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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FEDERAL EXPRESS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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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Federal Express LOGO
FEDERAL EXPRESS CORPORATION
2005 CORPORATE AVENUE
MEMPHIS, TENNESSEE 38132
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 25, 1995
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To the Stockholders of Federal Express Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Federal
Express Corporation (the "Corporation") will be held at The Memphis Marriott,
2625 Thousand Oaks Boulevard, Memphis, Tennessee on Monday, September 25, 1995
at 10:00 a.m., Central Daylight Time, for the following purposes:
1. To elect the Class III Directors to serve for the next three years;
2. To approve the adoption of the Corporation's 1995 Stock Incentive Plan
reserving for issuance pursuant to stock options 1.5 million shares
of Common Stock of the Corporation (representing 2.67% of the shares
outstanding as of July 31, 1995);
3. To approve the adoption of the Corporation's 1995 Restricted Stock
Plan reserving for awards under the plan 275,000 shares of Common
Stock of the Corporation;
4. To ratify the designation of Arthur Andersen LLP as independent
auditors of the Corporation for fiscal 1996; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on July 31, 1995
will be entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
By order of the Board of Directors,
/s/ Kenneth R. Masterson
KENNETH R. MASTERSON
Secretary
August 3, 1995
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING. THE ENCLOSED RETURN ENVELOPE REQUIRES NO
ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES OR CANADA, AS APPLICABLE.
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FEDERAL EXPRESS CORPORATION
2005 CORPORATE AVENUE 1995 PROXY STATEMENT
MEMPHIS, TENNESSEE 38132
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Federal Express Corporation (the
"Corporation") for use at the Annual Meeting of Stockholders to be held
September 25, 1995. Shares represented at the meeting by the enclosed form of
proxy will be voted by Mr. William J. Razzouk, Executive Vice
President -- Worldwide Customer Operations, and Mr. Kenneth R. Masterson, Senior
Vice President, General Counsel and Secretary, in accordance with the directions
noted thereon. If no direction is given, the shares will be voted FOR election
of the Class III Directors and FOR proposals 2 through 4.
A stockholder giving a proxy may revoke it before it is voted by giving
written notice of such revocation to the Secretary of the Corporation or by
executing a later dated proxy. Attendance at the meeting by a stockholder who
has given a proxy will not have the effect of revoking it unless the stockholder
gives such written notice of revocation to the Secretary before the proxy is
voted.
The Corporation's confidential voting policy provides that stockholder
proxies, ballots and voting materials that identify the votes of specific
stockholders will be kept confidential, except (i) as required by law, including
in connection with the pursuit or defense of legal or regulatory actions or
proceedings; (ii) in the event a stockholder expressly requests disclosure; or
(iii) during a contested election for the Board of Directors. In addition, the
policy states that the tabulators and inspectors of election, who may be the
Corporation's transfer agent or its employees, shall be independent and not the
employees of the Corporation. As in the past, the Corporation's transfer agent,
First Chicago Trust Company of New York, will tabulate the votes, and a
representative of the transfer agent will serve as inspector of election.
Proxies will be returned in envelopes addressed to the transfer agent and,
except in the limited circumstances specified above, will not be seen by or
reported to the Corporation.
The Definitive Proxy Statement and accompanying form of proxy will be first
sent or given to stockholders on or about August 14, 1995.
The solicitation of proxies is made by the Corporation and the cost of
solicitation will be borne by the Corporation. In addition to the solicitation
of proxies by use of the mail and the Corporation's internal mail system,
proxies may be solicited by directors, officers and regularly engaged employees
of the Corporation. Brokers, nominees and other similar record holders will be
requested to forward solicitation materials and will be reimbursed by the
Corporation upon request for their out-of-pocket expenses. The Corporation has
retained Morrow & Co., Inc. to assist in the solicitation of proxies for a fee
of $8,000 plus reimbursement of expenses.
The Annual Report to Stockholders for the Corporation's fiscal year ended
May 31, 1995, including financial statements, is enclosed. Such Annual Report is
not a part of the proxy solicitation materials and is not incorporated herein by
reference.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
Only stockholders of record at the close of business on July 31, 1995 will
be entitled to notice of and to vote at the meeting. Each share of Common Stock
is entitled to one vote for the election of the Class III Directors and for all
other matters before the meeting. As of July 31, 1995, the Corporation had
outstanding 56,181,384 shares of Common Stock.
A majority of the outstanding shares entitled to vote at the meeting will
constitute a quorum. Abstentions and broker non-votes will be counted for
purposes of determining the presence of a quorum. Abstentions will be included
in tabulations of the votes cast on the proposals presented in the same manner
as votes cast against such proposals. Broker non-votes will not be counted
either for or against the proposal when determining whether a particular
proposal has been approved.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the amount of the Corporation's Common Stock
beneficially owned by each Director of the Corporation, each nominee to become a
Director, each of the Executive Officers named in the Summary Compensation Table
and by all Directors and executive officers as a group, as of July 31, 1995.
Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------------------------------- -------------------- ----------
Smith, Frederick W. ................................... 5,032,748(1) 8.85%
Allen, Robert H. ...................................... 8,704(2) *
Baker, Howard H., Jr. ................................. 7,000(2) *
Bryan, Anthony J. A. .................................. 10,704(2) *
Cox, Robert L. ........................................ 32,000(3) *
DeNunzio, Ralph D. .................................... 8,000(2) *
Estrin, Judith L. ..................................... 6,000(4) *
Greer, Philip.......................................... 28,978(2)(5) *
Hyde, J. R., III....................................... 26,000(2)(6) *
Manatt, Charles T. .................................... 7,000(2) *
Mitchell, George J. ................................... 500 *
Smart, Jackson W., Jr. ................................ 28,234(2)(7) *
Smith, Joshua I. ...................................... 2,300(8) *
Willmott, Peter S. .................................... 49,950(2) *
Razzouk, William J. ................................... 32,763(9) *
Weise, Theodore L. .................................... 86,707(10) *
Perkins, James A. ..................................... 17,750(11) *
Masterson, Kenneth R. ................................. 46,400(12) *
All directors and executive officers as a group (28
persons)............................................. 5,690,380(1)(2) 10.01%
(3)(4)(5)(6)
(7)(8)(9)(10)
(11)(12)(13)
- ---------------
(*) Less than 1% of issued and outstanding shares of Common Stock of the
Corporation.
(1) Includes 3,744,928 shares of Common Stock owned of record by Mr. Smith
(representing 6.59% of the outstanding Common Stock), 1,035,320 shares of
Common Stock owned of record by Frederick Smith Enterprise Company, Inc.
("Enterprise"), a family holding company, and 252,500 shares as to which
Mr. Smith has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within 60
days of July 31, 1995 under the Corporation's 1987, 1989 and 1993 Stock
Incentive Plans. First Tennessee Bank, N.A., Memphis, Tennessee, as Trustee
of a trust of which Mr. Smith is the lifetime beneficiary, holds 55% of
Enterprise's outstanding stock and Mr. Smith owns 45% directly. Mr. Cox is
a director of Enterprise.
(2) Includes 5,000 and 1,000 shares, respectively, of Common Stock as to which
each Director who is not also an employee of the Corporation has the right
to acquire beneficial ownership through the exercise of stock options which
are vested or will become vested within 60 days of July 31, 1995 under the
Corporation's 1989 and 1993 Stock Incentive Plans, respectively.
(3) Includes 30,000 shares of Common Stock owned by RLC Family Partners Ltd., a
limited partnership of which Mr. Cox is the sole general partner and 1,000
and 1,000 shares, respectively, as to which Mr. Cox has the right to
acquire beneficial ownership through the exercise of stock options which
are vested or will become vested within 60 days of July 31, 1995 under the
Corporation's 1989 and 1993 Stock Incentive Plans, respectively, and
excludes 4,000 shares owned by Mr. Cox's wife as to which Mr. Cox disclaims
beneficial ownership.
(4) Includes 4,000 and 1,000 shares, respectively, of Common Stock as to which
Ms. Estrin has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become
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vested within 60 days of July 31, 1995 under the Corporation's 1989 and
1993 Stock Incentive Plans, respectively.
(5) Excludes 12,656 shares of Common Stock owned of record and beneficially by
members of Mr. Greer's family as to which Mr. Greer disclaims beneficial
ownership.
(6) Includes 4,000 shares of Common Stock owned by a family trust and members
of Mr. Hyde's family.
(7) Includes 2,100 shares of Common Stock owned by Mr. Smart's wife.
(8) Includes 1,000 and 1,000 shares, respectively, of Common Stock as to which
Mr. Smith has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within 60
days of July 31, 1995 under the Corporation's 1989 and 1993 Stock Incentive
Plans, respectively.
(9) Includes 26,950 shares of Common Stock as to which Mr. Razzouk has the
right to acquire beneficial ownership through the exercise of stock options
which are vested or will become vested within 60 days of July 31, 1995
under the Corporation's Stock Incentive Plans.
(10) Includes 53,715 shares of Common Stock as to which Mr. Weise has the right
to acquire beneficial ownership through the exercise of stock options which
are vested or will become vested within 60 days of July 31, 1995 under the
Corporation's Stock Incentive Plans and 4,914 shares owned by members of
Mr. Weise's family.
(11) Includes 15,250 shares of Common Stock as to which Mr. Perkins has the
right to acquire beneficial ownership through the exercise of stock options
which are vested or will become vested within 60 days of July 31, 1995
under the Corporation's Stock Incentive Plans.
(12) Includes 46,400 of Common Stock as to which Mr. Masterson has the right to
acquire beneficial ownership through the exercise of stock options which
are vested or will become vested within 60 days of July 31, 1995 under the
Corporation's Stock Incentive Plans.
(13) Includes 677,800 shares of Common Stock as to which the Directors and
executive officers as a group, have the right to acquire beneficial
ownership through the exercise of stock options which are vested or will
become vested within 60 days of July 31, 1995 under the Corporation's Stock
Incentive Plans.
Listed below are certain persons who owned beneficially, as of December 31,
1994, and in the case of PRIMECAP Management Company, as of May 31, 1995, more
than five percent of the Corporation's Common Stock. This information is copied
from Schedule 13Gs filed by each beneficial owner in February and July 1995 with
the Securities and Exchange Commission.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------------------- -------------------- ----------------
The Capital Group Companies, Inc........................... 7,355,610(1) 13.15%
333 South Hope Street
Los Angeles, California 90071
Sanford C. Bernstein & Co., Inc............................ 4,308,160(2) 7.70
One State Street Plaza
New York, New York 10004
Southeastern Asset Management, Inc......................... 3,030,839(3) 5.42
6075 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
PRIMECAP Management Company................................ 3,025,500(4) 5.37
225 South Lake Avenue
Pasadena, California 91101
- ---------------
(1) Certain operating subsidiaries of The Capital Group Companies, Inc.,
exercised investment discretion over various institutional accounts which
held shares of the Corporation. Capital Guardian Trust Company, a bank, and
one of such operating companies, exercised investment discretion over
2,588,370 of the shares. Capital Research and Management Company, a
registered investment advisor, and Capital International Limited and
Capital International, S.A., other operating subsidiaries, had investment
discretion with respect to 4,640,000, 90,440 and 36,800 shares,
respectively, of the aggregate shares. The
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Capital Group Companies, Inc. had sole power to vote or direct the vote
with respect to 2,045,130 shares. Neither The Capital Group Companies, Inc.
or any of its subsidiaries had the power to vote or to direct the vote of
the remaining shares. The Capital Group Companies, Inc. disclaimed
beneficial ownership of all such shares of the Corporation.
(2) Sanford Bernstein, a registered investment advisor, exercised sole
investment discretion with respect to the shares and sole voting power with
respect to 2,080,361 of such shares. Sanford Bernstein does not disclaim
beneficial ownership of any such shares.
(3) Southeastern Asset Management, Inc., a registered investment advisor,
exercised sole investment discretion over 2,385,389 of the aggregate
shares, and shared investment discretion with respect to 605,700 shares
with Longleaf Partners Fund, a series of Longleaf Partners Funds Trust,
formerly Southeastern Asset Management Funds Trust, an open-end registered
management investment company. Southeastern had sole power to vote or
direct the vote with respect to 2,300,389 of the aggregate shares, and
shared voting power over 605,700 shares with Longleaf Partners Fund.
Neither Southeastern or Longleaf Partners Fund had the power to vote or to
direct the vote of the remaining shares. Southeastern does not disclaim
beneficial ownership of any such shares; however, Mr. O. Mason Hawkins,
chairman and chief executive officer of Southeastern, disclaims beneficial
ownership of all of the shares in the event he is or could be deemed to be
a controlling person of Southeastern as a result of his official positions
with Southeastern or his ownership of its voting securities.
(4) PRIMECAP Management Company, a registered investment advisor, exercised
sole investment discretion and sole voting power with respect to the
shares, and does not disclaim beneficial ownership of any such shares.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the date of the Annual Meeting, the Board of Directors will consist of
fourteen members, divided into three classes. Five nominees (the "Class III
Directors") are to be elected at this Annual Meeting to serve for a term of
three years and until their successors are elected and qualified. The remaining
nine Directors will continue to serve as set forth below, with four Directors
(the "Class I Directors") having terms expiring at the 1996 Annual Meeting and
five Directors (the "Class II Directors") having terms expiring at the 1997
Annual Meeting. The nominees for election as Class III Directors are now
directors of the Corporation. Each nominee has consented to being named in this
Proxy Statement and agreed to serve if elected. The proxy holders will vote the
proxies received by them for the five Class III nominees or, in the event of a
contingency not presently foreseen, for different persons as substitutes
therefor unless authority is withheld.
The following sets forth, with respect to each nominee and each Director
continuing to serve, his or her name, age, principal occupation and employment
during the past five years, the year in which he or she first became a Director
of the Corporation and directorships held in other corporations.
NOMINEES FOR ELECTION AS
CLASS III DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 1998 ANNUAL MEETING
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- ------------------------- --- -------------------------------------------------------------
Howard H. Baker, Jr. 69 Partner, Baker, Donelson, Bearman & Caldwell, a law firm,
1988 since February 1995; Partner, Baker, Worthington, Crossley &
Stansberry from July 1988 to February 1995. Director,
Pennzoil Company, United Technologies Corporation and WMX
Technologies, Inc.
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DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- ------------------------- --- -------------------------------------------------------------
Judith L. Estrin 40 President and Chief Executive Officer of Precept Software,
1989 Inc., a computer software company, since March 1995;
Consultant from September 1994 to March 1995; Chief Executive
Officer and President of Network Computing Devices, Inc., a
company that supplies display stations for network computing
environments, from September 1993 to September 1994;
Executive Vice President of Network Computing Devices, Inc.
from July 1988 to September 1993. Director, Rockwell
International Corporation.
Philip Greer 59 Senior Managing Principal of Weiss, Peck & Greer, L.L.C., a
1974 diversified investment management and securities firm, since
1995; General Partner of Weiss, Peck & Greer from 1970 to
1995. Director, Network Computing Devices, Inc. and Robert
Mondavi Winery.
J. R. Hyde, III 52 Chairman and Chief Executive Officer of AutoZone, Inc., an
1977 auto parts retail chain, since July 1988. Director, AutoZone,
Inc. and First Tennessee National Corporation.
Frederick W. Smith 50 Chairman, President and Chief Executive Officer of the
1971 Corporation since 1983; Chief Executive Officer of the
Corporation since 1977; Chairman of the Corporation since
1975; President of the Corporation from 1971 to 1975.
CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1996 ANNUAL MEETING
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- ------------------------- --- -------------------------------------------------------------
Robert H. Allen 67 Private Investor and Managing Partner, Challenge Investment
1977 Partners, an investment firm, since May 1993; Chairman and
Chief Executive Officer of Realm Resources, Inc., a natural
resource company, from 1983 to 1991. Director, First City
Bank of Texas, Geoquest International, Inc., Gulf Canada
Resources Ltd. and Nuevo Energy Company.
Anthony J. A. Bryan 72 Chairman, Executive Committee, Hospital Corporation
1978 International, a company that owns, manages and builds
hospitals and health-related facilities in various countries
around the world, since March 1991; Chairman, Hospital
Corporation International from July 1991 until September
1992; Chairman and Chief Executive Officer of Oceonics Group
PLC from March 1988 to March 1991.
Robert L. Cox 59 Partner, Waring Cox, a law firm, for more than the past five
1993 years; Secretary of the Corporation from June 1971 to
September 1993. Director, Delta Life Corporation.
Peter S. Willmott 58 Chairman and Chief Executive Officer of Willmott Services,
1974 Inc., a retail and consulting firm, since June 1989;
President and Chief Operating Officer of the Corporation from
September 1980 to May 1983; Executive Vice President of the
Corporation from 1977 to 1980; Senior Vice
President -- Finance and Administration of the Corporation
from 1974 to 1977. Director, Browning-Ferris Industries,
Inc., International Multifoods Corporation, Mac Frugal's
Bargains -- Close-Outs, Inc., Maytag Corporation, Morgan
Keegan & Co., Inc. and Zenith Electronics Corporation.
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CLASS II DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1997 ANNUAL MEETING
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- ------------------------- --- -------------------------------------------------------------
Ralph D. DeNunzio 63 President of Harbor Point Associates, Inc., a private
1981 investment and consulting firm, since October 1987. Director,
AMP Incorporated, Harris Corporation and NIKE, Inc.
Charles T. Manatt 59 Senior Partner, Manatt, Phelps & Phillips, a law firm, for
1989 more than the past five years. Director, ICN Pharmaceuticals
Inc. and COMSAT Corporation.
George J. Mitchell 61 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, The
Walt Disney Company, UNUM Corporation and Xerox Corporation.
Jackson W. Smart, Jr. 64 Chairman and Chief Executive Officer of MSP Communications,
1976 Inc., a radio broadcasting company, since October 1988.
Trustee, Goldman Sachs -- Institutional Liquid Assets,
Financial Square Money Market Trust, Goldman Sachs Trust and
Goldman Sachs Equity Portfolios Inc. Director, North American
Private Equity Fund.
Joshua I. Smith 54 Chairman, President and Chief Executive Officer of The MAXIMA
1989 Corporation, an information and data processing firm, since
1978. Director, Caterpillar, Inc. and Inland Steel
Industries, Inc.
MEETINGS AND COMMITTEES
The Board of Directors of the Corporation conducted five regular and two
special meetings during fiscal 1995. Each Director, with the exception of Mr.
Bryan, attended at least 75% of the meetings of the Board and any committees on
which they served.
The Board of Directors has an Audit Committee and a Compensation Committee.
During fiscal 1995, the members of the Audit Committee were Philip Greer
(Chairman), Howard H. Baker, Jr., Anthony J. A. Bryan, Robert L. Cox, Charles T.
Manatt and Peter S. Willmott. The basic responsibilities of the Audit Committee,
as approved by the Board of Directors, are to review significant financial
information for the purpose of giving added assurance that the information is
accurate and timely and that it includes all appropriate financial statement
disclosures; to ascertain the existence of effective accounting and internal
control systems; to oversee the entire audit function both internal and
independent; and to provide an effective communication link between the auditors
(internal and independent) and the Board of Directors. The Audit Committee met
eight times during fiscal 1995.
During fiscal 1995, the members of the Compensation Committee were Jackson
W. Smart, Jr. (Chairman), Robert H. Allen, Ralph D. DeNunzio, J. R. Hyde, III
and Joshua I. Smith. The Compensation Committee determines the salaries, bonuses
and other remuneration and terms and conditions of employment of the officers of
the Corporation, administers the Corporation's Stock Incentive and Restricted
Stock Plans, oversees the administration of the Corporation's employee benefit
plans covering employees generally and makes recommendations to the Board of
Directors with respect to the Corporation's compensation policies. The
Compensation Committee held five meetings in fiscal 1995. The Board of Directors
does not have a nominating committee.
Effective July 17, 1995, Mr. Manatt resigned his position on the Audit
Committee and was appointed to the Compensation Committee, and Mr. Joshua Smith
resigned his position on the Compensation Committee and was appointed, along
with Mr. Mitchell, to the Audit Committee.
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SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Corporation's Chief Executive Officer and its four other most
highly-compensated executive officers for services rendered in all capacities
during the fiscal years ended May 31, 1995, 1994 and 1993.
LONG TERM COMPENSATION
-----------------------
AWARDS
ANNUAL COMPENSATION -----------------------
-------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(2) SARS (#) ($)(3)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- ------------
Frederick W. Smith 1995 700,000 515,500 96,541(4) -- 50,000 2,850
Chairman, President and 1994 650,121 470,000 84,016(4) -- 100,000 5,573
Chief Executive Officer 1993 550,368 -- 66,404(4) -- -- 2,154
William J. Razzouk 1995 459,442 239,940 -- -- 39,000 2,850
Executive Vice President 1994 436,386 343,690 169,152(1) 260,000 50,000 5,281
Worldwide Customer 1993 301,905 34,070 -- -- 5,000 2,154
Operations
Theodore L. Weise 1995 417,994 188,480 58,016(5) -- 27,500 2,850
Senior Vice President 1994 399,360 214,675 105,720(1) 162,500 25,000 4,440
Air Operations 1993 364,585 33,261 -- -- 5,000 2,154
James A. Perkins 1995 359,389 164,810 -- -- 22,500 2,850
Senior Vice President and 1994 338,503 155,286 -- -- 20,000 4,053
Chief Personnel Officer 1993 320,113 28,838 -- -- 5,000 2,154
Kenneth R. Masterson 1995 378,478 138,880 -- -- 22,500 2,850
Senior Vice President, 1994 357,162 180,428 -- -- 20,000 4,175
General Counsel 1993 345,198 45,111 -- -- 9,000 2,154
and Secretary
- ---------------
(1) The amounts shown for Mr. Razzouk and Mr. Weise in 1994 represent tax
reimbursements related to restricted stock awards.
(2) The amounts in the table represent the closing market value of the shares
awarded at the date of grant. At May 31, 1995, the number and value of the
restricted stock holdings of the named individuals were as follows:
NAME NUMBER OF SHARES HELD VALUE
------------------------------------------------------ --------------------- --------
F.W. Smith............................................ -- --
W.J. Razzouk.......................................... 5,813 $348,053
T.L. Weise............................................ 1,667 99,812
J.A. Perkins.......................................... -- --
K.R. Masterson........................................ -- --
The restrictions on the shares awarded to Mr. Razzouk lapse ratably over
five years after the date of award with respect to 1,250 shares granted in
October 1990 and lapse ratably over four years after the date of award with
respect to 4,563 shares granted in September 1991 and October 1993. The
restrictions on the shares awarded to Mr. Weise lapse ratably over three
years after the date of award.
Holders of restricted shares are entitled to receive any dividends declared
on such shares. The Corporation has never declared a dividend on its shares
because its policy has been to reinvest earnings in the business of the
Corporation.
(3) These amounts represent profit sharing payments to the named executive
officers and contributions under the Corporation's Deferred Profit Sharing
Plan.
(4) Of the amounts shown for 1995, 1994 and 1993, $69,437, $65,328 and $50,733,
respectively, represent personal use of corporate aircraft which is treated
as taxable income to Mr. Smith.
(5) Of the amount shown for 1995, $55,018 is for financial counseling.
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding grants of stock
options during the fiscal year ended May 31, 1995 made to the named executive
officers under the Corporation's Stock Incentive Plans. The amounts shown for
each of the named executive officers as potential realizable values are based on
arbitrarily assumed annualized rates of stock price appreciation of five percent
and ten percent over the full ten-year term of the options, which would result
in stock prices of approximately $123.59 and $196.80, respectively, for the
options with an exercise price of $75.8750; $114.53 and $182.37, respectively,
for the options with an exercise price of $70.3125; and $100.38 and $159.84,
respectively, for the options with an exercise price of $61.6250. No gain to the
optionees is possible without an increase in stock price which will benefit all
stockholders proportionately. These potential realizable values are based solely
on arbitrarily assumed rates of appreciation required by applicable Securities
and Exchange Commission regulations. Actual gains, if any, on option exercise
and common stock holdings are dependent on the future performance of the
Corporation's Common Stock and overall stock market conditions. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------ AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH)(*) DATE 5% ($) 10% ($)
- --------------------- ------------ ------------ ----------- ---------- --------- ---------
F.W. Smith........... 50,000 7.59 75.8750 6/1/2004 2,385,750 6,046,250
W.J. Razzouk......... 15,000 2.28 75.8750 6/1/2004 715,725 1,813,875
4,000 .61 70.3125 7/19/2004 176,870 448,230
20,000 3.04 61.6250 9/26/2004 775,100 1,964,300
T.L. Weise........... 7,500 1.14 75.8750 6/1/2004 357,863 906,938
20,000 3.04 61.6250 9/26/2004 775,100 1,964,300
J.A. Perkins......... 7,500 1.14 75.8750 6/1/2004 357,863 906,938
15,000 2.28 61.6250 9/26/2004 581,325 1,473,225
K.R. Masterson....... 7,500 1.14 75.8750 6/1/2004 357,863 906,938
15,000 2.28 61.6250 9/26/2004 581,325 1,473,225
- ---------------
(*) The option exercise price of the options granted to the individuals shown
above was the fair market value of the Corporation's Common Stock at the
date of grant of the option. The options expiring June 1, 2004 and July 19,
2004 are subject to a vesting schedule as follows: 20% after one year from
the date of grant; 40% after two years; 60% after three years; 80% after
four years; and 100% after five years. The options expiring September 26,
2004 are subject to a vesting schedule as follows: 25% after three years
from date of grant; 50% after four years; 75% after five years; and 100%
after six years. The options may not be transferred in any manner other
than by will or the laws of descent and distribution and may be exercised
during the lifetime of the optionee only by the optionee. During the fiscal
year ended May 31, 1995, options for a total of 658,800 shares were granted
to various employees of the Corporation.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table summarizes for each of the named executive officers
certain information relating to stock options exercised by them during the
fiscal year ended May 31, 1995. Value realized upon exercise is the difference
between the fair market value of the underlying stock on the exercise date and
the exercise or base price of the option. The value of an unexercised,
in-the-money option at fiscal year-end is the difference between its exercise or
base price and the fair market value of the underlying stock on May 31, 1995,
which was $59.875 per share. These values, unlike the amounts set forth in the
column "Value Realized," have not been, and may never be, realized. The options
have not been, and may not be, exercised; and actual gains, if any, on exercise
will depend on the value of the Corporation's Common Stock on the date of
exercise. There
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can be no assurance that these values will be realized. Unexercisable options
are those which have not yet vested.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES VALUE FY-END (#) FY-END ($)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ------------ -------- ----------- ------------- ----------- -------------
F.W. Smith................... -- -- 222,500 130,000 4,037,344 --
W.J. Razzouk................. 6,050 164,118 11,800 88,350 10,388 150,947
T.L. Weise................... -- -- 44,865 54,650 528,121 96,272
J.A. Perkins................. 3,750 78,397 7,400 44,850 19,288 80,672
K.R. Masterson............... 6,500 123,438 38,550 46,450 476,903 110,722
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table sets forth estimates of the possible future payouts to
each of the named executive officers under the Corporation's long-term
performance bonus plans.
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
NUMBER OF OTHER PERIOD -----------------------------------
SHARES, UNITS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME OR OTHER RIGHTS (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
- ------------------------------ ------------------- ---------------- --------- ---------- ----------
F.W. Smith.................... N/A 5/31/96 $ 400,000 $ 800,000 $1,200,000
N/A 5/31/97 500,000 1,000,000 1,500,000
N/A 5/31/98 500,000 1,000,000 1,500,000
W.J. Razzouk.................. N/A 5/31/96 200,000 400,000 600,000
N/A 5/31/97 225,000 450,000 675,000
N/A 5/31/98 225,000 450,000 675,000
T.L. Weise.................... N/A 5/31/96 125,000 250,000 375,000
N/A 5/31/97 125,000 250,000 375,000
N/A 5/31/98 125,000 250,000 375,000
J.A. Perkins.................. N/A 5/31/96 125,000 250,000 375,000
N/A 5/31/97 125,000 250,000 375,000
N/A 5/31/98 125,000 250,000 375,000
K.R. Masterson................ N/A 5/31/96 125,000 250,000 375,000
N/A 5/31/97 125,000 250,000 375,000
N/A 5/31/98 125,000 250,000 375,000
In 1994, 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 1996
if the Corporation achieves certain earnings per share targets established by
the Committee with respect to the three-fiscal year period 1994 through 1996.
However, no amounts can be earned until fiscal 1996 because it is only after the
conclusion of that year that the Committee can determine the extent of
achievement of the three-fiscal year earnings per share objectives. The
Committee has established similar plans for the three-fiscal year periods 1995
through 1997 and 1996 through 1998 providing bonus opportunities for 1997 and
1998, respectively, if certain earnings per share targets are achieved with
respect to those periods. No amounts can be earned for the 1995 through 1997 and
1996 through 1998 plans until 1997 and 1998, respectively, since achievement of
the earnings per share objectives can only be determined following the
conclusion of the applicable three-fiscal year period. Each successive plan has
earnings per share targets which are higher than the previous plans.
Under all three plans, the average percentage of an individual's
achievement of individual objectives under the Corporation's annual performance
bonus plan (discussed on page 11 of the Proxy Statement) for the three-fiscal
year period of each of the long-term performance bonus plans will be used as an
individual
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performance measure when calculating individual bonuses, except for Mr. Smith
whose payout will be determined by the Compensation Committee. The estimated
individual future payouts set forth in the table above are set dollar amounts
ranging from threshold amounts if the objectives are minimally achieved, up to
maximum amounts if the plan targets are substantially exceeded. Individual
bonuses may be adjusted downward from these amounts if the individual's average
individual achievement percentage is less than 100% for the three-fiscal year
period of each of the plans. There can be no assurance that the estimated future
payouts shown in this table will be achieved.
PENSION PLAN TABLE
The following table shows the estimated annual pension benefits payable to
participants upon retirement on a single life annuity basis in specified
remuneration classes and years of credited service under the Federal Express
Corporation Employees' Pension Plan and the Federal Express Corporation
Retirement Parity Pension Plan which provides 100 percent of the benefit that
would otherwise be denied certain participants by reason of Internal Revenue
Code limitations on qualified plan benefits. The benefits listed in the table
are not subject to any reduction for Social Security or other offset amounts.
YEARS OF SERVICE
-------------------------------------------------------
REMUNERATION 10 15 20 25 30
- ----------------------------------------- ------- ------- ------- ------- -------
300,000.................................. 60,000 90,000 120,000 150,000 150,000
350,000.................................. 70,000 105,000 140,000 175,000 175,000
400,000.................................. 80,000 120,000 160,000 200,000 200,000
450,000.................................. 90,000 135,000 180,000 225,000 225,000
500,000.................................. 100,000 150,000 200,000 250,000 250,000
600,000.................................. 120,000 180,000 240,000 300,000 300,000
700,000.................................. 140,000 210,000 280,000 350,000 350,000
800,000.................................. 160,000 240,000 320,000 400,000 400,000
900,000.................................. 180,000 270,000 360,000 450,000 450,000
The remuneration as specified above includes Salary and Bonus as reported
in the Summary Compensation Table (p. 7). Since the covered compensation is the
average over the five-year period preceding retirement, the amount differs from
that set forth in the Summary Compensation Table and is stated below together
with the credited years of service achieved.
YEARS OF
NAME COVERED COMPENSATION SERVICE
- ---------------------------------------------------------------- -------------------- --------
F.W. Smith...................................................... 679,900 23
W.J. Razzouk.................................................... 399,661 12
T.L. Weise...................................................... 412,323 23
J.A. Perkins.................................................... 343,466 21
K.R. Masterson.................................................. 369,761 15
REPORT ON EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation of the Corporation's executives comprises three basic
components: base salary, annual and long-term performance bonus plans, and
long-term equity incentives. The Compensation Committee (the "Committee") of the
Board of Directors determines the compensation of the executive officers of the
Corporation, approves the objectives for the annual and long-term performance
bonus plans, establishes the funding of the plans, determines the awards of
long-term equity incentives and the individuals to whom such awards are made,
and recommends to the Board of Directors the compensation of the chief executive
officer of the Corporation.
Base Salary. The establishment of competitive base compensation for the
Corporation's executives is the primary objective in setting base salaries. The
starting point for this process is to determine the relative
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importance of an executive officer's position, the extent of accountability of
the position and the skills required to perform the duties of the position. In
addition, the Corporation utilizes compensation surveys published by three major
consulting firms of companies in general industry with $5 billion or more in
annual sales. The Committee believes that general industry is an appropriate
comparison category in determining competitive compensation because the
Corporation's executives can be recruited from, and by, businesses outside the
Corporation's industry peer group. In addition, in its 1995 executive
compensation review, the Committee considered compensation information on the
five highest paid executive officers of other companies available from the proxy
statements of a group of 20 transportation companies and a group of 35 companies
in general industry with annual sales of $8-$12 billion. The transportation
companies comprise most of the companies in the Standard & Poor's Transportation
Index and the Dow Jones Transportation Average, but also include several other
companies not in these indices. Base salaries are generally targeted at the
median (or 50th percentile) of base salaries for comparable positions in the
comparison surveys mentioned above.
None of the factors mentioned above is given any particular weight in
determining base compensation. Other factors may also influence such
determination, such as the relative extent of an individual's experience or a
desire to retain a valuable executive. The Committee's target for Mr. Smith is
the 50th percentile as is the case with the other executive officers. Mr.
Smith's base salary was increased in 1995; however, his base salary remains at
less than the 25th percentile of base salaries of chief executive officers in
the comparison surveys.
Performance Bonus Plans. Under the Corporation's annual performance bonus
plan, a bonus opportunity is established at the beginning of each fiscal year
for management and certain professional employees based on the degree of
attainment of both corporate and individual goals for the year. Each position
eligible for such bonus, including all executive officers but excluding Mr.
Smith, is assigned a number of points based on salary grade. Individual
objectives for each position are established and points are allocated to the
objectives by each participant and his or her immediate superior. A participant
earns points by achieving his or her individual objectives. The amount of a
participant's bonus is determined by the number of points earned, multiplied by
the dollar value, if any, assigned to each point by the Committee according to
the extent of achievement of plan objectives.
The plan objectives established for 1995 were (i) a pretax income goal and
(ii) an internal measure reflecting a targeted level of service quality. For
1995, the pretax income goal and the internal service measure target were
assigned 85% and 15% weightings, respectively.
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 1995, the threshold bonus target was
established at an amount which, when added to base salary, would be less than
the 50th percentile of total salary and bonus for comparable positions in the
comparison surveys discussed above under Base Salary. Thus, total salary and
bonus for executive officers (assuming achievement of all individual objectives)
is designed to range from less than the 50th up to the 75th percentile of total
salary and bonus for comparable positions in the comparison surveys according to
the degree to which plan objectives are met or exceeded.
For 1995, bonuses were awarded to executive officers (other than Mr. Smith)
based on achievement of above-plan targets for pretax income for the entire
fiscal year. The service quality index goal was not achieved.
Mr. Smith's bonus is not determined by a number of points specifically
assigned to his position as is the case with other management personnel, but by
whether corporate business plan objectives are met or exceeded. If such
objectives are met, the Committee determines and recommends to the Board of
Directors a bonus which, when combined with base salary, may be up to the 75th
percentile of total salary and bonus for chief executive officers in the
comparison surveys discussed above under Base Salary. Mr. Smith's bonus for 1995
combined with his base salary amounted to less than the 50th percentile of total
salary and bonus of chief executive officers in these comparison surveys. In
addition to the comparison surveys, the Committee also considered publicly
available proxy statement information on the compensation of chief executive
officers of two groups of other public companies, as described above under Base
Salary, in determining Mr. Smith's total salary and bonus.
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In 1994, the Committee established a long-term performance bonus plan to
provide a long-term cash bonus opportunity to members of upper management,
including executive officers, at the conclusion of fiscal year 1996 if the
Corporation achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1994 through 1996. The
Committee has established similar plans for the three-fiscal year periods 1995
through 1997 and 1996 through 1998 providing bonus opportunities for 1997 and
1998, respectively, if certain earnings per share targets are achieved with
respect to those periods. The Long-Term Incentive Plans Table on page 9 of this
Proxy Statement sets forth the estimated future payouts 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 1995 to certain key employees of the Corporation, including
executive officers, under certain of the Corporation's Stock Incentive Plans.
Under the terms of the plans, the Corporation may grant options to key employees
(determined by the Committee) to purchase such number of shares of the Common
Stock of the Corporation as is determined by the Committee.
The number of shares for which options are granted to executive officers is
generally determined by the Committee based on the respective officer's senior
officer status. For example, options granted to Senior Vice Presidents are
generally for the same number of shares, while a grant to the Executive Vice
President will usually be for more shares than granted to Senior Vice
Presidents. However, no set criteria are used and other factors may influence
the Committee's determination with respect to the number of shares granted, such
as the promotion of an individual to a higher position, a desire to retain a
valued executive or the number of shares then available for grant under one or
more of the plans. The stock option holdings of an individual at the time of a
grant are generally not considered in determining the size of a grant to that
individual.
Under the terms of the 1986 Restricted Stock Plan, the Corporation may
award restricted stock to key employees as determined by the Committee. No set
criteria are used to determine the amount of restricted stock awarded; however,
the Committee's determination may be influenced with respect to the number of
shares awarded by factors such as the respective officer's senior officer
status, the promotion of an individual to a higher position, a desire to retain
a valued executive, a desire to recognize a particular officer's contribution to
the Corporation or the number of shares then available for award. No restricted
stock was awarded in 1995.
Section 162(m) of the Internal Revenue Code limits deductibility of certain
compensation for the chief executive officer and the four other highest paid
executive officers to $1,000,000 per year, unless certain requirements are met.
The policy of the Corporation is generally to design its compensation plans and
programs to ensure full deductibility. The Committee attempts to balance this
policy with compensation programs designed to motivate management to maximize
stockholder wealth. There are times when it is determined that the interests of
the stockholders are best served by the implementation of compensation policies
that do not restrict the Committee's ability to exercise its discretion in
crafting compensation packages even though such policies may result in certain
non-deductible compensation expenses.
The 1995 Stock Incentive Plan presented in this Proxy Statement for
stockholder approval complies with Section 162(m); therefore, compensation
recognized by the five highest paid executive officers under this plan will
qualify for appropriate tax deductions. The Corporation's annual and long-term
performance bonus plans and the 1995 Restricted Stock Plan presented herein do
not meet all of the conditions for qualification under Section 162(m).
Therefore, compensation received under these plans will be subject to the
$1,000,000 deductibility limit.
COMPENSATION COMMITTEE MEMBERS
Jackson W. Smart, Jr. -- Chairman
Robert H. Allen Ralph D. DeNunzio
J.R. Hyde, III Joshua I. Smith
May 31, 1995
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STOCK PERFORMANCE GRAPH
The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Corporation
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such acts.
The following graph shows changes over the past five fiscal years in the
value of $100 invested on May 31, 1990 in: (1) the Corporation's Common Stock;
(2) the Standard & Poor's 500 Composite Index; and (3) the Standard & Poor's
Transportation Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
(FDX, S&P 500 COMPOSITE INDEX AND S&P TRANSPORTATION INDEX)
GRAPH
MEASUREMENT PERIOD S&P 500 COMP. S&P TRANS.
(FISCAL YEAR COVERED) FDX INDEX INDEX
1990 100 100 100
1991 87 112 108
1992 88 123 131
1993 106 137 151
1994 165 143 156
1995 129 172 158
The total return assumes that all dividends were reinvested. No dividends
were paid on the Corporation's Common Stock during the period.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Pursuant to the provisions of the Corporation's Stock Incentive Plans, the
Corporation has made interest-free demand loans to certain officers, fully
secured by Common Stock of the Corporation, to assist them in exercising
non-incentive stock options and paying any tax liability associated with such
exercise. Such loans are repayable on demand or upon termination of employment
for any reason. The following table shows the highest balance of such loans
outstanding during the period June 1, 1994 through July 31, 1995 and the
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balance of such loans outstanding at July 31, 1995, for those executive officers
with loan balances which exceeded $60,000.
HIGHEST BALANCE BALANCE AT
EXECUTIVE OFFICER DURING PERIOD JULY 31, 1995
- --------------------------------------------------------------- --------------- -------------
Theodore L. Weise, Senior Vice President -- Air Operations..... $ 619,031 $ 619,031
William J. Razzouk, Executive Vice President -- Worldwide
Customer Operations.......................................... 181,676 --
The law firm of Baker, Donelson, Bearman & Caldwell has represented the
Corporation during fiscal year 1995 pursuant to a retainer arrangement. Mr.
Baker, a Director and nominee, is a named partner in that firm. The law firm of
Manatt, Phelps & Phillips has represented the Corporation during fiscal year
1995 pursuant to a retainer arrangement. Mr. Manatt, a Director, is a named
partner in that firm. Mr. Mitchell, a Director, is Special Counsel to the law
firm of Verner, Liipfert, Bernhard, McPherson and Hand. Mr. Mitchell represented
the Corporation pursuant to a retainer arrangement during fiscal 1995. The law
firm of Waring Cox has represented the Corporation during fiscal year 1995. Mr.
Cox, a Director, is a named partner in that firm. The Corporation expects to
utilize the services of these firms during fiscal year 1996.
During fiscal year 1995, the Corporation purchased computer devices and
services in the amount of $1,941,899 from Network Computing Devices, Inc. Ms.
Estrin, a Director and nominee, was the Chief Executive Officer, President and a
director of Network Computing Devices, Inc. during the first four months of the
Corporation's 1995 fiscal year. Mr. Greer, a Director, is also a director of
Network Computing Devices, Inc.
COMPENSATION OF DIRECTORS
For fiscal 1996, outside Directors are to be paid a quarterly retainer of
$7,500, $2,000 for each meeting of the Board attended and $1,000 for each
meeting of its Committees which they attend. Committee chairmen will be paid an
additional annual fee of $5,500. In addition, outside Directors will be granted
an option under the Corporation's 1993 Stock Incentive Plan for 1,000 shares of
Common Stock on each of the five consecutive Annual Meeting dates beginning
September 26, 1994. Officers of the Corporation receive no compensation for
serving as Directors.
The Corporation has a Retirement Plan for Outside Directors to attract,
retain and motivate directors who are not also employees of the Corporation to
serve on the Corporation's Board of Directors. The plan is unfunded and benefits
provided thereunder are payable out of the assets of the Corporation as a
general, unsecured obligation of the Corporation. An outside Director who has
served at least five years on the Board of Directors is entitled to a retirement
benefit beginning as of the first day of the fiscal quarter of the Corporation
next following the date of termination of his or her directorship or the date
such Director attains age 60, whichever is later. The benefit will be an annual
amount, payable as a lump-sum distribution or in quarterly installments for no
less than ten years and no more than fifteen years depending on years of
service, equal to a percentage from 50% to 100% (as determined by years of
service) of the annual retainer fee being paid to the outside Director at the
time of his or her termination as a Director. Under a policy adopted by the
Corporation's Board of Directors in 1995, a Director must retire immediately
before the Corporation's annual meeting of stockholders during the calendar year
in which the Director attains age 72, except that a Director attaining age 72
during calendar year 1995 may remain a Director until the Corporation's 1996
Annual Meeting.
CHANGE IN CONTROL ARRANGEMENT
The Corporation's 1980, 1983, 1984, 1987, 1989 and 1993 Stock Incentive
Plans provide that in the event of a change in control each holder of an
unexpired option under any of the plans has the right to exercise such option
without regard to the date such option would first be exercisable, except that
no option may be exercised less than six months from the date of grant. This
right continues, with respect to holders whose
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employment with the Corporation terminates following a change in control, for a
period of twelve months after such termination or until the option's expiration
date, whichever is sooner. The instruments pursuant to which restricted stock is
granted under the 1986 Restricted Stock Plan provide that the restricted shares
will be canceled and the Corporation will make a cash payment, in an amount
determined under the plan, to each holder in the event of a change in control.
1995 STOCK INCENTIVE PLAN
(PROPOSAL NO. 2)
The use of stock incentives to secure and retain key employees of
outstanding ability, to further identify the interests of employees with the
interests of the stockholders, to encourage greater stock ownership by, and to
provide added incentive to, those individuals who carry a major part of the
responsibility for the success of the business has been and remains important in
American industry. In furtherance of these objectives, the Board of Directors
has adopted the 1995 Stock Incentive Plan (the "1995 Plan"), subject to approval
thereof by the vote of the holders of a majority of the Common Stock represented
and voting at the 1995 Annual Meeting. A copy of the 1995 Plan is attached
hereto as Exhibit A and the statements made in this Proxy Statement with respect
to the 1995 Plan are qualified by and subject to the more complete information
set forth therein.
The 1995 Plan provides for the granting of options to purchase for cash an
aggregate of not more than 1,500,000 shares of the Common Stock of the
Corporation (subject to adjustments in the event of a consolidation or other
corporate reorganization in which the Corporation is the surviving corporation)
which represents 2.67% of the outstanding shares of Common Stock as of July 31,
1995. During the ten-year term of the Plan, no person may be granted options for
more than 200,000 shares during any fiscal year. Neither the dollar value or the
number of units that may be received by participants under the 1995 Plan are set
forth because such amounts are not determinable at this time.
Options may be granted to key employees, including officers (approximately
88 as of July 31, 1995), of the Corporation and its subsidiaries, as may be
designated by those members, not less than two, of the Compensation Committee of
the Board of Directors, each of whom is an "outside director" within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and a "disinterested person" as defined in Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Committee"). The Committee will select persons to receive options from among
the eligible employees, determine the types of options and the number of shares
to be awarded to optionees, and set the terms, conditions and provisions of the
options consistent with the terms of the 1995 Plan. The Committee will also
establish rules for the administration of the 1995 Plan.
Under the terms of the 1995 Plan, the Committee may grant options to
purchase Common Stock of the Corporation at a price which may not be less than
the fair market value of the shares, as determined by the mean between the high
and low prices of the stock on the New York Stock Exchange on the date the
option is granted. As of July 31, 1995, the closing price of the Corporation's
Common Stock was $67.50. The 1995 Plan does not permit the repricing of options
or the grant of discounted options.
Options may not be exercised later than ten years after the date of grant.
Subject to the limitations imposed by the provisions of the Code, certain of the
options granted under the 1995 Plan to key employees may be designated
"incentive stock options." The Corporation may make interest-free demand loans
to holders of options not designated as incentive stock options for the purpose
of exercising such options and paying any tax liability associated with such
exercise.
No option may be exercised until the optionee has completed a year of
service after the option is granted, except in the case of termination of an
employee's employment because of death or disability, nor may an option be
exercised after termination of an employee's employment for any reason other
than death, disability or retirement. Options may be exercised within twelve
months (i) after the optionee retires, (ii) after termination of an employee's
employment on account of permanent disability (except that no option may be
exercised less than six months from the date of grant), or (iii) after death
when in the service of the
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Corporation or any of its subsidiaries. In the event of death within the
twelve-month period following termination of an employee's employment for
retirement or permanent disability, options may be exercised by the optionee's
legal representative within twelve months following the date of death. However,
under no circumstances may an option be exercised after the expiration of the
stated period of the option.
Since the contemplated options are to be granted as incentives, no cash
consideration will be received for the granting of the options. Payment in full
of the option price must be made upon exercise of any option. The options are
not transferable by the optionee except by will or by the laws of descent and
distribution.
The 1995 Plan provides for the use of authorized but unissued shares or
treasury shares. In the event of approval of the 1995 Plan, and to the extent
that treasury shares are not acquired for the purpose of the 1995 Plan,
authorized but unissued Common Stock of the Corporation will be issued upon
exercise of options granted under the 1995 Plan.
No options or awards may be granted under the 1995 Plan after June 1, 2005,
but options or awards granted prior to such date may extend beyond that date.
The 1995 Plan may be discontinued by the Board of Directors, but no termination
may impair options or awards granted prior thereto.
Upon the occurrence of a change in control of the Corporation, each holder
of an unexpired option under the 1995 Plan will have the right to exercise the
option in whole or in part without regard to the date that such option would be
first exercisable, except no option may be exercised less than six months from
the date of grant, and such right will continue, with respect to any such holder
whose employment with the Corporation or subsidiary terminates following a
change in control, for a period ending on the earlier of the date of expiration
of such option or the date which is twelve months after such termination of
employment.
The Committee may alter or amend the 1995 Plan at any time. No amendment by
the Committee, however, may (i) increase the total number of shares reserved for
purposes of the 1995 Plan, (ii) reduce the option price to an amount less than
the fair market value at the time the option was granted, (iii) change the class
of employees eligible to receive awards, (iv) increase the maximum number of
options which may be granted to an optionee under the 1995 Plan, (v) decrease
the option vesting period to less than one year, or (vi) extend the duration of
the 1995 Plan, unless such amendment is approved by the stockholders. No
amendment or alteration may impair the rights of optionees with respect to
options theretofore granted, except the Committee may revoke and cancel any
outstanding options which, in the aggregate, would create a significant adverse
effect on the Corporation's financial statements in the event that the Financial
Accounting Standards Board issues a statement requiring an accounting treatment
which causes such adverse effect with respect to options then outstanding. The
Committee has the power to interpret the 1995 Plan and to make all other
determinations necessary or advisable for its administration.
Under current federal tax law, non-incentive stock options granted under
the 1995 Plan will not result in any taxable income to the optionee at the time
of grant or any tax deduction to the Corporation. Upon the exercise of such
option, the excess of the market value of the shares acquired over their cost is
taxable to the optionee as compensation income and is generally deductible by
the Corporation. The optionee's tax basis for the shares is the market value
thereof at the time of exercise.
Neither the grant nor the exercise of an option designated as an incentive
stock option results in any federal tax consequences to either the optionee or
the Corporation. At the time the optionee sells shares acquired pursuant to the
exercise of an incentive stock option, the excess of the sale price over the
exercise price will qualify as a capital gain, provided the applicable holding
period is satisfied. If the optionee disposes of such shares within two years of
the date of grant or within one year of the date of exercise, an amount equal to
the lesser of (i) the difference between the fair market value of the shares on
the date of exercise and the exercise price, or (ii) the difference between the
exercise price and the sale price will be taxed as ordinary income and the
Corporation will be entitled to a deduction in the same amount. The excess, if
any, of the sale price over the sum of the exercise price and the amount taxed
as ordinary income will qualify as capital gain if the applicable holding period
is satisfied. If the optionee exercises an incentive stock option more than
three months after his or her termination of employment due to retirement, he or
she is deemed to have exercised a non-incentive stock option.
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The Corporation believes that compensation received by optionees on the
exercise of non-incentive stock options or the disposition of shares acquired
upon exercise of any incentive stock options will be considered
performance-based compensation and not subject to the $1,000,000 deductibility
limit of Section 162(m) of the Code.
The affirmative vote of the holders of a majority of the Corporation's
Common Stock represented in person or by proxy at the Annual Meeting is required
for approval of the 1995 Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
1995 RESTRICTED STOCK PLAN
(PROPOSAL NO. 3)
To attract and retain key employees and to provide additional performance
incentives for eligible employees selected to participate therein, the Board of
Directors has adopted the 1995 Restricted Stock Plan (the "Plan"), subject to
approval thereof by the vote of the holders of a majority of the Common Stock
represented and voting at the 1995 Annual Meeting. A copy of the Plan is
attached hereto as Exhibit B and the statements made in this Proxy Statement
with respect to the Plan are qualified by and subject to the more complete
information set forth therein.
Approval of the Plan by stockholders would afford an exemption pursuant to
Rule 16b-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, from the operation of Section 16(b) of such Act. Such
Section requires that an executive officer forfeit to the Corporation any
"profit" realized from any sale and purchase, or purchase and sale, of common
stock within a period of less than six months. In the absence of such exemption,
an award of common stock under the Plan to an executive officer of the
Corporation would be deemed to be a "purchase" by such officer. In addition to
affording greater flexibility to the Corporation in the timing of awards under
the Plan, such exemption would enable its executive officers to more effectively
plan their personal financial affairs.
The Plan provides for the issuance of up to 275,000 shares of common stock
which shall be treasury shares, subject to proportionate adjustment in the event
of stock dividends, stock splits and similar stock changes. Neither the dollar
value or the number of units that may be received by participants under the Plan
are set forth because such amounts are not determinable at this time.
Awards may be made to key employees, including officers (approximately 88
as of July 31, 1995), of the Corporation and its subsidiaries, as may be
designated by those members, not less than two, of the Compensation Committee of
the Board of Directors, each of whom is a "disinterested person" as defined in
Rule 16b-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Committee"). The Committee will select persons to
receive awards from among the eligible employees, determine the number of shares
to be awarded to each participant, and set the terms, conditions and provisions
of the awards, including the period during which restrictions with respect to
the shares shall remain in effect, consistent with the terms of the Plan. The
Committee will also establish rules for the administration of the Plan.
Shares will be awarded without receipt of monetary consideration by the
Corporation at the date of the award, but the shares awarded will not be
transferable and will be forfeited if a recipient's employment with the
Corporation or its subsidiaries is terminated for any reason (other than
retirement at or after age 60, death or disability) during a designated
restriction period determined at the date of an award. It is anticipated that
restrictions will terminate annually with respect to a portion of the shares
awarded until all of the shares covered by any award become unrestricted.
Accordingly, each recipient of an award must earn the shares by providing
services over the period that the restrictions remain in effect. Persons
receiving an award under the Plan will be entitled to vote the shares awarded
and will be entitled to receive any dividends paid with respect to such shares.
The Plan may be amended by the Compensation Committee from time to time.
However, approval of the stockholders of the Corporation is required for any
amendment that would (i) materially increase the benefits
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accruing to participants under the Plan, (ii) increase the number of shares of
Common Stock which may be issued under the Plan, (iii) reduce the Restriction
Period to less than one year, (iv) extend the duration of the Plan or (v) modify
the class of eligible employees.
Under current federal income tax laws and regulations, a recipient of an
award under the Plan will not be considered to have received gross income at the
time of the award, unless the recipient affirmatively elects to include the fair
market value of the shares at the date of the award in the recipient's gross
income for the year of the award. In the absence of such an election, a
recipient's gross income in the year the restrictions terminate will include the
fair market value of the shares, less any par value amount paid, at the date of
the termination of the restrictions. The Corporation will be entitled to a tax
deduction in the same amount as the recipient is considered to have received
gross income pursuant to an award. The holding period for shares of stock
awarded for purposes of characterizing gain or loss on the sale of any shares as
long- or short-term commences at the time the employee is considered to have
received gross income pursuant to an award. An employee's tax basis for shares
of stock acquired will be equal to the amount included in the employee's gross
income, which, if no election is made, will be the fair market value of the
shares at the date the restrictions terminated, less any amount previously paid.
For financial reporting purposes, the aggregate fair market value of the
shares awarded, determined as of the date of the award, will be accrued as
compensation expense over the period the restrictions remain in effect. Earnings
of the Corporation will be diluted by this charge to expense. Management of the
Corporation has determined that the dilution to earnings will be less than 1%
over a five-year period.
Compensation received by employees under the Plan will not be considered
performance-based compensation and will be subject to the $1,000,000
deductibility limit of Section 162(m) of the Code. As a result, all or a portion
of the compensation, if any, received by Mr. Smith and the next four highest
paid executive officers under the Plan may not be tax deductible to the
Corporation. The Corporation's policy is to utilize, whenever appropriate,
available tax deductions, including tax deductions that result from
compensation. The Committee attempts to balance this policy to best maximize
stockholder wealth. However, there are times when it is determined that the
interests of the stockholders are best served by the implementation of policies
that do not restrict the Committee's ability to exercise its discretion in
crafting compensation packages even though such policies may not maximize the
tax deductible compensation expenses of the Corporation.
The affirmative vote of the holders of a majority of the Corporation's
Common Stock represented in person or by proxy at the Annual Meeting is required
for approval of the Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
AUDITORS
(PROPOSAL NO. 4)
Arthur Andersen LLP have been the auditors for the Corporation since 1972.
Upon the recommendation of the Audit Committee, the Board of Directors has
designated Arthur Andersen LLP to be the independent auditors of the Corporation
for the year ending May 31, 1996. The Board of Directors will offer a resolution
at the Annual Meeting to ratify this designation. It is anticipated that
representatives of Arthur Andersen LLP will be present at the meeting to respond
to appropriate questions, and they will have an opportunity, if they desire, to
make a statement.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
SECTION 16 FILINGS
Under the securities laws of the United States, the Corporation's Directors
and Executive Officers are required to report their initial ownership of the
Corporation's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established by the Commission and the Corporation is required to disclose
in this Proxy Statement any late
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filings or failure to file. Mr. Joshua Smith made a filing of a Form 5 for
failure to file a Form 4 involving one transaction in the Corporation's Common
Stock.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Corporation's
1996 Annual Meeting of Stockholders must be received by the Corporation on or
prior to April 6, 1996 to be eligible for inclusion in the Corporation's proxy
statement and form of proxy to be used in connection with the 1996 Annual
Meeting of Stockholders.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
at the meeting. If, however, other matters are properly presented, the persons
named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.
By order of the Board of Directors,
/s/ Kenneth R. Masterson
KENNETH R. MASTERSON
Secretary
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EXHIBIT A
FEDERAL EXPRESS CORPORATION
1995 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of the Federal Express Corporation 1995 Stock Incentive Plan
(the "Plan") is to aid Federal Express Corporation (the "Corporation") and its
subsidiaries in securing and retaining key employees of outstanding ability and
to provide additional motivation to such employees to exert their best efforts
on behalf of the Corporation and its subsidiaries. The Corporation expects that
it will benefit from the added interest which such employees will have in the
welfare of the Corporation as a result of their ownership or increased ownership
of the Corporation's Common Stock.
2. STOCK SUBJECT TO THE PLAN
The total number of shares of Common Stock of the Corporation that may be
optioned under the Plan is 1,500,000 shares, which may consist, in whole or in
part, of unissued shares or treasury shares. Any shares optioned hereunder that
are canceled or cease to be subject to the option may again be optioned under
the Plan.
3. ADMINISTRATION
The Plan shall be administered by those members, not less than two, of the
Compensation Committee of the Board of Directors, each of whom is an "outside
director" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), and a "disinterested person" as defined in Rule
16b-3 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Committee"). No member of the Committee shall be eligible
to participate in the Plan nor shall he or she have been at any time within one
year prior to his or her appointment eligible for selection as a person to whom
shares might have been optioned pursuant to the Plan or to whom stock options,
stock appreciation rights, or stock of the Corporation or any of its affiliates
may have been granted pursuant to any other plan of the Corporation or its
affiliates, except a formula plan meeting the conditions of Rule
16b-3(c)(2)(ii).
The Committee shall have the sole authority to grant options under the Plan
and, consistent with the Plan, to determine the provisions of the options to be
granted, to interpret the Plan and the options granted under the Plan, to adopt,
amend and rescind rules and regulations for the administration of the Plan and
generally to administer the Plan and to make all determinations in connection
therewith which may be necessary or advisable, and all such actions of the
Committee shall be binding upon all participants. Committee decisions and
selections shall be made by a majority of its members present at the meeting at
which a quorum is present, and shall be final. Any decision or selection reduced
to writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly held.
4. ELIGIBILITY
Key employees, including officers, of the Corporation and its subsidiaries,
who are from time to time responsible for the management, growth and protection
of the business of the Corporation and its subsidiaries are eligible to be
granted options under the Plan. No member of the Board of Directors of the
Corporation shall be eligible to participate in the Plan unless such director is
also an employee of the Corporation or a subsidiary. The employees who shall
receive options under the Plan shall be selected from time to time by the
Committee in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares to be covered by
the option or options granted to each such employee selected, subject to the
maximum number of stock options which may be granted to an optionee under the
Plan.
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5. LIMIT ON AWARDS
No option may be granted under the Plan after June 1, 2005, but options
theretofore granted may extend beyond that date.
No optionee shall receive options for more than 200,000 shares of the
Corporation's Common Stock during any fiscal year under the Plan.
6. TERMS AND CONDITIONS OF STOCK OPTIONS
All options granted under this Plan shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith as the Committee
shall determine.
(a) Option Price. The option price per share for options granted to
employees shall be determined by the Committee, but shall not be less than
100% of the fair market value at the time the option is granted. The fair
market value shall, for all purposes of the Plan, be the mean between the
high and low prices at which shares of such stock are traded on the New
York Stock Exchange on the day on which the option is granted. In the event
that the method for determining the fair market value of the shares
provided for in this paragraph (a) shall not be practicable, then the fair
market value per share shall be determined by such other reasonable method
as the Committee shall, in its discretion, select and apply at the time of
grant of the option concerned.
(b) Time of Exercise of Option. Each option shall be exercisable
during and over such period ending not later than ten years from the date
it was granted, as may be determined by the Committee and stated in the
option. No option shall be exercisable during the year ending on the first
anniversary date of the granting of the option, except as provided in
paragraphs 6(d) and 13 of the Plan.
(c) Payment. Each option may be exercised by giving written notice to
the Corporation specifying the number of shares to be purchased and
accompanied by payment in full (including applicable taxes, if any) in cash
therefor. No option shall be exercised for less than the lesser of 50
shares or the full number of shares for which the option is then
exercisable. No optionee shall have any rights to dividends or other rights
of a stockholder with respect to shares subject to his or her option until
he or she has given written notice of exercise of his or her option, paid
in full for such shares and, if requested, given the representation
described in paragraph 10 of the Plan.
(d) Rights After Termination of Employment. If an optionee's
employment by the Corporation or a subsidiary terminates by reason of such
person's retirement, the optionee's option may thereafter be exercised to
the extent to which it was exercisable at the time of retirement but may
not be exercised after the expiration of the period of twelve months from
the date of such termination of employment or of the stated period of the
option, whichever period is the shorter; provided, however, that if the
optionee dies within twelve months after such termination of employment,
any unexercised option, to the extent to which it was exercisable at the
time of the optionee's death, may thereafter be exercised by the legal
representative of the estate or by the legatee of the option under a last
will for a period of twelve months from the date of the optionee's death or
the expiration of the stated period of the option, whichever period is the
shorter.
If an optionee's employment by the Corporation or a subsidiary terminates
by reason of permanent disability, the optionee's option may thereafter be
exercised in full (except that no option may be exercised less than six
months from the date of grant) but may not be exercised after the
expiration of the period of twelve months from the date of such termination
of employment or of the stated period of the option, whichever period is
the shorter; provided, however, that if the optionee dies within a period
of twelve months after such termination of employment, any unexercised
option, to the extent to which it was exercisable at the time of the
optionee's death, may thereafter be exercised by the legal representative
of the estate or by the legatee of the option under a last will for a
period of twelve months from the date of the optionee's death or the
expiration of the stated period of the option, whichever period is the
shorter.
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If an optionee's employment by the Corporation or a subsidiary terminates
by reason of the optionee's death, the optionee's option may thereafter be
immediately exercised in full by the legal representative of the estate or
by the legatee of the option under a last will, and for a period of twelve
months from the date of the optionee's death or the expiration of the
stated period of the option, whichever period is the shorter.
If an optionee's employment terminates for any reason other than death,
retirement or permanent disability, the optionee's option shall thereupon
terminate.
7. TRANSFERABILITY RESTRICTION
The option by its terms shall be personal and shall not be transferable by
the optionee otherwise than by will or by the laws of descent and distribution.
During the lifetime of an optionee, the option shall be exercisable only by the
optionee, or by a duly appointed legal representative.
8. DESIGNATION OF CERTAIN OPTIONS AS INCENTIVE STOCK OPTIONS
Options or portions of options granted to employees hereunder may, in the
discretion of the Committee, be designated as "incentive stock options" within
the meaning of Section 422A of the Code. In addition to the terms and conditions
contained in paragraph 6 hereof, options designated as incentive stock options
shall also be subject to the condition that the aggregate fair market value
(determined at the time the options are granted) of the Corporation's Common
Stock with respect to which incentive stock options are exercisable for the
first time by any individual employee during any calendar year (under this Plan
and all other similar plans of the Corporation and its subsidiaries) shall not
exceed $100,000.
9. LOANS TO OPTIONEES
The Corporation may make interest-free demand loans to holders of options
which are not designated or qualified hereunder or by the Code as "incentive
stock options" for the purpose of exercising such options or for the purpose of
enabling optionees to pay any tax liability associated with the exercise of any
such option. Such loans shall be fully secured by shares of Common Stock of the
Corporation and shall in any event be repayable upon the termination of the
optionee's employment with the Corporation for any reason. The Committee shall
establish written procedures concerning the application for and making of such
loans.
10. INVESTMENT REPRESENTATION
Upon any distribution of shares of Common Stock of the Corporation pursuant
to any provision of this Plan, the distributee may be required to represent in
writing that he or she is acquiring such shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof. The certificates for such shares may include
any legend which the Corporation deems appropriate to reflect any restrictions
on transfers.
11. TRANSFER, LEAVE OF ABSENCE, ETC.
For the purpose of the Plan: (a) a transfer of an employee from the
Corporation to a subsidiary, or vice versa, or from one subsidiary to another,
and (b) a leave of absence, duly authorized in writing by the Corporation, shall
not be deemed a termination of employment.
12. RIGHTS OF EMPLOYEES AND OTHERS
(a) No person shall have any rights or claims under the Plan except in
accordance with the provisions of the Plan.
(b) Nothing contained in the Plan shall be deemed to give any employee
the right to be retained in the service of the Corporation or its
subsidiaries.
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13. CHANGES IN CAPITAL OR CONTROL
If the outstanding Common Stock of the Corporation subject to the Plan
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation or
other corporate reorganization in which the Corporation is the surviving
corporation, the number and kind of shares subject to this Plan and the option
prices shall be approximately and equitably adjusted so as to maintain the
option price thereof. Notwithstanding any other provision of the Plan, upon the
occurrence of a Change in Control, as hereinafter defined, each holder of an
unexpired option under the Plan shall have the right to exercise such option in
whole or in part without regard to the date that such option would be first
exercisable, except that no option may be exercised less than six months from
the date of grant, and such right shall continue, with respect to any such
holder whose employment with the Corporation or subsidiary terminates following
a Change in Control, for a period ending on the earlier of the date of
expiration of such option or the date which is twelve months after such
termination of employment.
For purposes of the Plan, a "Change in Control" of the Corporation shall be
deemed to have occurred if:
(a) any person, as such term is used in Sections 13(d)(3) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended, becomes a beneficial
owner (within the meaning of Rule 13d-3 under such Act) of 20% or more of
the Corporation's outstanding Common Stock;
(b) there occurs within any period of two consecutive years any change
in the directors of the Corporation such that the members of the
Corporation's Board of Directors prior to such change do not constitute a
majority of the directors after giving effect to all changes during such
two-year period unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(c) the Corporation is merged, consolidated or reorganized into or
with, or sells all or substantially all of its assets to, another
corporation or other entity, and immediately after such transaction less
than 80% of the voting power of the then-outstanding securities of such
corporation or other entity immediately after such transaction is held in
the aggregate by holders of the Corporation's Common Stock immediately
before such transaction.
In addition, if the Corporation enters into an agreement or series of
agreements or the Board of Directors of the Corporation adopts a resolution
which results in the occurrence of any of the foregoing events, and the
employment of a holder of an option under the Plan is terminated after the
entering into of such agreement or series of agreements or the adoption of such
resolution, then, upon the occurrence of any of the events described above, a
Change in Control shall be deemed to have retroactively occurred on the date of
entering into of the earliest of such agreements or the adoption of such
resolution.
14. USE OF PROCEEDS
Proceeds from the sale of shares pursuant to options granted under this
Plan shall constitute general funds of the Corporation.
15. AMENDMENTS
The Board of Directors may discontinue the Plan and the Committee may amend
the Plan from time to time, but no amendment, alteration or discontinuation
shall be made which, without the approval of the stockholders, would:
(a) Except as provided in paragraph 13 of the Plan, increase the total
number of shares reserved for the purposes of the Plan;
(b) Decrease the option price of an option to less than 100% of the
fair market value on the date of the granting of the option;
(c) Change the classes of employees eligible to receive awards under
the Plan;
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(d) Increase the maximum number of options which may be granted to an
optionee under the Plan;
(e) Decrease the period in which no option shall be exercisable under
paragraph 6(b) hereof to less than one year; or
(f) Extend the duration of the Plan.
Neither shall any amendment, alteration or discontinuation impair the
rights of any holder of an option theretofore granted without the optionee's
consent; provided, however, that if the Committee after consulting with
management of the Corporation determines that application of an accounting
standard in compliance with any statement issued by the Financial Accounting
Standards Board concerning the treatment of employee stock options would have a
significant adverse effect on the Corporation's financial statements because of
the fact that options granted before the issuance of such statement are then
outstanding, then the Committee in its absolute discretion may cancel and revoke
all outstanding options to which such adverse effect is attributed and the
holders of such options shall have no further rights in respect thereof. Such
cancellation and revocation shall be effective upon written notice by the
Committee to the holders of such options.
16. REPRICING RESTRICTION
Options granted under this Plan shall not be repriced by the Corporation
for any reason.
17. EFFECTIVE DATE OF PLAN
This Plan shall be effective upon its approval by the Corporation's Board
of Directors and stockholders.
18. COMPLIANCE WITH SECTION 16(b)
The Plan is intended to comply with all applicable conditions of Rule 16b-3
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended. All transactions involving the Corporation's executive officers are
subject to such conditions, regardless of whether the conditions are expressly
set forth in the Plan. Any provision of the Plan that is contrary to a condition
of Rule 16b-3 shall not apply to executive officers of the Corporation.
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EXHIBIT B
FEDERAL EXPRESS CORPORATION
1995 RESTRICTED STOCK PLAN
1. PURPOSE OF PLAN
The Federal Express Corporation 1995 Restricted Stock Plan (the "Plan") is
established by Federal Express Corporation (the "Corporation") to aid the
Corporation and its subsidiaries in securing and retaining key employees of
outstanding ability and to provide additional motivation to such employees to
exert their best efforts on behalf of the Corporation and its subsidiaries. The
Corporation expects that it will benefit from the added interest which such
employees will have in the welfare of the Corporation as a result of their
ownership or increased ownership of the Corporation's Common Stock.
2. STOCK SUBJECT TO THE PLAN
The shares that may be awarded under the Plan (without payment by
participants) shall be the common stock, $.10 par value, of the Corporation, and
shall be treasury shares. The maximum number of shares of Common Stock that may
be awarded hereunder (subject to any adjustments as provided below) shall not in
the aggregate exceed 275,000 shares. Shares which are forfeited as a result of a
participant's termination of employment shall again become available for award
under the Plan.
3. ADMINISTRATION
The Plan shall be administered by those members, not less than two, of the
Compensation Committee of the Board of Directors, each of whom is a
"disinterested person" as defined in Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Committee"). No member of the Committee shall be eligible to participate in the
Plan nor shall he or she have been at any time within one year prior to his or
her appointment eligible for selection as a person to whom shares might have
been awarded pursuant to the Plan or to whom stock options, stock appreciation
rights, or stock of the Corporation or any of its affiliates may have been
granted pursuant to any other plan of the Corporation or its affiliates, except
a formula plan meeting the conditions of Rule 16b-3(c)(2)(ii).
The Committee shall have the sole authority to (i) award shares under the
Plan; (ii) consistent with the Plan, determine the provisions of the shares to
be awarded, the restrictions and other terms and conditions applicable to each
award of shares under the Plan; (iii) interpret the Plan, the instruments
evidencing the restrictions imposed upon stock awarded under the Plan and the
shares awarded under the Plan; (iv) adopt, amend and rescind rules and
regulations for the administration of the Plan; and (v) generally to administer
the Plan and make all determinations in connection therewith which may be
necessary or advisable, and all such actions of the Committee shall be binding
upon all participants. Committee decisions and selections shall be made by a
majority of its members present at the meeting at which a quorum is present, and
shall be final. Any decision or selection reduced to writing and signed by all
of the members of the Committee shall be as fully effective as if it had been
made at a meeting duly held.
4. ELIGIBILITY
Key employees, including officers, of the Corporation and its subsidiaries
who are from time to time responsible for the management, growth and protection
of the business of the Corporation and its subsidiaries shall be eligible for
awards of stock under the Plan. No member of the Board of Directors of the
Corporation shall be eligible to participate in the Plan unless such director is
also an employee of the Corporation or a subsidiary. The employees who shall
receive awards under the Plan shall be selected from time to time by the
Committee in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares to be awarded to
each such employee selected. The Committee may, within the terms of the Plan, be
selective and non-uniform with respect to its determination of the amount of
awards and the eligible employees to whom such awards are made.
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5. RIGHTS WITH RESPECT TO SHARES
An employee to whom an award of Common Stock is made hereunder shall have,
after delivery to the Corporation or its designee of a certificate or
certificates for such stock to be held in escrow on such employee's behalf, all
rights of ownership with respect to such stock including the right to vote the
same and receive any dividends paid thereon, subject, however, to the terms,
conditions and restrictions contained in the Plan and in the instrument under
which the award is made.
6. INVESTMENT REPRESENTATION
If the shares of Common Stock that have been awarded to an employee
pursuant to the terms of the Plan are not registered under the Securities Act of
1933, as amended, pursuant to an effective registration statement, such
employee, if the Committee shall deem it advisable, may be required to represent
and agree in writing (i) that any shares of Common Stock acquired by such
employee pursuant to the Plan will not be sold except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or pursuant
to an exemption from registration under such Act, and (ii) that such employee
has acquired such shares of Common Stock for the participant's own account and
not with a view to the distribution thereof.
7. CASH BONUSES
If the Committee so determines in its sole and exclusive discretion, the
Corporation may make a cash payment or payments to an employee in connection
with an award of Common Stock hereunder, the lapse of restrictions imposed
thereon or the payment by the employee of any taxes related thereto.
8. RESTRICTIONS
(a) Terms, Conditions and Restrictions. In addition to such other terms,
conditions and restrictions as may be imposed by the Committee and contained in
the instrument under which awards of Common Stock are made pursuant to the Plan,
(i) no Common Stock so awarded shall be restricted for a period (the
"Restriction Period") of less than one year or more than ten years; and (ii)
except as provided in paragraph (e) below, the recipient of the award shall
remain in the employ of the Corporation or its subsidiaries during the
Restriction Period or otherwise forfeit all right, title and interest in and to
the shares subject to such restrictions.
(b) Transferability Restriction. No share awarded under the Plan shall be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of
during the Restriction Period applicable thereto.
(c) Agreements; Stock Legend. As a condition to the grant of an award
under the Plan, each eligible employee selected to participate shall execute and
deliver to the Corporation an agreement in form and substance satisfactory to
the Committee reflecting the conditions and restrictions imposed upon the Common
Stock awarded. Certificates for shares of Common Stock delivered pursuant to
such awards may, if the Committee so determines, bear a legend referring to the
restrictions and the instruments to which such awards are subject.
(d) Additional Conditions. In the agreements evidencing awards or
otherwise, the Committee may impose such other and additional terms, conditions
and restrictions upon the award as it, in its discretion, deems appropriate
including, without limitation: (i) that the Corporation shall have the right to
deduct from payments of any kind due to the participant any federal, state or
local taxes of any kind required by law to be withheld with respect to the
shares awarded or the payment of related cash bonuses; and (ii) that the
participant enter into a covenant not to compete with the business of the
Corporation and its subsidiaries during the period of employment and for a
reasonable time thereafter.
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(e) Lapse of Restrictions. The restrictions imposed under paragraph (a)
above shall terminate with respect to the shares of Common Stock to which they
apply on the earliest to occur of the following, except no restrictions shall
lapse less than six months from the date of award in the event of (i), (ii) and
(iii) below:
(i) the expiration of the Restriction Period:
(ii) the participant's retirement at or after age 60;
(iii) the participant's total and permanent disability; or
(iv) the participant's death.
Certificates for shares of Common Stock with respect to which restrictions have
lapsed as provided above shall, upon lapse thereof, be released from escrow and
delivered to the participant or, in the event of participant's death, to
participant's personal representative. Any stock legend referring to the
restrictions imposed hereunder shall thereupon be removed.
9. CHANGES IN CAPITAL OR CONTROL
If the outstanding Common Stock of the Corporation subject to the Plan
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation or
other corporate reorganization in which the Corporation is the surviving
corporation, an appropriate adjustment shall be made in the number and kind of
shares that have been awarded pursuant to the Plan and are subject to
restrictions imposed by the Plan and that may thereafter be awarded hereunder.
Notwithstanding any other provision of the Plan, upon the occurrence of a
Change in Control, as defined below, the stock certificates evidencing any
Restricted Shares shall be canceled and the Corporation shall make a cash
payment to the participants in an amount equal to the highest price per share
received by holders of the Corporation's Common Stock in connection with the
Change in Control multiplied by the then number of Restricted Shares, with any
non-cash consideration valued in good faith by the Committee.
For purposes of the Plan, a "Change in Control" of the Corporation shall be
deemed to have occurred if:
(a) any person, as such term is used in Sections 13(d)(3) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended, becomes a beneficial
owner (within the meaning of Rule 13d-3 under such Act) of 20% or more of
the Corporation's outstanding Common Stock;
(b) there occurs within any period of two consecutive years any change
in the directors of the Corporation such that the members of the
Corporation's Board of Directors prior to such change do not constitute a
majority of the directors after giving effect to all changes during such
two-year period unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(c) the Corporation is merged, consolidated or reorganized into or
with, or sells all or substantially all of its assets to, another
corporation or other entity, and immediately after such transaction less
than 80% of the voting power of the then-outstanding securities of such
corporation or other entity immediately after such transaction is held in
the aggregate by holders of the Corporation's Common Stock immediately
before such transaction.
In addition, if the Corporation enters into an agreement or series of
agreements or the Board of Directors of the Corporation adopts a resolution
which results in the occurrence of any of the foregoing events, and the
employment of a participant is terminated after the entering into of such
agreement or series of agreements or the adoption of such resolution then, upon
the occurrence of any of the events described above, a Change in Control shall
be deemed to have retroactively occurred on the date of entering into of the
earliest of such agreements or the adoption of such resolution and the
participants shall be entitled to the payment as of such date with respect to
any forfeited Restricted Shares.
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10. MISCELLANEOUS
(a) No Right to Receive Award. Nothing in the Plan shall be construed to
give any employee of the Corporation or a subsidiary any right to receive an
award under the Plan.
(b) Additional Shares Received With Respect to Restricted Stock. Any
shares of Common Stock or other securities of the Corporation received by an
employee as a stock dividend on, or as a result of stock splits, combinations,
exchanges of shares, reorganizations, mergers, consolidations or otherwise with
respect to shares of Common Stock received pursuant to an award hereunder shall
have the same status, be subject to the same restrictions and bear the same
legend, if any, as the shares received pursuant to the original award.
(c) No Effect on Employment Rights. Nothing in the Plan or in the
instruments evidencing the grant of an award hereunder shall in any manner be
construed to limit in any way the right of the Corporation or a subsidiary to
terminate an employee's employment at any time, or give any right to an employee
to remain employed by the Corporation or a subsidiary.
11. EFFECTIVE DATE OF PLAN
The Plan shall become effective when approved by the stockholders of the
Corporation.
12. AMENDMENTS
This Plan may be amended any time or from time to time by the Committee
provided that if the Plan shall have been approved by the stockholders of the
Corporation no such amendment shall, without the further approval of such
stockholders:
(i) except as provided in paragraph 9 of the Plan, increase the
maximum number of shares reserved for purposes of the Plan;
(ii) change the classes of employees eligible to receive awards under
the Plan;
(iii) extend the duration of the Plan;
(iv) decrease the Restriction Period to less than one year; or
(v) materially increase the benefits accruing to participants under
the Plan.
Neither shall any amendment or alteration impair the rights of any participant
during the Restriction Period without the participant's consent.
13. DURATION AND TERMINATION
This Plan shall terminate and no further stock shall be awarded hereunder
after September 25, 2005. In addition, the Committee may terminate the Plan at
any time prior thereto. The termination of this Plan shall not, however, affect
any restriction previously imposed or restricted stock awarded pursuant to this
Plan.
14. COMPLIANCE WITH SECTION 16(b)
The Plan is intended to comply with all applicable conditions of Rule 16b-3
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended. All transactions involving the Corporation's executive officers are
subject to such conditions, regardless of whether the conditions are expressly
set forth in the Plan. Any provision of the Plan that is contrary to a condition
of Rule 16b-3 shall not apply to executive officers of the Corporation.
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APPENDIX
PROXY FEDERAL EXPRESS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 25, 1995
The undersigned hereby constitutes and appoints KENNETH R. MASTERSON and
WILLIAM J. RAZZOUK, and each of them, his or her true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned
and to vote all of the shares of stock of the undersigned in Federal Express
Corporation at the Annual Meeting of Stockholders of said Corporation to be held
at The Memphis Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee on
Monday, September 25, 1995, and at any adjournments thereof, on Items 1 through
4 as specified on the reverse side hereof (with discretionary authority under
Item 1 to vote for a new nominee if any nominee has become unavailable) and on
such other matters as may properly come before said meeting.
ELECTION OF CLASS III DIRECTORS. NOMINEES: COMMENTS
Howard H. Baker, Jr. ---------------------------------------------------------------------------
Judith L. Estrin ---------------------------------------------------------------------------
Philip Greer ---------------------------------------------------------------------------
J. R. Hyde, III ---------------------------------------------------------------------------
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, SEE
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. RAZZOUK
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
/X/ Please mark your votes as in this example. 6169
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF THE CLASS III
DIRECTORS AND FOR PROPOSALS 2 THROUGH 4.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1-4
- --------------------------------------------------------------------------------
1. Election of Class III Directors. / / FOR / / WITHHELD / / FOR, EXCEPT VOTE WITHHELD FROM
THE FOLLOWING NOMINEE(S):_______
2. Approval of 1995 Stock Incentive Plan. / / FOR / / AGAINST / / ABSTAIN
3. Approval of 1995 Restricted Stock Plan. / / FOR / / AGAINST / / ABSTAIN
4. Approval of Independent Accountants. / / FOR / / AGAINST / / ABSTAIN
/ / 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 any adjournments
thereof.
NOTE: Please sign exactly as
name appears on this card.
Joint owners should each sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
------------------------------
------------------------------
SIGNATURE(S) DATE
32
CORPORATE INFORMATION
STOCK TRANSFER AGENT AND REGISTRAR: The First Chicago Trust Company of New
York
Changes of address and questions concerning common stock should be
addressed to:
Shareholder Services
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
1-800-446-2617
Transfers of stock ownership should be directed to the above address at
P.O. Box 2506, Jersey City, NJ 07303-2506.
STOCKHOLDERS: At July 13, 1995, there were 8,254 stockholders of record.
The Company's common stock is listed on The New York Stock Exchange under the
ticker symbol FDX.
DIVIDENDS: No cash dividends have been declared for the Company's common
stock.
FINANCIAL INFORMATION: For financial information, contact Thomas L.
Holland, Manager of Investor Relations, Federal Express Corporation, Box 727,
Department 1854, Memphis, Tennessee 38194, (901) 395-3478. Items available upon
request include the 1995 Annual Report to Stockholders, Quarterly Reports on
Form 10-Q (quarters ending August, November and February), Proxy Statement and
Annual Report on Form 10-K (excluding exhibits).
GENERAL INFORMATION: For general information about the Company, contact
Shirlee M. Clark, Manager of Media Relations, Federal Express Corporation, Box
727, Department 1850, Memphis, Tennessee 38194, (901) 395-5007.