessor Federal Express
Corporation) and directorships held in other companies.
CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2002 ANNUAL MEETING
<Table>
<Caption>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
James L. Barksdale 58 Managing Partner, The Barksdale Group, a venture capital
1999 firm, since April 1999; President and Chief Executive
Officer of Netscape Communications Corporation, a provider
of software, services and Web site resources to Internet
users, from January 1995 to March 1999; President, Chief
Executive Officer and Chief Operating Officer of AT&T
Wireless Services (formerly McCaw Cellular Communications,
Inc. (collectively, "McCaw")), a cellular telecommunications
company, from September 1994 to January 1995; President and
Chief Operating Officer of McCaw from January 1992 to
September 1994; Executive Vice President and Chief Operating
Officer of Federal Express Corporation from April 1983 to
January 1992; Director of Federal Express Corporation from
April 1983 to October 1991; Senior Vice President -- Data
Systems of Federal Express Corporation from February 1979 to
April 1983. Director, AOL Time Warner Inc., Sun
Microsystems, Inc. and Webvan Group, Inc.
Robert L. Cox 65 Partner, Waring Cox, a law firm, for more than the past five
1993 years; Secretary of Federal Express Corporation from June
1971 to September 1993.
</Table>
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<Table>
<Caption>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
Paul S. Walsh 46 Group Chief Executive Officer of Diageo plc, a consumer food
1996 and beverage company, since September 2000; Group Chief
Operating Officer of Diageo plc from January 2000 to
September 2000; Chairman, President and Chief Executive
Officer of The Pillsbury Company, a wholly owned subsidiary
of Diageo plc, from April 1996 to January 2000; Chief
Executive Officer of The Pillsbury Company from January 1992
to April 1996. Director, Diageo plc.
Peter S. Willmott 64 Chairman and Chief Executive Officer of Willmott Services,
1974 Inc., a retail and consulting firm, since June 1989; Chief
Executive Officer and President of Zenith Electronics
Corporation, an electronics manufacturing company, from July
1996 to January 1998 (Zenith Electronics Corporation filed
for reorganization in federal bankruptcy court in August
1999); President and Chief Operating Officer of Federal
Express Corporation from September 1980 to May 1983;
Executive Vice President of Federal Express Corporation from
1977 to 1980; Senior Vice President -- Finance and
Administration of Federal Express Corporation from 1974 to
1977. Director, Security Capital Group Incorporated.
</Table>
CLASS II DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2003 ANNUAL MEETING
<Table>
<Caption>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
Ralph D. DeNunzio 69 President of Harbor Point Associates, Inc., a private
1981 investment and consulting firm, since October 1987.
Director, Harris Corporation and NIKE, Inc.
F. S. Garrison 67 Chairman Emeritus of American Freightways, Inc., a
2001 less-than- truckload freight carrier and indirect wholly
owned subsidiary of FedEx, since February 2001; Chairman of
American Freightways Corporation from October 1982 to
February 2001; Chief Executive Officer of American
Freightways Corporation from October 1982 to July 2000;
President of American Freightways Corporation from October
1982 to July 1999. Director, Energizer Holdings, Inc.
George J. Mitchell 67 Special Counsel to Verner, Liipfert, Bernhard, McPherson and
1995 Hand, a law firm, since January 1995; Member of the United
States Senate from May 1980 to January 1995. Director,
Casella Waste Systems, Inc., Staples, Inc., Starwood Hotels
& Resorts Worldwide, Inc., Unilever PLC, UnumProvident
Corporation, The Walt Disney Company and Xerox Corporation.
Joshua I. Smith 60 Chairman and Managing Partner, Coaching Group, LLC, a
1989 consulting firm, since June 2001; Vice Chairman and
President of iGate, Inc., a broadband networking company,
from June 2000 to June 2001; Chairman, President and Chief
Executive Officer of The MAXIMA Corporation, an information
and data processing firm, from 1978 to June 2000 (The MAXIMA
Corporation filed for reorganization in federal bankruptcy
court in June 1998). Director, The Allstate Corporation,
CardioComm Solutions Inc. and Caterpillar Inc.
</Table>
9
14
MEETINGS AND COMMITTEES
MEETINGS
The Board of Directors conducted seven regular meetings and one special
meeting during fiscal 2001. Each director attended at least 75% of the meetings
of the Board and any committees on which he or she served.
COMMITTEES
The Board of Directors has an Audit Committee, a Compensation Committee and
an Information Technology Oversight Committee. The Board does not have a
nominating committee, such function being reserved to the full Board of
Directors. Committee memberships are as follows:
<Table>
<Caption>
INFORMATION TECHNOLOGY
AUDIT COMMITTEE COMPENSATION COMMITTEE OVERSIGHT COMMITTEE
- --------------- ---------------------- ----------------------
Philip Greer (Chairman) Ralph D. DeNunzio (Chairman) Judith L. Estrin (Chairwoman)
Robert L. Cox J. R. Hyde, III James L. Barksdale
George J. Mitchell Paul S. Walsh Shirley A. Jackson
Joshua I. Smith
Peter S. Willmott
</Table>
The Audit Committee, which held eight meetings during fiscal 2001, performs
the following functions:
- reviews FedEx's financial reporting process on behalf of the Board of
Directors;
- reviews the adequacy of FedEx's accounting and internal control systems;
- oversees the entire audit function, both internal and independent; and
- provides an effective communication link between the auditors (internal
and independent) and the Board of Directors.
The Compensation Committee, which held six meetings during fiscal 2001,
performs the following functions:
- determines the salaries, bonuses and other remuneration and terms and
conditions of employment of the officers of FedEx;
- supervises the administration of FedEx's stock incentive and restricted
stock plans;
- oversees the administration of FedEx's employee benefit plans covering
employees generally; and
- makes recommendations to the Board of Directors with respect to FedEx's
compensation policies.
The Information Technology Oversight Committee, which held five meetings
during fiscal 2001, performs the following functions:
- reviews and oversees significant information technology related matters;
- oversees major information technology related projects and technology
architecture decisions; and
- makes recommendations to the Board of Directors with respect to FedEx's
information technology strategies and investments.
10
15
COMPENSATION OF DIRECTORS
For fiscal 2002, non-employee (outside) directors will be paid:
- a quarterly retainer of $10,000;
- $2,000 for each Board meeting attended; and
- $1,200 for each committee meeting attended.
Committee chairpersons will be paid an additional annual fee of $8,000. Outside
directors also will be granted an option under FedEx's 1997 Stock Incentive
Plan, as amended, for 8,000 shares of common stock on each of the next two
annual meeting dates, including the 2001 annual meeting. Officers of FedEx
receive no additional compensation for serving as directors.
At its July 1997 meeting, the Board of Directors of Federal Express
Corporation (FedEx's predecessor) voted to freeze the Retirement Plan for
Outside Directors (that is, no further benefits would be earned under this
plan). This plan is unfunded and any benefits under the plan are payable out of
the assets of FedEx as a general, unsecured obligation of FedEx.
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. In general, each director is entitled to a retirement benefit
beginning as of the first day of the fiscal quarter of FedEx next following the
date of termination of his or her directorship or the date such director attains
age 60, whichever is later. The benefit is 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 10% for
each year of service up to 100% of the annual retainer fee being paid to the
outside director at the time the plan was frozen. Each outside director then
serving on the Board who was not yet vested (three directors) will now receive a
benefit equal to 10% for each year of service up to the date the plan was
frozen. The remaining outside directors will receive their benefits based on
their years of service and annual retainer at the time the plan was frozen. Once
all benefits are paid from the plan, it will be terminated.
The Board has established a policy that a director must retire immediately
before FedEx's annual meeting of stockholders during the calendar year in which
the director attains age 72.
The Board of Directors has adopted a guideline for stock ownership by
establishing a goal that each outside director own shares in FedEx valued at
five times the annual retainer fee. Based on the closing price of FedEx's common
stock on July 30, 2001, this goal represents approximately 4,877 shares. Vested
stock options are not counted as stock ownership under the guideline. Ten of
FedEx's outside directors own sufficient shares to comply with the guideline.
The Board believes significant stock ownership by outside directors further
aligns their interests with that of FedEx's stockholders.
11
16
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to FedEx'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, 2001, 2000 and 1999.
<Table>
<Caption>
LONG-TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- ----------
------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) SARS(#) PAYOUTS($) ($)(3)
- --------------------------- ---- --------- --------- ------------ ---------- ---------- ---------- ------------
Frederick W. Smith........... 2001 1,143,758 940,827 224,662(4) -- 300,000 -- 32,335
CHAIRMAN, PRESIDENT AND 2000 1,093,754 1,048,000 131,163(4) -- 300,000 2,000,000 52,569
CHIEF EXECUTIVE OFFICER 1999 1,050,000 1,072,000 276,945(4) -- 300,000 1,750,000 60,956
Kenneth R. Masterson......... 2001 670,380 327,985(5) 233,198(6) 322,000 40,000 -- 14,284
EXECUTIVE VICE PRESIDENT, 2000 629,708 384,725 460,818(6) 622,406 50,000 945,750 28,330
GENERAL COUNSEL AND 1999 597,213 601,810(5) -- -- 50,000 791,175 32,805
SECRETARY
Alan B. Graf, Jr............. 2001 631,673 303,031(5) 287,056(6) 322,000 40,000 -- 13,496
EXECUTIVE VICE PRESIDENT 2000 596,157 363,762 460,818(6) 622,406 50,000 933,075 26,691
AND CHIEF FINANCIAL OFFICER 1999 567,512 567,731(5) -- -- 50,000 769,725 31,589
T. Michael Glenn............. 2001 589,184 257,635(5) 233,198(6) 322,000 40,000 -- 12,400
EXECUTIVE VICE PRESIDENT, 2000 527,289 329,668 460,818(6) 622,406 50,000 831,250 23,002
MARKET DEVELOPMENT AND 1999 480,147 493,644(5) -- -- 50,000 605,000 26,564
CORPORATE COMMUNICATIONS
Robert B. Carter(7).......... 2001 468,398 308,738(5) 233,198(6) 322,000 40,000 -- 8,059
EXECUTIVE VICE PRESIDENT
AND CHIEF INFORMATION
OFFICER
</Table>
- ---------------
(1) The amounts in this column are based upon information in the named executive
officer's Form W-2, which is filed on a calendar year basis.
(2) The amounts in the table represent the closing market value of the shares
awarded at the date of grant. At May 31, 2001, the number and value of the
aggregate restricted stock holdings of the named executive officers were as
follows:
<Table>
<Caption>
NAME NUMBER OF SHARES HELD VALUE($)
- ---- --------------------- --------
F.W. Smith............................................. -- --
K.R. Masterson......................................... 21,500 860,000
A.B. Graf, Jr.......................................... 21,500 860,000
T.M. Glenn............................................. 21,500 860,000
R.B. Carter............................................ 16,000 640,000
</Table>
- The restrictions on the shares awarded to Messrs. Masterson, Graf and
Glenn lapse ratably over four years after the date of award with respect
to 3,750 shares granted in March 1998, 6,000 shares granted in July 1999,
3,750 shares granted in March 2000 and 8,000 shares granted in July 2000.
- The restrictions on the shares awarded to Mr. Carter lapse ratably over
four years after the date of the award with respect to 1,000 shares
granted in June 1997, 4,000 shares granted in July 1998, 3,000 shares
granted in July 1999 and 8,000 shares granted in July 2000.
Holders of restricted shares are entitled to receive any dividends declared
on such shares. FedEx has never declared a dividend on its shares because
its policy has been to reinvest earnings in its business.
12
17
(3) The amounts shown for 2001 represent payments to the named executive
officers under the Federal Express Corporation Profit Sharing Plan, in which
FedEx participates. The amounts shown for 2000 and 1999 represent payments
to the named executive officers and contributions under the Federal Express
Corporation Profit Sharing Plan.
(4) Of the amounts shown for 2001, 2000 and 1999, $150,120, $74,934 and
$189,450, respectively, represent personal use of corporate aircraft treated
as taxable income to Mr. Smith. Of the amounts shown for 2001, 2000 and
1999, $64,497, $49,191 and $80,405, respectively, are for financial
counseling.
(5) The amounts shown for Messrs. Masterson, Graf and Glenn in 2001 represent
annual performance bonuses received under FedEx's annual performance bonus
plan and special recognition bonuses. The amount shown for Mr. Carter in
2001 represents an annual performance bonus, a special recognition bonus and
a bonus received for promotion. The amounts shown for 1999 represent annual
performance bonuses and bonuses received for promotion.
(6) The amounts shown for Messrs. Masterson, Graf, Glenn and Carter in 2001
include $233,198 of tax reimbursements related to restricted stock awards.
The amount shown for Mr. Graf in 2001 also includes $46,187 for personal use
of corporate aircraft, which is treated as taxable income to Mr. Graf. The
amounts shown for Messrs. Masterson, Graf and Glenn in 2000 represent tax
reimbursements related to restricted stock awards.
(7) Mr. Carter became an executive officer of FedEx on June 1, 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock option grants
under FedEx's Stock Incentive Plans made during the fiscal year ended May 31,
2001 to the named executive officers. The amounts shown for each named executive
officer as potential realizable values are based entirely on assumed annualized
rates of stock price appreciation of five percent and ten percent over the full
ten-year term of the options. These assumed rates of growth were selected by the
Securities and Exchange Commission for illustration purposes only and are not
intended to predict future stock prices, which will depend upon overall stock
market conditions and FedEx's future performance and prospects. Consequently,
there can be no assurance that the potential realizable values shown in this
table will be achieved.
<Table>
<Caption>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH)* DATE 5% ($) 10% ($)
- ---- ------------ ------------ ----------- ---------- ------------ -------------
F.W. Smith........... 300,000 11.14 36.00 06/01/10 6,792,062 17,212,419
K.R. Masterson....... 40,000 1.49 36.00 06/01/10 905,608 2,294,989
A.B. Graf, Jr........ 40,000 1.49 36.00 06/01/10 905,608 2,294,989
T.M. Glenn........... 40,000 1.49 36.00 06/01/10 905,608 2,294,989
R.B. Carter.......... 40,000 1.49 36.00 06/01/10 905,608 2,294,989
</Table>
- ---------------
* The exercise price of the options granted to the individuals shown above was
the fair market value of FedEx's common stock (the mean between the high and
low prices of the stock on the New York Stock Exchange) at the date of grant.
The options granted are subject to a vesting schedule as follows: 25% after
one year from date of grant; 50% after two years; 75% after three years; and
100% after four 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 fiscal 2001,
options for a total of 2,692,737 shares were granted to various employees of
FedEx and its subsidiaries.
13
18
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth for each named executive officer certain
information about stock options exercised during the fiscal year ended May 31,
2001 and unexercised stock options held the end of the fiscal year. The value
realized upon exercise of an option is the difference between the exercise price
of the option and the fair market value of FedEx's common stock (the mean
between the high and low prices of the stock on the New York Stock Exchange) on
the exercise date. The value of an unexercised in-the-money option at fiscal
year-end is the difference between its exercise price and the fair market value
of FedEx's common stock on May 31, 2001. The value of unexercised in-the-money
options, unlike the amounts set forth in the column "Value Realized," has not
been, and may never be, realized. Such options have not been, and may never be,
exercised. The actual gain, if any, on exercise will depend on the value of
FedEx's common stock on the date of exercise. An option is "in-the-money" if the
fair market value of FedEx's common stock exceeds the exercise price of the
option. An option is "unexercisable" if it has not yet vested.
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
EXERCISE REALIZED ---------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- --------- ----------- ------------- ----------- -------------
F.W. Smith........... -- -- 1,305,000 895,000 19,783,270 4,743,640
K.R. Masterson....... -- -- 316,700 104,500 6,404,276 373,957
A.B. Graf, Jr. ...... -- -- 206,000 170,000 3,889,772 1,740,109
T.M. Glenn........... 203,892 4,074,927 55,608 166,500 620,140 1,683,697
R.B. Carter.......... 21,296 376,015 34,204 84,500 492,341 745,803
</Table>
14
19
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
In 1999, 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 2001
if FedEx achieved certain earnings-per-share targets established by the
Compensation Committee with respect to the three-fiscal-year period 1999 through
2001. No bonuses were awarded in fiscal 2001 to upper management, including
executive officers, under the long-term plan because of below-plan performance
for the three-fiscal-year period.
The Compensation Committee has established similar plans for the
three-fiscal-year periods 2000 through 2002, 2001 through 2003 and 2002 through
2004, providing bonus opportunities for 2002, 2003 and 2004, respectively, if
certain earnings-per-share targets are achieved with respect to those periods.
No amounts can be earned for the 2000 through 2002, 2001 through 2003 and 2002
through 2004 plans until 2002, 2003 and 2004, respectively, because achievement
of the earnings-per-share objectives can only be determined following the
conclusion of the applicable three-fiscal-year period. The following table sets
forth estimates of the possible future payouts to each of the named executive
officers under FedEx's long-term performance bonus plans.
<Table>
<Caption>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
OTHER PERIOD ---------------------------------
UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME OR PAYOUT ($) ($) ($)
- ---- ---------------- --------- --------- ---------
F.W. Smith.................................... 5/31/02 750,000 1,500,000 2,250,000
5/31/03 750,000 1,500,000 2,250,000
5/31/04 750,000 1,500,000 2,250,000
K.R. Masterson................................ 5/31/02 375,000 750,000 1,125,000
5/31/03 375,000 750,000 1,125,000
5/31/04 375,000 750,000 1,125,000
A.B. Graf, Jr................................. 5/31/02 375,000 750,000 1,125,000
5/31/03 375,000 750,000 1,125,000
5/31/04 375,000 750,000 1,125,000
T.M. Glenn.................................... 5/31/02 375,000 750,000 1,125,000
5/31/03 375,000 750,000 1,125,000
5/31/04 375,000 750,000 1,125,000
R.B. Carter................................... 5/31/02 300,000 600,000 900,000
5/31/03 375,000 750,000 1,125,000
5/31/04 375,000 750,000 1,125,000
</Table>
Under each plan, the average percentage of an individual's achievement of
individual objectives under FedEx's annual performance bonus plan (which is
discussed on page 17) 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 individual
performance measure 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.
15
20
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 FedEx Corporation
Employees' Pension Plan and the Federal Express Corporation Retirement Parity
Pension Plan, which provides 100% 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.
<Table>
<Caption>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 10 15 20 25 30
- ------------ -------- -------- ---------- ---------- ----------
$ 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
1,100,000......................... 220,000 330,000 440,000 550,000 550,000
1,200,000......................... 240,000 360,000 480,000 600,000 600,000
2,100,000......................... 420,000 630,000 840,000 1,050,000 1,050,000
2,200,000......................... 440,000 660,000 880,000 1,100,000 1,100,000
2,500,000......................... 500,000 750,000 1,000,000 1,250,000 1,250,000
2,600,000......................... 520,000 780,000 1,040,000 1,300,000 1,300,000
</Table>
The remuneration specified in the Pension Plan Table includes "Salary" and
"Bonus" as reported in the Summary Compensation Table on page 12. Because the
covered compensation is the average of the three calendar years of highest
earnings during employment, the amount differs from that set forth in the
Summary Compensation Table and is stated below, together with the credited years
of service achieved.
<Table>
<Caption>
COVERED YEARS OF
NAME COMPENSATION SERVICE
- ---- ------------ --------
F.W. Smith.................................................. $2,107,559 29
K.R. Masterson.............................................. 1,137,188 21
A.B. Graf, Jr. ............................................. 1,046,653 21
T.M. Glenn.................................................. 911,679 20
R.B. Carter................................................. 472,410 8
</Table>
16
21
REPORT ON EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation of FedEx's executives comprises three basic components:
base salary; annual and long-term performance bonus plans; and long-term equity
incentives. The Compensation Committee of the Board of Directors determines the
compensation of the executive officers of FedEx, 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.
BASE SALARY. The establishment of competitive base compensation for
FedEx'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. The Compensation
Committee believes that general industry is an appropriate comparison category
in determining competitive compensation because FedEx's executives can be
recruited from, and by, businesses outside FedEx's industry peer group. In its
fiscal 2001 executive compensation review, the Compensation Committee considered
compensation survey information published by two major consulting firms and
compensation information on FedEx's officers and top officers of other companies
available from a group of companies in general industry with annual sales in
excess of $10 billion. Base salaries for FedEx executives, including Mr. Smith,
are generally targeted at the 75th 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 also may influence such
determination, such as the relative extent of an individual's experience or a
desire to retain a valuable executive. Although Mr. Smith's base salary was
increased in fiscal 2001, his base salary is only slightly above the market
median of base salaries of chief executive officers in the comparison surveys.
PERFORMANCE BONUS PLANS. Bonus targets are established as a percentage of
pay based on pay level. 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 fiscal 2001, the
threshold bonus level was established at an amount that, when added to base
salary, could 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 and corporate 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.
Mr. Smith's bonus is determined by whether corporate business plan
objectives are met or exceeded. If such objectives are met, the Compensation
Committee determines and recommends to the Board of Directors a bonus that, 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. Mr. Smith received an annual bonus of $940,827 for fiscal
2001, which, together with his base salary, is below the 75th percentile of
total salary and bonus for chief executive officers in the comparison surveys
discussed above under BASE SALARY.
In 1999, 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 2001 if
FedEx achieved certain earnings-per-share targets established by the
Compensation Committee with respect to the three-fiscal-year period 1999 through
2001. No bonuses were awarded in fiscal 2001 to upper management, including
17
22
executive officers, under the long-term plan because of below-plan performance
for the three-fiscal-year period.
The Compensation Committee has established similar long-term performance
bonus plans for the three-fiscal-year periods 2000 through 2002, 2001 through
2003 and 2002 through 2004, providing bonus opportunities for fiscal 2002, 2003
and 2004, respectively, if certain earnings-per-share targets are achieved with
respect to those periods. The Long-Term Incentive Plans Table on page 15 sets
forth the estimated future payouts to the named executive officers under these
plans if the three-fiscal-year earnings-per-share objectives are achieved.
LONG-TERM EQUITY INCENTIVES. Stock options were granted as long-term
incentives in fiscal 2001 to certain key employees of FedEx, including executive
officers, under certain of FedEx's Stock Incentive Plans. Under the terms of the
plans, FedEx may grant options to key employees (as determined by the
Compensation Committee) to purchase such number of shares of FedEx's common
stock as is determined by the Compensation Committee.
The number of shares for which options are granted to executive officers is
generally determined by the Compensation Committee based on the respective
officer's senior officer status. No set criteria are used, however, and other
factors may influence the Compensation 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 FedEx's 1995, 1997 and 2001 Restricted Stock Plans,
FedEx may award restricted stock to key employees as determined by the
Compensation Committee. Although no set criteria are used to determine the
amount of restricted stock awarded, the Compensation Committee's determination
may be influenced 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
FedEx or the number of shares then available for award. In fiscal 2001, 330,250
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.
FedEx designs certain compensation plans and programs to ensure full
deductibility. The Compensation Committee believes, however, that the interests
of the stockholders are best served by not restricting the Compensation
Committee's discretion in crafting compensation programs, even though such
programs may result in certain non-deductible compensation expenses.
Because FedEx's Stock Incentive Plans comply with Section 162(m),
compensation recognized by the five highest-paid executive officers under these
plans will qualify for appropriate tax deductions. FedEx's annual and long-term
performance bonus plans and its Restricted Stock Plans 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
Ralph D. DeNunzio -- CHAIRMAN
J. R. Hyde, III
Paul S. Walsh
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CHANGE-IN-CONTROL ARRANGEMENTS
STOCK INCENTIVE AND RESTRICTED STOCK PLANS
FedEx's Stock Incentive Plans provide that, in the event of a change in
control (as defined in the plans), 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 FedEx 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.
FedEx's Restricted Stock Plans provide that, in the event of a change of
control (as defined in the plans), the restricted shares will be canceled and
FedEx shall make a cash payment to each holder in an amount equal to the product
of the highest price per share received by the holders of FedEx's common stock
in connection with the change of control multiplied by the number of restricted
shares held.
MANAGEMENT RETENTION AGREEMENTS
FedEx has entered into Management Retention Agreements ("MRAs") with
certain senior officers of FedEx and its subsidiaries, including the named
executive officers. The purpose of the MRAs is to secure the executives'
continued services in the event of any threat or occurrence of a change of
control (as defined in the MRAs). The terms and conditions of the MRAs with the
named executive officers are summarized below.
TERM. The MRAs renew annually for consecutive two-year terms, unless FedEx
gives six months' prior notice that the agreements will not be extended. The
non-extension notices may not be given at any time when the Board of Directors
has knowledge that any person has taken steps reasonably calculated to effect a
change of control of FedEx.
EMPLOYMENT PERIOD. Upon a change of control, the MRA immediately
establishes a three-year employment agreement with the executive officer. During
the employment period, the officer's position (including status, title,
authority, duties and responsibilities) may not be diminished. The officer's
position is considered diminished if FedEx becomes a subsidiary of another
company or if another company acquires all or substantially all of FedEx's
assets, unless the parent or successor assumes all of FedEx's obligations under
the MRA and the officer assumes a position with the parent or successor
commensurate with his former position.
COMPENSATION. During the three-year employment period, the executive
officer receives base salary (no less than his highest base salary over the
twelve-month period prior to the change of control), annual bonus (no less than
his average bonus over the three-year period prior to the change of control),
incentive, savings and retirement plan benefits, expense reimbursement, fringe
benefits, office and staff support, welfare plan benefits and vacation benefits.
These benefits must be no less than the benefits the officer had during the
90-day period immediately prior to the change of control.
TERMINATION. The MRA terminates immediately upon the executive officer's
death. FedEx may terminate the MRA for disability if the disability is
determined to be total after 26 weeks. Once disability is established, the
officer receives 180 days' prior notice of termination. FedEx also may terminate
the officer's MRA for "cause."
BENEFITS FOR QUALIFYING TERMINATIONS. A "Qualifying Termination" is a
termination by FedEx other than for cause, disability or death, by the officer
"for good reason" (principally relating to assignment of duties inconsistent
with the officer's position and reductions in compensation) or by the officer
for any reason during the thirty-day period beginning with the first anniversary
date of the change of control.
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In the event of a Qualifying Termination, the executive officer will
receive: (1) a lump sum cash payment equal to three times his annual
compensation, which includes his base salary, target annual bonus, target
long-term incentive compensation, and company matching contributions to various
benefit plans; and (2) a lump sum cash payment equal to the actuarial present
value at termination of the amount required to be contributed by FedEx to fund
the benefits to the officer under FedEx's pension and parity plans based on an
additional 36 months of base salary and target annual bonus and an additional 36
months of age and service, or, if greater, the number of additional months of
age and service necessary to provide the officer with 25 years of service and an
attained age of 60 under the plans.
For a period ending on the earliest of: (i) 36 months following the
termination date, (ii) the commencement of equivalent benefits from a new
employer, or (iii) the date on which the executive officer reaches age 60, FedEx
agrees to keep in force each plan and policy providing medical, accidental
death, disability and life coverage to the officer and his dependents with the
same level of coverage and the same terms as each policy and plan in effect
immediately prior to the termination date.
FedEx agrees to pay any taxes incurred by the officer for any payment,
distribution or other benefit (including any acceleration of vesting of any
benefit) received or deemed received by the officer from FedEx that triggers
certain excise taxes.
In exchange for these benefits, the executive officer has agreed that, for
the one-year period following his termination, he will not own, manage, operate,
control or be employed by any enterprise that competes with FedEx or any of its
affiliates.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LOANS TO MANAGEMENT
Pursuant to the provisions of FedEx's Stock Incentive Plans, FedEx has made
interest-free demand loans to Robert B. Carter and T. Michael Glenn, Executive
Vice Presidents of FedEx, to assist them in exercising non-incentive stock
options and paying any tax liability associated with such exercises. The loans
are fully secured by common stock of FedEx. The loans are repayable on demand
and in any event prior to the termination of employment. The highest balances of
the loans for the period June 1, 2000 through July 31, 2001, which were the loan
balances at July 31, 2001, were $5,254,959 for Mr. Glenn and $539,710 for Mr.
Carter.
TRANSACTIONS WITH MANAGEMENT AND OTHERS AND CERTAIN BUSINESS RELATIONSHIPS
The law firm of Waring Cox represented Federal Express Corporation, a
wholly owned subsidiary of FedEx, during fiscal 2001. Mr. Cox, a director, is a
named partner in that firm, the services of which Federal Express Corporation
expects to use during fiscal 2002. Senator Mitchell, a director, represented
FedEx pursuant to a retainer arrangement during fiscal 2001 for a fee of
$100,000.
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on FedEx's common
stock during the last five fiscal years with the Standard & Poor's 500 Composite
Index and the Standard & Poor's 500 Transportation Index during the same period.
The graph shows the value, at the end of each of the last five fiscal years, of
$100 invested in FedEx's common stock and in each of the foregoing indices on
May 31, 1996, and assumes the reinvestment of all dividends. No dividends were
paid on FedEx's common stock during this five-year period. The graph depicts the
change in the value of FedEx's common stock relative to the indices as of the
end of each fiscal year and not for any interim period. Historical stock
performance is not necessarily indicative of future stock price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
(FEDEX, S&P 500 COMPOSITE INDEX AND
S&P 500 TRANSPORTATION INDEX)
(STOCK PERFORMANCE GRAPH APPEARS HERE)
<Table>
<Caption>
S&P 500
FEDEX S&P 500 COMPOSITE TRANSPORTATION
CORPORATION INDEX INDEX
----------- ------------------- --------------
Fiscal Year Ended May 31,
1996 $100 $ 100 $ 100
1997 137 129 120
1998 167 169 135
1999 286 205 148
2000 185 226 114
2001 209 202 152
</Table>
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee operates pursuant to a charter, which has been approved
and adopted by the Board of Directors and is reviewed and reassessed annually by
the Audit Committee. The text of the charter is included in Appendix A to this
proxy statement. The Audit Committee is comprised of five directors who meet the
independence and experience requirements of the New York Stock Exchange.
The Audit Committee oversees FedEx's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the financial reporting process, including the systems
of internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed with management the audited financial statements for the
fiscal year ended May 31, 2001, including a discussion of the acceptability and
quality of the accounting principles, the reasonableness of significant
accounting judgments and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the acceptability and quality of FedEx's accounting principles
and such other matters as are required to be discussed with the Audit Committee
under generally accepted auditing standards, including those matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees. In addition, the Audit Committee has received the written
disclosures from the independent auditors required by Independence Standards
Board Standard No. 1, and has discussed those disclosures with the auditors.
The Audit Committee discussed with FedEx's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal auditor and independent auditors, with and
without management present, to discuss the results of their examinations of
FedEx's internal controls, and the overall quality of FedEx's financial
reporting.
Members of the Audit Committee rely without independent verification on the
information provided to them and on the representations made by management and
the independent auditors. In reliance on the reviews and discussions with
management and with the independent auditors referred to above, and the receipt
of an unqualified opinion from Arthur Andersen LLP dated June 27, 2001 regarding
the audited financial statements of FedEx for the fiscal year ended May 31,
2001, the Audit Committee recommended to the Board of Directors (and the Board
has approved) that the audited financial statements be included in the Annual
Report on Form 10-K for the year ended May 31, 2001 for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE MEMBERS
Philip Greer -- CHAIRMAN
Robert L. Cox
George J. Mitchell
Joshua I. Smith
Peter S. Willmott
THE FOREGOING REPORT ON EXECUTIVE COMPENSATION OF THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS, STOCK PERFORMANCE GRAPH AND REPORT OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE 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 FEDEX SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND
SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
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AUDITOR FEES
Arthur Andersen LLP billed FedEx the following fees for services provided
during fiscal year 2001:
- AUDIT FEES: The aggregate fees for professional services rendered for
the audit of FedEx's fiscal year 2001 annual financial statements and
review of FedEx's Form 10-Q reports were $3,109,000.
- AUDIT-RELATED FEES: The aggregate fees for professional services
rendered during fiscal 2001 related to statutory foreign and stand-alone
subsidiary audits, audits of employee benefit plans and registration
statements were $1,097,000.
- FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES: $1,372,000.
- ALL OTHER FEES: The aggregate fees for all other non-audit services
(including tax-consulting and compliance fees of $3,223,000) were
$10,916,000.
FedEx's Audit Committee has considered whether Arthur Andersen LLP's
provision of non-audit services to FedEx is compatible with maintaining Arthur
Andersen LLP's independence.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Arthur Andersen LLP has served as the auditors for Federal Express
Corporation since 1972 and for FedEx since its inception. Upon the
recommendation of the Audit Committee, the Board of Directors has appointed
Arthur Andersen LLP to be FedEx's independent auditors for the fiscal year
ending May 31, 2002. The stockholders are asked to ratify this appointment at
the annual meeting. Representatives of Arthur Andersen LLP will be present at
the meeting to respond to appropriate questions and to make a statement if they
so desire.
The ratification of the appointment of Arthur Andersen LLP as FedEx's
independent auditors requires the affirmative vote of a majority of the shares
present at the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
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PROPOSAL 3 -- STOCKHOLDER PROPOSAL
FEDEX IS NOT RESPONSIBLE FOR THE CONTENT OF THIS STOCKHOLDER PROPOSAL OR
SUPPORTING STATEMENT.
Bart Naylor, 1255 N. Buchanan, Arlington, Virginia 22205, the beneficial
owner of 200 shares of FedEx common stock, has submitted the following proposal:
"Resolved: The shareholders urge our board of directors to take the
necessary steps to nominate at least two candidates for each open board
position, and that the names, biographical sketches, SEC-required declarations
and photographs of such candidates shall appear in the company's proxy materials
(or other required disclosures) to the same extent that such information is
required by law and is our company's current practice with the single candidates
it now proposes for each position."
PROPONENT'S STATEMENT IN SUPPORT
"Although our company's board appreciates the importance of qualified
people overseeing management, we believe that the process for electing directors
can be improved.
Our company currently nominates for election only one candidate for each
board seat, thus leaving shareholders no practical choice in most director
elections. Shareholders who oppose a candidate have no easy way to do so unless
they are willing to undertake the considerable expense of running an independent
candidate for the board. The only other way to register dissent about a given
candidate is to withhold support for that nominee, but that process rarely
affects the outcome of director elections. The current system thus provides no
readily effective way for shareholders to oppose a candidate that has failed to
attend board meetings; or serves on so many boards as to be unable to supervise
our company management diligently; or who serves as a consultant to the company
that could compromise independence; or poses other problems. As a result, while
directors legally serve as the shareholder agent in overseeing management, the
election of directors at the annual meeting is largely perfunctory. Even
directors of near bankrupt companies enjoy re-election with 90%+ pluralities.
The 'real' selection comes through the nominating committee, a process too often
influenced, if not controlled, by the very management the board is expected to
scrutinize critically.
Our company should offer a rational choice when shareholders elect
directors. Such a process could abate the problem of a chair 'choosing' his own
board, that is, selecting those directors he expects will reflexively support
his initiatives, and shedding those who may sometimes dissent. Such a process
could create healthy and more rigorous shareholder evaluation about which
specific nominees are best qualified.
Would such a process lead to board discontinuity? Perhaps, but only with
shareholder approval. Presumably an incumbent would be defeated only because
shareholders considered the alternative a superior choice. Would such a
procedure discourage some candidates? Surely our board should not be made of
those intolerant of competition. Would such a procedure be 'awkward' for
management when it recruits candidates? Hopefully so. (Management could print a
nominee's name advanced by an independent shareholder to limit such
embarrassment.). The point is to remove the 'final' decision on who serves as a
board director from the hands of management, and place it firmly in those of
shareholders.
We urge you to vote FOR this proposal."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors has a duty to FedEx's stockholders to identify the
most qualified candidates to serve as directors. The Board would compromise this
important duty if it were to follow the procedure set forth in the proposal.
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Adoption of the proposal would hamper the Board of Directors' efforts to
attract and retain the best candidates, who typically have many opportunities to
serve as directors of other large public companies that do not require contested
elections. It is not practical to expect highly qualified candidates to set
aside their time and forgo other directorships in order to compete in a
political campaign in which they would not even be assured of the support of the
entire Board. Furthermore, we believe it is not the proper role of the Board of
Directors to foster a political environment in which nominees compete with one
another for available positions.
In nominating a slate of candidates each year, the Board of Directors
considers not only the qualifications of each individual nominee, but also how
nominees will perform with the existing directors. The Board selects the slate
of candidates in order to achieve a diverse blend of experience, institutional
knowledge and personal chemistry. A contested election, in which some nominees
were elected and others were not, could alter this balance.
Contrary to what the proposal suggests, FedEx's stockholders have
alternatives by which to voice their concerns about FedEx's directors. Under
FedEx's current election methods, dissatisfied stockholders may register their
disapproval by withholding votes for some or all candidates or by conducting a
proxy contest to challenge the Board's nominees. In addition, stockholders who
comply with the advance notice requirements described on page 26 of this proxy
statement may nominate their own director candidates at the annual meeting of
stockholders.
In short, the Board believes our practice of nominating a single candidate
for each director position comports with the longstanding and widespread
practice of major companies and promotes the best interests of FedEx's
stockholders. Accordingly, we recommend a vote against the proposal.
If the stockholder proposal is properly presented at the meeting, approval
of the proposal requires the affirmative vote of a majority of the shares
present at the meeting in person or by proxy and entitled to vote.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THIS PROPOSAL.
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OTHER MATTERS
The Board of Directors knows of no other business that will be presented at
the meeting. If any other matter properly comes before the stockholders for a
vote at the meeting, however, the proxy holders will vote your shares in
accordance with their best judgment.
ADDITIONAL INFORMATION
PROXY SOLICITATION
FedEx will bear the entire cost of this proxy solicitation. In addition to
soliciting proxies by this mailing, we expect that our directors, officers and
regularly engaged employees may solicit proxies personally or by mail,
telephone, facsimile or other electronic means, for which solicitation they will
not receive any additional compensation. FedEx will reimburse brokerage firms,
custodians, fiduciaries and other nominees for their out-of-pocket expenses in
forwarding solicitation materials to beneficial owners upon our request. FedEx
has retained Morrow & Co., Inc. to assist in the solicitation of proxies for a
fee of up to $25,000, which includes reimbursement of expenses.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Stockholder proposals intended to be presented at FedEx's 2002 annual
meeting must be received by FedEx no later than April 15, 2002 to be eligible
for inclusion in FedEx's proxy statement and form of proxy for next year's
meeting. Proposals should be addressed to FedEx Corporation, Attention:
Corporate Secretary, 942 South Shady Grove Road, Memphis, Tennessee 38120.
For any proposal that is not submitted for inclusion in next year's proxy
statement (as described in the preceding paragraph), but is instead sought to be
presented directly at the 2002 annual meeting, Securities and Exchange
Commission rules will permit management to vote proxies in its discretion if
FedEx does not receive notice of the proposal by July 1, 2002. Notices of
intention to present proposals at the 2002 annual meeting should be addressed to
FedEx Corporation, Attention: Corporate Secretary, 942 South Shady Grove Road,
Memphis, Tennessee 38120.
By order of the Board of Directors,
/s/ Kenneth R. Masterson
KENNETH R. MASTERSON
SECRETARY
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APPENDIX A
FEDEX CORPORATION
AUDIT COMMITTEE CHARTER
PURPOSE
The purpose of the Audit Committee is to support the oversight function of
the Board of Directors of the Company over the Company's accounting and
financial reporting practices. The Audit Committee shall perform this function
through the periodic review of the Company's processes for producing financial
data and identifying and controlling key business, financial and other risks.
The Audit Committee shall also review the adequacy of the Company's internal
controls and the independence of its independent auditor.
MEMBERSHIP
The Audit Committee shall consist of such number of members of the Board of
Directors of the Company as shall be designated by the Board from time to time,
but in no event shall the Committee consist of fewer than three members. All
members of the Committee shall be competent to perform the responsibilities and
duties of the Committee. At least one member of the Committee shall have
accounting or related financial management expertise. The Chairperson of the
Committee shall be selected by the Board of Directors. None of the members of
the Committee shall be employed by the Company or any of its subsidiaries, nor
shall any member of the Committee have been so employed within the three years
preceding appointment to the Committee. In addition, each member of the
Committee shall be independent of management of the Company and shall be free
from any relationship that, in the opinion of the Board of Directors of the
Company, would interfere with the exercise of independent judgment by such
Committee member.
FUNCTIONS AND POWERS
The Audit Committee shall:
INDEPENDENT AUDITOR
1. Recommend to the Board of Directors the firm to be employed as the
Company's independent auditor, instruct the independent auditor that the Board
of Directors is its client and review the proposed discharge of such firm;
2. Review the independent auditor's compensation, the proposed term of its
engagement, and its independence;
3. Receive annually a written statement from the independent auditor
delineating all relationships between the independent auditor and the Company
and assess the effect of any such relationships on such auditor's objectivity
and independence;
4. Review the scope and results of each independent audit of the Company,
the reports of the audit, any related management letter, and management's
responses to recommendations made by the independent auditor in connection with
the audit;
5. Meet periodically with the independent auditor, as appropriate, without
members of management present;
INTERNAL AUDITOR
6. Review the appointment and replacement of the senior internal auditing
executive;
A-1
32
7. Periodically review the adequacy of the organizational structure and
qualifications of the internal audit staff, and annually review the performance
of the senior internal auditing executive;
8. Review the annual audit plan of the internal audit department and review
the results of audits that are material to the Company's system of internal
control and management's responses to those reports;
9. Meet periodically with the senior internal audit executive, as
appropriate, without other members of management present;
FINANCIAL REPORTING
10. Review the Company's quarterly and annual financial reports including
management's discussion and analysis, any certification, report, opinion, or
review rendered by the independent auditor in connection therewith, and any
communications required by professional standards between the independent
auditor and the Audit Committee prior to the public release of such information;
11. Consider major changes and other major questions of choice regarding
the appropriate accounting principles and practices to be used in the
preparation of the Company's financial statements;
12. Review with financial management and the independent auditor their
qualitative judgments about the appropriateness, not just acceptability, of
accounting principles, estimates and financial disclosure practices used in the
preparation of the Company's financial statements and other public reports;
INTERNAL CONTROL STRUCTURE
13. Consider, in consultation with the Company's financial management, the
independent auditor and the senior internal auditing executive, the adequacy of
the Company's internal controls;
OTHER
14. Serve as the channel of communication between the independent auditor
and the Board of Directors, and between the senior internal auditing executive
and the Board of Directors;
15. Inquire into any other financial matters not set forth above which the
Committee in its judgment determines to be necessary, by either investigating
such matter on its own, referring such matter to the Board of Directors or
requesting management of the Company to conduct an appropriate investigation;
16. Annually review this charter and revise it as conditions dictate;
17. Approve the minutes of all meetings of the Committee;
18. Report regularly to the Board of Directors on matters within the scope
of the Committee as well as any special problems that merit the attention of the
Board of Directors; and
19. Perform such other duties as the Board of Directors may from time to
time assign to it.
A-2
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PROXY PROXY
FEDEX CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FEDEX
FOR THE ANNUAL MEETING OF STOCKHOLDERS, SEPTEMBER 24, 2001
The undersigned hereby constitutes and appoints Kenneth R. Masterson and Alan B.
Graf, Jr., and each of them, jointly and severally, his or her true and lawful
agents and proxies, each with full power of substitution, to represent the
undersigned and to vote all of the shares of FedEx Corporation common stock of
the undersigned at the Annual Meeting of Stockholders of FedEx to be held at The
Peabody Hotel, 149 Union Avenue, Memphis, Tennessee 38103, on Monday, September
24, 2001, at 10:00 a.m., local time, and at any postponements or adjournments
thereof, on Items 1 through 3 as specified on the reverse side hereof (with
discretionary authority under Item 1 to vote for a new nominee if any nominee is
unable to stand for election) and on such other matters as may properly come
before said meeting. THIS CARD ALSO CONSTITUTES VOTING INSTRUCTIONS FOR ANY
SHARES HELD FOR THE UNDERSIGNED IN ANY EMPLOYEE BENEFIT PLAN OF FEDEX
CORPORATION OR ITS SUBSIDIARIES.
ELECTION OF CLASS III DIRECTORS.
NOMINEES: COMMENTS
01) Judith L. Estrin --------------------------------------------
02) Philip Greer --------------------------------------------
03) J.R. Hyde, III --------------------------------------------
04) Shirley A. Jackson --------------------------------------------
05) Frederick W. Smith
(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 the appropriate
boxes on the reverse side, but you need not mark any boxes if you wish
to vote in accordance with the Board of Directors' recommendations. Mr.
Masterson and Mr. Graf cannot vote your shares unless you sign and
return this card or vote on the Internet or by telephone.
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
2001 ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following guidelines
will apply for FedEx 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 13, 2001, and
will be published in the program for the meeting. If you are a stock-
holder of record and do not return your proxy card or vote on the
Internet or by telephone 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. 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.
3. If you wish to comment on any of the proposals that will be voted on at
the meeting or ask an appropriate question about the business of FedEx
after the meeting, please register your intention to do so on the
sign-up sheet at the registration table.
4. The use of cameras or sound recording equipment of any kind is
prohibited, except those employed by FedEx to provide a record of the
proceedings.
5. Time has been reserved after the meeting for stockholder questions that
relate to the business of FedEx. 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 in
order 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 FedEx's first quarter report on Form 10-Q.
34
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE 2743
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST
ITEM 3. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITEMS 1 AND 2 AND
AGAINST ITEM 3.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
- --------------------------------------------------------------------------------
1. Election of Class III Directors
FOR ALL WITHHELD ALL
[ ] [ ]
FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Approval of Independent Auditors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 3.
- --------------------------------------------------------------------------------
3. Stockholder Proposal-Change Board Nomination Procedure
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF.
Comments on reverse side. [ ]
I request my name be disclosed with my vote and comments, if any. [ ]
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or at any postponements or 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 -
IF YOU WISH TO VOTE ON THE INTERNET OR BY TELEPHONE,
PLEASE READ THE INSTRUCTIONS BELOW.
Dear Stockholder:
Internet and telephone voting are convenient ways to vote your shares on matters
to be covered at the 2001 Annual Meeting of Stockholders. Voting on the Internet
or by telephone eliminates the need to return your proxy card.
To vote your shares on the Internet or by telephone, you must have available the
control number printed in the above box, just below the perforation. When voting
on the Internet or by telephone, you will be prompted to enter this control
number in order to access the system.
1. INTERNET VOTING: Log on to the Internet and go to the Web site
HTTP://WWW.EPROXYVOTE.COM/FDX.
NOTE: IF YOU VOTE ON THE INTERNET, YOU MAY ELECT TO HAVE NEXT YEAR'S
PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS DELIVERED TO YOU VIA
THE INTERNET. WE STRONGLY ENCOURAGE YOU TO ENROLL IN INTERNET DELIVERY.
IT IS A COST-EFFECTIVE WAY FOR US TO SEND YOU PROXY MATERIALS AND
ANNUAL REPORTS.
2. TELEPHONE VOTING: On a touch-tone telephone, call 1-877-PRX-VOTE
(1-877-779-8683) 24 hours a day, 7 days a week.
If you choose to vote on the Internet or by telephone, you do NOT need to mail
back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.