Exhibit 10.81

Compensation Arrangements with Executive Officers

Base Salaries of Named Executive Officers

The following table sets forth the fiscal 2006 annual base salaries of FedEx’s named executive officers, other than Kenneth R. Masterson, who retired as FedEx’s Executive Vice President, General Counsel and Secretary effective June 1, 2005:

Mr. Smith’s fiscal 2006 base salary is effective as of July 16, 2005.  The fiscal 2006 base salaries of the other named executive officers are effective as of July 1, 2005.

FY2006 Annual Incentive Compensation Plans

Chairman, President and Chief Executive Officer

Frederick W. Smith’s fiscal 2006 annual bonus will be determined by the achievement of corporate objectives for consolidated pre-tax income for fiscal 2006.  The Compensation Committee can adjust Mr. Smith’s bonus amount upward or downward based on its consideration of several factors, including: FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Transportation Average and the Dow Jones Industrial Average; FedEx’s revenue and operating income growth relative to competitors; FedEx’s cash flow; FedEx’s return on invested capital; FedEx’s U.S. revenue market share; FedEx’s reputation rankings by various publications and surveys; and the Compensation Committee’s assessment of the quality and effectiveness of Mr. Smith’s leadership during FY2006.  None of these factors will be given any particular weight by the Compensation Committee in determining whether to adjust Mr. Smith’s

bonus amount.  Mr. Smith’s annual bonus target for fiscal 2006 is 130% of his base salary, with a maximum payout of 300% of his base salary.

Mr. Smith’s target annual bonus, combined with his base salary, has a 75^th percentile target for total annual salary and bonus for chief executive officers in executive compensation surveys utilized by the Compensation Committee.

Non-CEO Executive Officers

FedEx Corporation executive vice presidents participate in the fiscal 2006 annual incentive cash bonus plan for headquarters employees.  Under this plan, the annual bonus target for each executive is 90% of his or her base salary, with a maximum payout of 240% of base salary.  A threshold payout of up to 30% of the target bonus is based on the achievement of individual objectives established at the beginning of the fiscal year for each executive.  Mr. Smith will determine the achievement level of each executive’s individual objectives at the conclusion of fiscal 2006.  The balance of the bonus payout is based on FedEx’s consolidated pre-tax income for fiscal 2006 and ranges, on a sliding scale, from a minimum amount if the plan’s pre-established consolidated pre-tax income threshold is achieved up to a maximum amount if such financial performance goal is substantially exceeded.

Each of the presidents of FedEx Express, FedEx Ground, FedEx Freight and FedEx Kinko’s participate in the fiscal 2006 annual incentive cash bonus plan sponsored by his respective company.  The target annual bonus for the president of FedEx Express is 100% of his base salary, with a maximum payout of 240% of his base salary.  The target annual bonus for the president of each of FedEx Ground, FedEx Freight and FedEx Kinko’s is 80% of base salary, with a maximum payout of 240% of base salary.  Under each of these plans, a threshold payout of up to 30% of the target bonus is based on the achievement of individual objectives established at the beginning of the fiscal year for each executive.  Mr. Smith will determine the achievement level of each executive’s individual objectives at the conclusion of fiscal 2006.  The balance of the payout under each of the plans is based on each respective subsidiary’s operating income (30% of the target bonus) and FedEx’s consolidated pre-tax income (40% of the target bonus) for fiscal 2006 and ranges, on a sliding scale, from a minimum amount if the plan’s pre-established subsidiary operating income and FedEx’s consolidated pre-tax income thresholds are achieved up to a maximum amount if such financial performance goals are substantially exceeded.

Total annual salary and bonus for these executive officers for fiscal 2006 (assuming achievement of all individual and corporate objectives as described above) is targeted at the 75^th percentile of total annual salary and bonus for comparable positions in the comparison surveys utilized by the Compensation Committee.

Long-Term Incentive Cash Bonus Program

The Compensation Committee has established long-term performance bonus plans for the three-fiscal-year periods 2004 through 2006, 2005 through 2007 and 2006 through 2008, providing bonus opportunities to members of upper management, including executive officers, for fiscal 2006, 2007 and 2008, respectively, if certain aggregate earnings-per-share goals established by the Compensation Committee are achieved with respect to those periods.  No amounts can be earned

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for the fiscal 2004 through 2006, 2005 through 2007 and 2006 through 2008 plans until 2006, 2007 and 2008, respectively, because achievement of the earnings-per-share goals can only be determined following the conclusion of the applicable three-fiscal-year period.

The following table sets forth estimates of the possible future payouts to each of FedEx’s named executive officers.  Mr. Masterson, who retired effective June 1, 2005, is eligible for bonuses under the fiscal 2004 through 2006 and 2005 through 2007 plans based on the proportion of the applicable three-fiscal-year period during which he was employed.

The estimated individual future payouts set forth in the table above are set dollar amounts ranging from threshold amounts, if the earnings-per-share goal achieved is less than target, up to maximum amounts, if the plan goal is substantially exceeded.  There can be no assurance that the estimated future payouts shown in this table will be achieved.

Other Arrangements

FedEx executive officers are eligible to receive certain perquisites offered by FedEx, including financial counseling and tax preparation services, personal use of corporate aircraft, club memberships, and personal security and other services, including home security systems and monitoring.

Executive officers also receive tax reimbursement payments relating to restricted stock awards and certain perquisites.

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