Compensation Arrangements with Named Executive Officers
EXHIBIT 10.63
Compensation Arrangements with Named Executive Officers
Base Salaries
The following table sets forth the annual base salaries of FedEx’s named executive officers:
| Name and Current Position | Base Salary | |||||
| Frederick W. Smith | $1,266,960 | |||||
| Chairman, President and Chief Executive Officer | ||||||
| Alan B. Graf, Jr. | $902,784 | |||||
| Executive Vice President and Chief Financial Officer | ||||||
| David J. Bronczek | $942,096 | |||||
| President and Chief Executive Officer – FedEx Express | ||||||
| T. Michael Glenn | $833,364 | |||||
| Executive Vice President, Market Development and Corporate Communications | ||||||
| Robert B. Carter | $762,960 | |||||
| Executive Vice President, FedEx Information Services and Chief Information Officer | ||||||
Mr. Smith’s base salary was effective as of July 16, 2011. The base salaries of the other named executive officers were effective as of July 1, 2011.
Fiscal 2013 Annual Incentive Compensation Program
Chairman, President and Chief Executive Officer
Frederick W. Smith’s fiscal 2013 annual bonus will be based on the achievement of corporate objectives for consolidated pre-tax income for fiscal 2013. The independent members of the Board of Directors, upon the recommendation of the Compensation Committee, may adjust Mr. Smith’s bonus amount upward or downward based on their annual evaluation of Mr. Smith’s performance, including the quality and effectiveness of his leadership, the execution of key strategic initiatives and the following corporate performance measures:
| • | FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Transportation Average, the Dow Jones Industrial Average and competitors; |
| • | FedEx’s stock price to earnings (P/E) ratio relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Industrial Average and competitors; |
| • | FedEx’s market capitalization; |
| • | FedEx’s revenue and operating income growth (excluding certain unusual items) relative to competitors; |
| • | FedEx’s free cash flow (excluding business acquisitions), return on invested capital (excluding certain unusual items), and weighted average cost of capital; |
| • | Analyst coverage and ratings for FedEx’s stock; |
| • | FedEx’s U.S. and international revenue market share; and |
| • | FedEx’s reputation rankings by various publications and surveys. |
None of these factors will be given any particular weight in determining whether to adjust Mr. Smith’s bonus amount.
Mr. Smith’s annual bonus target for fiscal 2013 is 130% of his annual base salary (at fiscal year-end), with a maximum payout of 300% of his target bonus.
Non-CEO Named Executive Officers
The fiscal 2013 annual bonus target payouts for the non-CEO named executive officers, as a percentage of annual base salary (at fiscal year-end), are as follows:
| Name | Target Payout | |||
| Alan B. Graf, Jr. | 90% | |||
| David J. Bronczek | 100% | |||
| T. Michael Glenn | 90% | |||
| Robert B. Carter | 90% |
The maximum payout for each executive is 240% of his target bonus.
The fiscal 2013 annual bonus for the non-CEO named executive officers will be based on:
| • | the achievement of individual objectives established at the beginning of the fiscal year for each executive (30% of each executive’s target bonus); and |
| • | the achievement of corporate objectives for consolidated pre-tax income for fiscal 2013 (70% of each executive’s target bonus). |
Mr. Smith will determine the achievement level of each executive’s individual objectives at the conclusion of fiscal 2013.
Company Financial Performance Measure
The annual bonus payout opportunity relating to company financial performance for each named executive officer ranges, on a sliding scale, from a minimum amount if the annual bonus plan’s pre-established consolidated pre-tax income threshold is achieved up to a maximum amount if such financial performance goal is substantially exceeded. Ordinarily, our business plan objective for consolidated pre-tax income is the target under the annual bonus plan. For fiscal 2013, however, in order to further motivate management to improve the company’s performance, the annual bonus plan’s target objective for company financial performance is higher than the business plan objective for consolidated pre-tax income.
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Long-Term Incentive Program
FedEx’s long-term incentive (“LTI”) plans for the three-fiscal-year periods 2011 through 2013, 2012 through 2014 and 2013 through 2015, provide long-term cash bonus opportunities to members of upper management, including the named executive officers, upon the conclusion of fiscal 2013, 2014 and 2015, respectively, if certain aggregate fully diluted earnings per share (“EPS”) goals established by the Board of Directors are achieved with respect to those periods. No amounts can be earned for the fiscal 2011 through 2013, 2012 through 2014 and 2013 through 2015 plans until 2013, 2014 and 2015, respectively, because achievement of the EPS goals can only be determined following the conclusion of the applicable three-fiscal-year period.
The following table sets forth the potential future payouts to each of FedEx’s named executive officers under FedEx’s LTI plans:
| Potential Future Payouts | ||||||||||||||
| Name | Performance Period | Threshold ($) | Target ($) | Maximum ($) | ||||||||||
| Frederick W. Smith | FY2011–FY2013 | 875,000 | 3,500,000 | 5,250,000 | ||||||||||
| FY2012–FY2014 | 1,000,000 | 4,000,000 | 6,000,000 | |||||||||||
| FY2013–FY2015 | 1,000,000 | 4,000,000 | 6,000,000 | |||||||||||
| Alan B. Graf, Jr. | FY2011–FY2013 | 300,000 | 1,200,000 | 1,800,000 | ||||||||||
| FY2012–FY2014 | 300,000 | 1,200,000 | 1,800,000 | |||||||||||
| FY2013–FY2015 | 300,000 | 1,200,000 | 1,800,000 | |||||||||||
| David J. Bronczek | FY2011–FY2013 | 375,000 | 1,500,000 | 2,250,000 | ||||||||||
| FY2012–FY2014 | 375,000 | 1,500,000 | 2,250,000 | |||||||||||
| FY2013–FY2015 | 375,000 | 1,500,000 | 2,250,000 | |||||||||||
| T. Michael Glenn | FY2011–FY2013 | 300,000 | 1,200,000 | 1,800,000 | ||||||||||
| FY2012–FY2014 | 300,000 | 1,200,000 | 1,800,000 | |||||||||||
| FY2013–FY2015 | 300,000 | 1,200,000 | 1,800,000 | |||||||||||
| Robert B. Carter | FY2011–FY2013 | 300,000 | 1,200,000 | 1,800,000 | ||||||||||
| FY2012–FY2014 | 300,000 | 1,200,000 | 1,800,000 | |||||||||||
| FY2013–FY2015 | 300,000 | 1,200,000 | 1,800,000 | |||||||||||
The potential individual future payouts set forth in the table above are set dollar amounts ranging from threshold (minimum) amounts, if the EPS goal achieved is less than target, up to maximum amounts, if the plan goal is substantially exceeded. There can be no assurance that the potential future payouts shown in this table will be achieved.
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