<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FDX CORPORATION
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________
5) Total fee paid:
________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________
3) Filing Party:
___________________________________________
4) Date Filed:
___________________________________________
<PAGE>
[LOGO OF FDX CORPORATION APPEARS HERE]
FDX CORPORATION
6075 POPLAR AVENUE
MEMPHIS, TENNESSEE 38119
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 28, 1998
To the Stockholders of FDX Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of FDX
Corporation (the "Corporation") will be held at the Memphis Marriott, 2625
Thousand Oaks Boulevard, Memphis, Tennessee on Monday, September 28, 1998 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 an amendment to the Corporation's 1997 Stock
Incentive Plan to provide for a stock option grant to the
Corporation's outside Directors;
3. To ratify the designation of Arthur Andersen LLP as independent
auditors of the Corporation for fiscal year 1999;
4. To consider and act upon a stockholder proposal to declassify
the Corporation's Board of Directors; 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 August 3, 1998 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 13, 1998
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY OR VOTE YOUR
SHARES THROUGH THE INTERNET OR THE TELEPHONE 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.
<PAGE>
FDX CORPORATION
6075 POPLAR AVENUE
MEMPHIS, TENNESSEE 38119 1998 PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of FDX Corporation (the "Corporation") for
use at the Annual Meeting of Stockholders to be held September 28, 1998.
Shares represented at the meeting by the enclosed form of proxy will be voted
by Mr. Kenneth R. Masterson, Executive Vice President, General Counsel and
Secretary, or Mr. Alan B. Graf, Jr., Executive Vice President and Chief
Financial Officer, in accordance with the directions noted thereon. If no
direction is given, the shares will be voted FOR election of the Class III
Directors, FOR proposals 2 and 3 and AGAINST proposal 4. You may also
authorize Mr. Masterson or Mr. Graf to vote your shares by calling a toll-free
telephone number or by using the Internet.
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 (including a proxy by telephone or the
Internet). 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.
Telephone and Internet voting provide convenient, cost-effective
alternatives to returning your proxy card by mail. If you hold your shares
through a broker or custodian, please check the voting form used by that firm
to see if it offers telephone or Internet voting.
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. 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 or collected through the Internet or telephone voting procedure 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 17, 1998.
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, 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 $10,000 plus reimbursement
of expenses.
The Annual Report to Stockholders for the Corporation's fiscal year ended
May 31, 1998, including financial statements, is enclosed. Such Annual Report
is not a part of the proxy solicitation materials and is not incorporated
herein by reference.
1
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
Only stockholders of record at the close of business on August 3, 1998 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 August 3, 1998, the
Corporation had outstanding 147,449,762 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.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the amount of the Corporation's Common Stock
beneficially owned by each Director of the Corporation, each nominee to become
a Director, each of the executive officers named in the Summary Compensation
Table and by all Directors and executive officers as a group, as of August 3,
1998. Unless otherwise indicated, beneficial ownership is direct and the
person indicated has sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ -------------------- --------
<S> <C> <C>
Smith, Frederick W...................... 10,275,496(/1/) 6.95%
Allen, Robert H......................... 23,408(/2/) *
Cox, Robert L........................... 70,000(/3/) *
DeNunzio, Ralph D....................... 22,000(/2/) *
Estrin, Judith L........................ 18,000(/4/) *
Greer, Philip........................... 62,431(/2/)(/5/) *
Hyde, J. R., III........................ 58,000(/2/)(/6/) *
Manatt, Charles T....................... 21,400(/2/) *
Mitchell, George J...................... 9,000(/7/) *
Smart, Jackson W., Jr................... 62,468(/2/)(/8/) *
Smith, Joshua I......................... 2,600(/9/) *
Walsh, Paul S........................... 5,500(/10/) *
Willmott, Peter S....................... 105,900(/2/) *
Weise, Theodore L....................... 187,770(/11/) *
Masterson, Kenneth R.................... 147,900(/12/) *
Graf, Alan B., Jr....................... 174,801(/13/) *
Jones, Dennis H......................... 233,900(/14/) *
All directors and executive officers as
a group (20 persons)................... 11,865,305(/1/)-(/15/) 7.98%
</TABLE>
- --------
(*) Less than 1% of issued and outstanding shares of Common Stock of the
Corporation.
(1) Includes 7,894,856 shares of Common Stock owned of record by Mr. Smith
(representing 5.34% of the outstanding Common Stock), 2,070,640 shares of
Common Stock owned of record by Frederick Smith Enterprise Company, Inc.
("Enterprise"), a family holding company, and 310,000 shares as to which
Mr. Smith has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within
60 days of August 3, 1998 under the Corporation's 1989, 1993, 1995 and
1997 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
<PAGE>
(2) Includes 10,000 and 8,000 shares, respectively, of Common Stock as to
which each Director who is not also an employee of the Corporation has
the right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
3, 1998 under the Corporation's 1989 and 1993 Stock Incentive Plans.
(3) Includes 60,000 shares of Common Stock owned by RLC Family Partners LP, a
limited partnership of which Mr. Cox is the sole general partner, and
2,000 and 8,000 shares, respectively, as to which Mr. Cox has the right
to acquire beneficial ownership through the exercise of stock options
which are vested or will become vested within 60 days of August 3, 1998
under the Corporation's 1989 and 1993 Stock Incentive Plans, and excludes
8,000 shares owned by Mr. Cox's wife as to which Mr. Cox disclaims
beneficial ownership.
(4) Includes 8,000 and 8,000 shares, respectively, of Common Stock as to
which Ms. Estrin has the right to acquire beneficial ownership through
the exercise of stock options which are vested or will become vested
within 60 days of August 3, 1998 under the Corporation's 1989 and 1993
Stock Incentive Plans.
(5) Excludes 28,862 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 8,000 shares of Common Stock owned by a family trust and members
of Mr. Hyde's family.
(7) Includes 6,000 shares of Common Stock as to which Mr. Mitchell has the
right to acquire beneficial ownership through the exercise of stock
options which will become vested within 60 days of August 3, 1998 under
the Corporation's 1993 Stock Incentive Plan.
(8) Includes 4,200 shares of Common Stock owned by Mr. Smart's wife.
(9) Includes 2,000 shares of Common Stock as to which Mr. Smith has the right
to acquire beneficial ownership through the exercise of stock options
which are vested or will become vested within 60 days of August 3, 1998
under the Corporation's 1993 Stock Incentive Plan.
(10) Includes 4,000 shares of Common Stock as to which Mr. Walsh has the right
to acquire beneficial ownership through the exercise of stock options
which are vested or will become vested within 60 days of August 3, 1998
under the Corporation's 1993 Stock Incentive Plan.
(11) Includes 70,800 shares of Common Stock as to which Mr. Weise has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
3, 1998 under the Corporation's Stock Incentive Plans and 3,454 shares
owned by members of Mr. Weise's family.
(12) Includes 97,900 shares of Common Stock as to which Mr. Masterson has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
3, 1998 under the Corporation's Stock Incentive Plans.
(13) Includes 109,300 shares of Common Stock as to which Mr. Graf has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
3, 1998 under the Corporation's Stock Incentive Plans.
(14) Includes 167,128 shares of Common Stock as to which Mr. Jones has the
right to acquire beneficial ownership through the exercise of stock
options which are vested or will become vested within 60 days of August
3, 1998 under the Corporation's Stock Incentive Plans.
(15) Includes 1,176,742 shares of Common Stock as to which the Directors and
executive officers as a group, have the right to acquire beneficial
ownership through the exercise of stock options which are vested or will
become vested within 60 days of August 3, 1998 under the Corporation's
Stock Incentive Plans.
3
<PAGE>
Listed below are certain persons who owned beneficially, as of March 31,
1998 (February 28, 1998 in the case of Southeastern), more than five percent
of the Corporation's Common Stock. This information is copied from the latest
Schedule 13G or 13F filed by these beneficial owners with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------ -------------------- --------
<S> <C> <C>
Brinson Partners, Inc............................ 11,739,895(/1/) 8.0%
209 South LaSalle Street
Chicago, Illinois 60604
Southeastern Asset Management, Inc............... 9,874,720(/2/) 6.7
6075 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
PRIMECAP Management Company...................... 7,371,700(/3/) 5.0
225 South Lake Avenue
Pasadena, California 91101
</TABLE>
- --------
(1) Brinson Partners, Inc., a registered investment advisor, shared investment
discretion and voting power with respect to the shares with Brinson Trust
Company, its subsidiary, and UBS (USA) Inc. and UBS AG, its parent
companies, all of which are affiliates of Brinson Partners, Inc. Neither
Brinson Partners, Inc. nor any of its affiliates disclaimed beneficial
ownership of any such shares.
(2) Southeastern Asset Management, Inc. ("Southeastern"), a registered
investment advisor, exercised sole investment discretion over 5,830,020 of
the aggregate shares, and shared investment discretion with respect to
3,974,800 shares with Longleaf Partners Fund, a series of Longleaf
Partners Funds Trust, an open-end registered investment management
company. Southeastern had sole power to vote or direct the vote with
respect to 5,110,220 of the aggregate shares, and shared voting power over
3,974,800 shares with Longleaf Partners Fund. Neither Southeastern nor
Longleaf Partners Fund had the power to vote or to direct the vote of the
remaining shares. Southeastern does not disclaim beneficial ownership of
any such shares; however, Mr. O. Mason Hawkins, Chairman and Chief
Executive Officer of Southeastern, disclaims beneficial ownership of all
of the shares in the event he is or could be deemed to be a controlling
person of Southeastern as a result of his official positions with
Southeastern or his ownership of its voting securities.
(3) 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
thirteen members, divided into three classes. Four nominees (the "Class III
Directors") are to be elected, at least by a plurality vote, at this Annual
Meeting to serve for a term of three years and until their successors are
elected and qualified. The remaining Directors will continue to serve as set
forth below, with four Directors (the "Class I Directors") having terms
expiring at the 1999 Annual Meeting and five Directors (the "Class II
Directors") having terms expiring at the 2000 Annual Meeting. Each of the
nominees for election as Class III Directors is now a director of the
Corporation. Each nominee has consented to being named in this Proxy Statement
and agreed to serve if elected. The proxy holders will vote the proxies
received by them for the four Class III nominees or, in the event of a
contingency not presently foreseen, for different persons as substitutes
therefor unless authority is withheld.
4
<PAGE>
The following table 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 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR
FIRST
ELECTED AS PRINCIPAL OCCUPATION,
DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------- --- --------------------------
<S> <C> <C>
Judith L. Estrin 43 Senior Vice President and Chief Technology Officer of Cisco
1989 Systems, Inc., a networking systems company, since April
1998; President and Chief Executive Officer of Precept
Software, Inc., a computer software company, from March 1995
to April 1998; Consultant from September 1994 to March 1995;
Chief Executive Officer and President of Network Computing
Devices, Inc., a corporation 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, Sun
Microsystems, Inc. and The Walt Disney Company.
Philip Greer 62 Senior Managing Director of Weiss, Peck & Greer, L.L.C., an
1974 investment management firm, since 1995; General Partner of
Weiss, Peck & Greer from 1970 to 1995. Director, Network
Computing Devices, Inc. and The Robert Mondavi Corporation.
J. R. Hyde, III 55 President of Pittco, Inc., an investment company, since
1977 April 1989; Chairman of AutoZone, Inc., an auto parts retail
chain, from May 1986 to March 1997; Chief Executive Officer
of AutoZone, Inc. from May 1986 to December 1996. Director,
AutoZone, Inc.
Frederick W. Smith 53 Chairman, President and Chief Executive Officer of the
1971 Corporation since January 1998; Chairman of Federal Express
Corporation since 1975; Chairman, President and Chief
Executive Officer of Federal Express Corporation from 1983
to January 1998; Chief Executive Officer of Federal Express
Corporation from 1977 to January 1998; President of Federal
Express Corporation from 1971 to 1975.
</TABLE>
5
<PAGE>
CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
- -------------------- --- --------------------------
<S> <C> <C>
Robert H. Allen 70 Private Investor and Managing Partner, Challenge Investment
1977 Partners, an investment firm, since May 1993. Director, Gulf
Canada Resources Ltd., Gulf Indonesia Resources Ltd., and
University of Texas Investment Management Company. Trustee,
Baylor College of Medicine. Regent, Texas A&M University
System.
Robert L. Cox 62 Partner, Waring Cox, a law firm, for more than the past five
1993 years; Secretary of Federal Express Corporation from June
1971 to September 1993.
Paul S. Walsh 43 Chairman, President and Chief Executive Officer of The
1996 Pillsbury Company, a wholly-owned subsidiary of Diageo PLC,
a consumer food and beverage company, since April 1996;
Chief Executive Officer of The Pillsbury Corporation from
January 1992 to April 1996. Director, Ceridian Corporation
and Diageo PLC.
Peter S. Willmott 61 Chairman and Chief Executive Officer of Willmott Services,
1974 Inc., a retail and consulting firm, since June 1989; Chief
Executive Officer and President of Zenith Electronics
Corporation, an electronics manufacturing company, from July
1996 to January 1998; President and Chief Operating Officer
of Federal Express Corporation from September 1980 to May
1983; Executive Vice President of Federal Express
Corporation from 1977 to 1980; Senior Vice President-Finance
and Administration of Federal Express Corporation from 1974
to 1977. Director, Zenith Electronics Corporation and
Security Capital Group Incorporated.
CLASS II DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 2000 ANNUAL MEETING
Ralph D. DeNunzio 66 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 62 Chairman, Manatt, Phelps & Phillips, a law firm, for more
1989 than the past five years. Director, ICN Pharmaceuticals,
Inc. and COMSAT Corporation.
George J. Mitchell 64 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,
Starwood Lodging Trust, The Walt Disney Company, UNUM
Corporation and Xerox Corporation.
Jackson W. Smart, Jr. 67 Chairman, Executive Committee, First Commonwealth, Inc., a
1976 managed dental care company, since January 1996; Chairman
and Chief Executive Officer of MSP Communications, Inc., a
radio broadcasting company, from October 1988 to December
1997. Trustee, Goldman Sachs Money Market Trust, Goldman
Sachs Trust and Goldman Sachs Equity Portfolios Inc.
Director, First Commonwealth, Inc. and Evanston Northwestern
Healthcare.
Joshua I. Smith 57 Chairman, President and Chief Executive Officer of The
1989 MAXIMA Corporation, an information and data processing firm,
since 1978. The MAXIMA Corporation filed for reorganization
in federal bankruptcy court in June 1998. Director, The
Allstate Corporation, Caterpillar, Inc. and Inland Steel
Industries, Inc.
</TABLE>
6
<PAGE>
MEETINGS AND COMMITTEES
The Board of Directors of the Corporation conducted six regular meetings and
two special meetings during fiscal 1998. Each Director attended at least 75%
of the meetings of the Board and any committees on which he or she served.
This report of attendance includes the attendance of the Directors at meetings
of the Board of Directors and committees of both Federal Express Corporation
and the Corporation during fiscal 1998. In January 1998 the Corporation became
the holding company for Federal Express Corporation. All of the Directors of
the Corporation were previously Directors of Federal Express Corporation and
the committee memberships remained the same.
The Board of Directors has an Audit Committee and a Compensation Committee.
The members of the Audit Committee are Philip Greer (Chairman), Robert L. Cox,
Judith L. Estrin, George J. Mitchell, Joshua I. Smith and Peter S. Willmott.
The basic responsibilities of the Audit Committee, as approved by the Board of
Directors, are to review significant financial information for the purpose of
giving added assurance that the information is accurate and timely and that it
includes all appropriate financial statement disclosures; to ascertain the
existence of effective accounting and internal control systems; to oversee the
entire audit function, both internal and independent; and to provide an
effective communication link between the auditors (internal and independent)
and the Board of Directors. The Audit Committee met nine times during fiscal
1998.
The members of the Compensation Committee are Jackson W. Smart, Jr.
(Chairman), Robert H. Allen, Ralph D. DeNunzio, J. R. Hyde, III, Charles T.
Manatt and Paul S. Walsh. 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 seven meetings in fiscal 1998. The
Board of Directors does not have a nominating committee.
COMPENSATION OF DIRECTORS
For fiscal 1999, outside Directors are to be paid a quarterly retainer of
$10,000, $2,000 for each meeting of the Board attended and $1,200 for each
committee meeting which they attend. Committee chairmen will be paid an
additional annual fee of $8,000. In addition, outside Directors are granted an
option under the Corporation's 1993 Stock Incentive Plan for 2,000 shares of
Common Stock on each of the five consecutive Annual Meeting dates beginning
September 26, 1994. Outside Directors will also be granted an option under the
Corporation's 1997 Stock Incentive Plan (assuming approval of the amendment to
the 1997 Stock Incentive Plan by the stockholders at this Annual Meeting) for
2,000 shares of Common Stock on September 28, 1998 and for 4,000 shares on
each of the four consecutive Annual Meeting dates beginning September 27,
1999. Officers of the Corporation receive no compensation for serving as
Directors.
At its July 1997 meeting, the Board of Directors of Federal Express
Corporation voted to freeze the Corporation's Retirement Plan for Outside
Directors, i.e., no further benefits will be earned under such Plan. This Plan
is unfunded and benefits provided thereunder are payable out of the assets of
the Corporation as a general, unsecured obligation of the Corporation.
Concurrent with the freeze, the Board amended the Plan to accelerate the
vesting of the benefits for each outside Director who was not yet vested under
the Plan. In general, each Director is entitled to a retirement benefit
beginning as of the first day of the fiscal quarter of the Corporation next
following the date of termination of his or her directorship or the date such
Director attains age 60,
7
<PAGE>
whichever is later. The benefit is an annual amount, payable as a lump-sum
distribution or in quarterly installments for no less than ten years and no
more than fifteen years depending upon years of service, equal to 10% for each
year of service up to 100% of the annual retainer fee being paid to the
outside Director at the time the Plan is frozen. Each outside Director then
serving on the Board, who was not yet vested (three Directors), will now
receive a benefit equal to 10% for each year of service up to the date the
Plan was frozen. The remaining outside Directors will receive their benefits
based on their years of service and annual retainer at the time the Plan was
frozen. Once all benefits are paid from the Plan, it will be terminated. The
Board has established a policy that a Director must retire immediately before
the Corporation's annual meeting of stockholders during the calendar year in
which the Director attains age 72.
The Board of Directors has also adopted a guideline for stock ownership
establishing a goal that each outside Director own shares in the Corporation
valued at five times the annual retainer fee ($200,000) by the end of the
first quarter of fiscal year 2000. At current stock prices, this goal
represents approximately 3,316 shares. Vested stock options are not counted as
stock ownership under the guideline. Eight of the Corporation's outside
Directors already own sufficient shares to comply with this guideline. The
Board of Directors believes significant stock ownership by outside Directors
further aligns their interests with that of the Corporation's stockholders.
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Corporation's chief executive officer and its four other most
highly-compensated executive officers for services rendered in all capacities
during the fiscal years ended May 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- --------------------- ---------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($)(1) SARs (#) ($) ($)(2)
- ------------------ ---- ------- ------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick W. Smith...... 1998 927,912 875,000 227,688(/3/) -- 350,000 1,246,000 32,279
Chairman, President and 1997 805,000 213,000 221,359(/3/) -- -- 1,125,000 19,655
Chief Executive Officer 1996 745,833 -- 131,742(/3/) -- -- 1,200,000 24,174
FDX Corporation
Theodore L. Weise....... 1998 665,322 497,831(/4/) 491,888(/5/) 693,125 20,000 437,035 22,153
President and Chief 1997 569,896 147,705(/4/) 614,545(/5/) 838,000 30,000 329,531 14,024
Executive Officer 1996 449,604 37,500(/4/) 974,734(/5/) 1,333,500 11,500 352,388 12,947
Federal Express
Corporation
Kenneth R. Masterson.... 1998 554,593 590,889(/4/) 420,361(/5/) 519,844 4,000 456,283 18,520
Executive Vice 1997 476,344 148,084(/4/)(/6/) 614,545(/5/) 838,000 25,000 342,000 11,487
President, 1996 396,688 37,500(/4/) 764,729(/5/) 1,044,500 11,500 364,875 10,743
General Counsel and
Secretary
FDX Corporation
Alan B. Graf, Jr........ 1998 527,448 472,579(/4/) 368,659(/5/) 519,844 -- 445,775 15,818
Executive Vice 1997 451,526 102,970(/4/) 614,545(/5/) 838,000 45,000 334,269 10,304
President 1996 375,421 25,000(/4/) 843,160(/5/) 1,152,875 11,500 362,250 10,312
and Chief Financial
Officer
FDX Corporation
Dennis H. Jones......... 1998 493,998 409,528(/4/) 368,659(/5/) 519,844 4,000 302,155 17,277
Executive Vice 1997 421,998 101,580(/4/)(/6/) 614,545(/5/) 838,000 40,000 273,094 10,083
President 1996 367,419 -- 658,956(/5/) 900,000 11,500 364,988 9,673
and Chief Information
Officer
FDX Corporation
</TABLE>
- --------
(1) The amounts in the above table represent the closing market value of the
shares awarded at the date of grant. At May 29, 1998, the number and value
of the aggregate restricted stock holdings of the named executive officers
were as follows:
NAME NUMBER OF SHARES HELD VALUE
---- --------------------- ----------
F.W. Smith................................ -- --
T.L. Weise................................ 42,700 $2,738,138
K.R. Masterson............................ 33,000 2,116,125
A.B. Graf, Jr............................. 37,200 2,385,450
D.H. Jones................................ 33,000 2,116,125
The restrictions on the shares awarded to Mr. Weise lapse ratably over five
years after the date of award with respect to 13,500 shares granted in
October 1995 and 7,200 shares granted in April 1996 and over four years
with respect to 12,000 shares granted in February 1997 and 10,000 shares
granted in March 1998. The restrictions on the shares awarded to Mr.
Masterson lapse ratably over five years after the date of award with
respect to 13,500 shares granted in December 1995 and over four years after
the date of award with respect to 12,000 shares granted in February 1997
and 7,500 shares granted in March 1998. The restrictions on the shares
awarded to Mr. Graf lapse ratably over five years after the date of award
with respect to 13,500 shares granted in October 1995 and 4,200 shares
granted in April 1996 and over four years after the date of award with
respect to 12,000 shares granted in February 1997 and 7,500 shares
9
<PAGE>
granted in March 1998. The restrictions on the shares awarded to Mr. Jones
lapse ratably over five years after the date of award with respect to 13,500
shares granted in October 1995 and over four years with respect to 12,000
shares granted in February 1997 and 7,500 shares granted in March 1998.
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 businesses of the
Corporation.
(2) These amounts represent profit sharing payments to the named executive
officers and contributions under Federal Express Corporation's Profit
Sharing Plan.
(3) Of the amounts shown for 1998, 1997 and 1996, $150,658, $152,528 and
$95,174, respectively, represent personal use of corporate aircraft
treated as taxable income to Mr. Smith. Of the amounts shown for 1998 and
1997, $71,228 and $62,497, respectively, are for financial counseling.
(4) The amounts shown for 1998 represent annual performance bonuses received
by each officer under the Corporation's annual performance bonus plan;
bonuses received by Messrs. Weise, Masterson, Graf and Jones for
promotion; and special recognition awards received by Messrs. Masterson,
Graf and Jones. The amounts shown for 1997 represent annual performance
bonuses received by each officer under Federal Express Corporation's
annual performance bonus plan; bonuses received by Messrs. Weise,
Masterson and Graf for promotion to Executive Vice President; and, in the
case of Mr. Masterson, an additional special recognition award. The
amounts shown for 1996 represent bonuses received by each officer upon
promotion to Executive Vice President and, in the case of Mr. Masterson,
an additional special recognition award. No amounts are included for
annual performance bonuses because no such bonuses were awarded for fiscal
1996.
(5) The amounts shown for Messrs. Weise, Graf and Jones in 1998 represent tax
reimbursements related to restricted stock awards. Of the amount shown for
Mr. Masterson for 1998, $368,659 represents tax reimbursements related to
restricted stock awards. The amounts shown for Messrs. Weise, Masterson,
Graf and Jones in 1997 and 1996 represent tax reimbursements related to
restricted stock awards.
(6) This amount includes $25,000 from a Five Star Award, Federal Express
Corporation's highest special achievement award.
10
<PAGE>
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, 1998 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 $86.13 and $137.14,
respectively, for the options with an exercise price of $52.875; $104.66 and
$166.65, respectively, for the options with an exercise price of $64.25; and
$96.21 and $153.19, respectively, for the options with an exercise price of
$59.0625. No gain to the optionees is possible without an increase in stock
price which will benefit all stockholders proportionately. These potential
realizable values are based solely on arbitrarily assumed rates of
appreciation required by applicable Securities and Exchange Commission
regulations. Actual gains, if any, on option exercise and Common Stock
holdings depend on the future performance of the Corporation's Common Stock
and overall stock market conditions. There can be no assurance that the
potential realizable values shown in this table will be achieved.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARs EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARs EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH)(*) DATE 5% ($) 10% ($)
- ---- ------------ ------------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
F.W. Smith.............. 150,000 12.31 $ 52.875 06/02/07 $4,988,250 $12,639,750
200,000 16.41 64.25 01/27/08 8,082,000 20,480,000
T.L. Weise.............. 20,000 1.64 64.25 01/27/08 808,200 2,048,000
K.R. Masterson.......... 4,000 .33 59.0625 07/09/07 148,590 376,510
A.B. Graf, Jr........... -- -- -- -- -- --
D.H. Jones.............. 4,000 .33 59.0625 07/09/07 148,590 376,510
</TABLE>
- --------
(*) The option exercise price was the fair market value of the Corporation's
Common Stock at the date of grant of the option. The options granted to
Messrs. Jones, Weise and Masterson and the option grant to Mr. Smith
expiring 1/27/08 are subject to a vesting schedule as follows: 25% after
one year from the date of grant; 50% after two years; 75% after three
years; and 100% after four years. The options granted to Mr. Smith
expiring 06/02/07 are subject to a vesting schedule as follows: 20% after
one year from the date of grant; 40% after two years; 60% after three
years; 80% after four years; and 100% after five years. The options may
not be transferred in any manner other than by will or the laws of descent
and distribution and may be exercised during the lifetime of the optionee
only by the optionee. During the fiscal year ended May 31, 1998, options
for a total of 1,218,772 shares were granted to various employees of the
Corporation and its subsidiaries.
11
<PAGE>
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, 1998. 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 29, 1998, which
was $64.5625 per share. These values, unlike the amounts set forth in the
column "Value Realized," have not been, and may never be, realized. Such
options have not yet been, and may not ever be, exercised and actual gains, if
any, upon exercise will depend on the value of the Corporation's Common Stock
on the date of exercise. There can be no assurance that these values will be
realized. Unexercisable options are those which have not yet vested.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARs AT FY-END OPTIONS/SARs AT FY-END
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.W. Smith.............. 405,000 $14,605,313 220,000 430,000 $6,892,500 $4,204,375
T.L. Weise.............. 62,302 2,682,103 35,700 102,300 986,525 2,414,631
K.R. Masterson.......... -- -- 67,550 73,050 2,073,744 1,992,038
A.B. Graf, Jr........... 32,600 1,311,131 81,350 104,650 2,546,675 2,982,169
D.H. Jones.............. 9,572 397,316 138,178 105,250 4,754,985 2,887,044
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table sets forth estimates of the possible future payouts to
each of the named executive officers under the Corporation's long-term
performance bonus plans.
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE
SHARES, OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
UNITS OR PERIOD NON-STOCK PRICE-BASED PLANS
OTHER UNTIL -------------------------------
RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
- ---- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
F.W. Smith................ N/A 5/31/99 $500,000 $1,000,000 $1,500,000
N/A 5/31/00 500,000 1,000,000 1,500,000
N/A 5/31/01 750,000 1,500,000 2,250,000
T.L. Weise................ N/A 5/31/99 300,000 600,000 900,000
N/A 5/31/00 375,000 750,000 1,125,000
N/A 5/31/01 450,000 900,000 1,350,000
K.R. Masterson............ N/A 5/31/99 275,000 550,000 825,000
N/A 5/31/00 325,000 650,000 975,000
N/A 5/31/01 375,000 750,000 1,125,000
A.B. Graf, Jr............. N/A 5/31/99 275,000 550,000 825,000
N/A 5/31/00 325,000 650,000 975,000
N/A 5/31/01 375,000 750,000 1,125,000
D.H. Jones................ N/A 5/31/99 208,334 416,667 625,001
N/A 5/31/00 291,667 583,334 875,001
N/A 5/31/01 375,000 750,000 1,125,000
</TABLE>
In 1996, the Compensation Committee (the "Committee") established a long-
term performance bonus plan to provide a long-term cash bonus opportunity to
members of upper management,
12
<PAGE>
including executive officers, at the conclusion of fiscal year 1998 if the
Corporation achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1996 through 1998. The
Committee has established similar plans for the three-fiscal year periods 1997
through 1999, 1998 through 2000 and 1999 through 2001, which provide
opportunities for 1999, 2000 and 2001, respectively, if certain earnings per
share targets are achieved with respect to those periods. No amounts can be
earned for the 1997 through 1999, 1998 through 2000 and 1999 through 2001
plans until 1999, 2000 and 2001, respectively, since achievement of the
earnings per share objectives can only be determined following the conclusion
of the applicable three-fiscal year period. Each successive plan has earnings
per share targets which are higher than the previous plans.
Under each plan, the average percentage of an individual's achievement of
individual objectives under the Corporation's annual performance bonus plan
(discussed on page 14 of the Proxy Statement) for the three-fiscal year period
of each of the long-term performance bonus plans will be used as an individual
performance measure when calculating individual bonuses, except for Mr. Smith
whose payout will be determined by the Compensation Committee. The estimated
individual future payouts set forth in the table above are set dollar amounts
ranging from threshold amounts if the objectives are minimally achieved, up to
maximum amounts if the plan targets are substantially exceeded. Individual
bonuses may be adjusted downward from these amounts if the individual's
average individual achievement percentage is less than 100% for the three-
fiscal year period of each of the plans. There can be no assurance that the
estimated future payouts shown in this table will be achieved.
PENSION PLAN TABLE
The following table shows the estimated annual pension benefits payable to
participants upon retirement on a single life annuity basis in specified
remuneration classes and years of credited service under the Federal Express
Corporation Employees' Pension Plan and the Federal Express Corporation
Retirement Parity Pension Plan which provides 100 percent of the benefit that
would otherwise be denied certain participants by reason of Internal Revenue
Code limitations on qualified plan benefits. The benefits listed in the table
are not subject to any reduction for Social Security or other offset amounts.
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------
REMUNERATION 10 15 20 25 30
- ------------ -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 500,000..................... $100,000 $150,000 $200,000 $ 250,000 $ 250,000
700,000..................... 140,000 210,000 280,000 350,000 350,000
900,000..................... 180,000 270,000 360,000 450,000 450,000
1,100,000..................... 220,000 330,000 440,000 550,000 550,000
1,300,000..................... 260,000 390,000 520,000 650,000 650,000
1,500,000..................... 300,000 450,000 600,000 750,000 750,000
1,700,000..................... 340,000 510,000 680,000 850,000 850,000
1,900,000..................... 380,000 570,000 760,000 950,000 950,000
2,100,000..................... 420,000 630,000 840,000 1,050,000 1,050,000
</TABLE>
The remuneration specified in the Pension Plan Table includes Salary and
Bonus as reported in the Summary Compensation Table (p. 9). 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 years of credited service achieved.
<TABLE>
<CAPTION>
YEARS OF
NAME COVERED COMPENSATION SERVICE
- ---- -------------------- --------
<S> <C> <C>
F.W. Smith........................................ $974,039 26
T. L. Weise....................................... 601,328 26
K. R. Masterson................................... 520,607 18
A. B. Graf, Jr.................................... 481,980 18
D. H. Jones....................................... 462,386 23
</TABLE>
13
<PAGE>
REPORT ON EXECUTIVE COMPENSATION OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation of the Corporation's executives comprises three basic
components: base salary, annual and long-term performance bonus plans, and
long-term equity incentives. The Compensation Committee (the "Committee") of
the Board of Directors determines the compensation of the executive officers
of the Corporation, approves the objectives for the annual and long-term
performance bonus plans, establishes the funding of the plans, determines the
awards of long-term equity incentives and the individuals to whom such awards
are made, and recommends to the Board of Directors the compensation of the
chief executive officer of the Corporation.
Base Salary. The establishment of competitive base compensation for the
Corporation's executives is the primary objective in setting base salaries.
The starting point for this process is to determine the relative importance of
an executive officer's position, the extent of accountability of the position
and the skills required to perform the duties of the position. 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 its 1998 executive compensation review, the Committee considered
compensation survey information published by two major consulting firms and
compensation information on the FDX officers and top officers of other
companies available from a group of companies in general industry with annual
sales in excess of $10 billion. Base salaries are generally targeted at the
75th percentile of base salaries for comparable positions in the comparison
surveys mentioned above.
None of the factors mentioned above is given any particular weight in
determining base compensation. Other factors 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 75th percentile as is the case with the other executive officers. Mr.
Smith's base salary was increased in 1998; however, his base salary remains
below the market median of base salaries of chief executive officers in the
comparison surveys.
Performance Bonus Plans. For the first eight months of fiscal year 1998,
bonuses were based on the degree of attainment of both corporate and
individual goals for the year for management and certain professional
employees. Each position eligible for such bonus, including all executive
officers but excluding Mr. Smith, is assigned a number of points based on
salary grade. Individual objectives for each position are established and
points are allocated to the objectives by each participant and his or her
immediate superior. A participant earns points by achieving his or her
individual objectives. The amount of a participant's bonus is determined by
the number of points earned, multiplied by the dollar value, if any, assigned
to each point by the Committee according to the extent of achievement of plan
objectives.
If both the individual and plan objectives are achieved, the plan is
designed to produce a bonus ranging, on a sliding scale, from a threshold
amount if the plan objectives are minimally achieved up to a maximum amount if
such objectives are substantially exceeded. For 1998, the threshold bonus
target was established at an amount which, when added to base salary, could be
less than the 50th percentile of total salary and bonus for comparable
positions in the comparison surveys discussed above under Base Salary. Thus,
total salary and bonus for executive officers (assuming achievement of all
individual objectives) is designed to range from less than the 50th percentile
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 the balance of the fiscal year following the transaction in which
Federal Express Corporation and Caliber System, Inc. became wholly-owned
subsidiaries of the Corporation (February 1, 1998
14
<PAGE>
through May 31, 1998), bonus targets were established as a percent of pay
based on pay level. The bonus amount was converted to the point system by
dividing the bonus by a dollar target per point. The target points were then
converted to a monthly point value and divided by the number of months at the
Corporation for the remainder of the fiscal year (four months for the majority
of employees) to arrive at a monthly point value. The newly calculated
Corporation points were then added to the previous eight months of Federal
Express Corporation points. The amount of bonus was determined in the same
manner as described above; that is, the number of points earned was multiplied
by the dollar value.
The plan objectives established for 1998 were (i) a pretax income goal and
(ii) an internal measure reflecting a targeted level of service quality.
Bonuses were awarded for 1998 because plan targets for pretax income were
exceeded.
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 received an
annual bonus of $875,000 for 1998.
In 1996, 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 1998 if the
Corporation achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1996 through 1998.
Bonuses were awarded under the long-term plan in 1998 to upper management,
including the named executive officers, based on achievement of above plan
performance for the three-fiscal year period. The Committee has established
similar plans for the three-fiscal year periods 1997 through 1999, 1998
through 2000 and 1999 through 2001 providing bonus opportunities for 1999,
2000 and 2001, respectively, if certain earnings per share targets are
achieved with respect to those periods. The Long-Term Incentive Plans table on
page 12 of this Proxy Statement sets forth the estimated future payouts for
the named individuals under these plans if the three-year earnings per share
objectives are achieved.
Long-Term Equity Incentives. Stock options were granted as long-term
incentives in 1998 to certain key employees of the Corporation, including
executive officers, under certain of the Corporation's Stock Incentive Plans.
Under the terms of the plans, the Corporation may grant options to key
employees (determined by the Committee) to purchase such number of shares of
the Common Stock of the Corporation as is determined by the Committee.
The number of shares for which options are granted to executive officers is
generally determined by the Committee based on the respective officer's senior
officer status. However, no set criteria are used and other factors may
influence the Committee's determination with respect to the number of shares
granted, such as the promotion of an individual to a higher position, a desire
to retain a valued executive or the number of shares then available for grant
under one or more of the plans. The stock option holdings of an individual at
the time of a grant are generally not considered in determining the size of a
grant to that individual.
Under the terms of the Corporation's 1995 and 1997 Restricted Stock Plans
(the 1997 plan was approved by the Board of Directors in July 1997), 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
15
<PAGE>
recognize a particular officer's contribution to the Corporation or the number
of shares then available for award. In 1998, 120,000 shares of restricted
stock were awarded.
Section 162(m) of the Internal Revenue Code limits deductibility of certain
compensation for the chief executive officer and the four other highest paid
executive officers to $1,000,000 per year, unless certain requirements are
met. The policy of the Corporation is generally to design its compensation
plans and programs to ensure full deductibility. The Committee attempts to
balance this policy with compensation programs designed to motivate management
to maximize stockholder wealth. There are times when it is determined that the
interests of the stockholders are best served by the implementation of
compensation policies that do not restrict the Committee's ability to exercise
its discretion in crafting compensation packages even though such policies may
result in certain non-deductible compensation expenses.
The Corporation's Stock Incentive Plans comply with Section 162(m);
therefore, compensation recognized by the five highest paid executive officers
under these plans will qualify for appropriate tax deductions. The
Corporation's annual and long-term performance bonus plans and its Restricted
Stock Plans do not meet all of the conditions for qualification under Section
162(m). Therefore, compensation received under these plans will be subject to
the $1,000,000 deductibility limit.
COMPENSATION COMMITTEE MEMBERS
Jackson W. Smart, Jr.--Chairman
Robert H. Allen Ralph D. DeNunzio
J.R. Hyde, III Charles T. Manatt
Paul S. Walsh
May 31, 1998
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, 1997 through August 3, 1998 and the
balance of such loans outstanding at August 3, 1998, for those executive
officers with loan balances which exceeded $60,000.
<TABLE>
<CAPTION>
HIGHEST BALANCE BALANCE AT
EXECUTIVE OFFICER DURING PERIOD AUGUST 3, 1998
- ----------------- --------------- --------------
<S> <C> <C>
Theodore L. Weise, President and Chief Executive
Officer
Federal Express Corporation............... $355,373 $355,373
</TABLE>
The law firm of Waring Cox represented the Corporation during fiscal year
1998. Mr. Cox, a Director, is a named partner in that firm. The Corporation
expects to utilize the services of this firm during fiscal year 1999. Mr.
Mitchell, a Director, represented the Corporation pursuant to a retainer
arrangement during fiscal 1998 for a fee of $100,000. Mr. Manatt, a Director,
represented the Corporation pursuant to a retainer arrangement during fiscal
1998 for a fee of $100,000, and the Corporation has utilized the services of
Manatt, Phelps & Phillips from time to time. The Corporation expects to
utilize the services of Mr. Manatt and Mr. Mitchell during fiscal 1999.
16
<PAGE>
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, 1993 in: (1) the Corporation's Common Stock;
(2) the Standard & Poor's 500 Composite Index; and (3) the Standard & Poor's
Transportation Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
(FDX, S&P 500 COMPOSITE INDEX AND S&P TRANSPORTATION INDEX)
[Graph appears here]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FDX 100.00 156.12 122.19 156.38 213.78 261.73
- -----------------------------------------------------------------------
S & P 500 Composite Index 100.00 104.26 125.31 160.95 208.29 272.20
- -----------------------------------------------------------------------
S & P Transportation Index 100.00 104.04 109.71 143.56 171.88 194.49
</TABLE>
The total return assumes that all dividends were reinvested. No dividends
were paid on the Corporation's Common Stock during the period.
17
<PAGE>
CHANGE IN CONTROL ARRANGEMENT
The Corporation's Stock Incentive Plans provide that in the event of a
change in control each holder of an unexpired option under any of the plans
has the right to exercise such option without regard to the date such option
would first be exercisable, except that no option may be exercised less than
six months from the date of grant. This right continues, with respect to
holders whose employment with the Corporation terminates following a change in
control, for a period of twelve months after such termination or until the
option's expiration date, whichever is sooner. The instruments pursuant to
which restricted stock is granted under the Corporation's Restricted Stock
Plans provide that the restricted shares will be canceled and the Corporation
will make a cash payment, in an amount determined under the plan, to each
holder in the event of a change in control.
AMENDMENT TO THE CORPORATION'S
1997 STOCK INCENTIVE PLAN
(PROPOSAL NO. 2)
The use of stock incentives to secure and retain key employees and directors
of outstanding ability, to further identify the interests of employees and
directors 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 a business has been and
remains important in American industry. In furtherance of these objectives,
the Board of Directors recommended, and the stockholders of Federal Express
Corporation approved in January 1998, a stock incentive plan (the "1997 Stock
Incentive Plan"). The Board of Directors has adopted an amendment to the 1997
Stock Incentive Plan which provides for an annual automatic grant of stock
options to Directors who are not also employees of the Corporation (the
"Amendment"). The adoption of the Amendment is subject to approval thereof by
the vote of the holders of a majority of the Common Stock represented and
voting at the 1998 Annual Meeting. A copy of the Amendment is attached hereto
as Exhibit A and the statements made in this Proxy Statement with respect to
the Amendment are qualified by and subject to the more complete information
set forth therein.
The 1997 Stock Incentive Plan was very similar to a plan approved by the
stockholders of Federal Express Corporation at the annual meeting of
stockholders in September 1997 (the "September Plan"). The September Plan,
while approved by the Federal Express Corporation stockholders, was
discontinued by the Board of Directors of Federal Express Corporation because
of the transaction in which Federal Express Corporation and Caliber System,
Inc. became wholly-owned subsidiaries of the Corporation. The 1997 Stock
Incentive Plan replaced the September Plan. The September Plan (but not the
1997 Stock Incentive Plan, again because of such transaction) contained a
provision which was identical in all material respects to the Amendment. The
Board of Directors of the Corporation has recommended that the stockholders of
the Corporation, through the Amendment, restore the automatic grant of options
to the Directors which was included in the September Plan but not included in
the 1997 Stock Incentive Plan.
The Amendment to the 1997 Stock Incentive Plan provides that each Director
who is not also an employee of the Corporation and who remains in office
immediately following each of, or is elected at one of, the five consecutive
annual meetings beginning with the 1998 Annual Meeting will automatically be
granted, immediately after the conclusion of each such annual meeting, an
option to purchase shares of Common Stock. At the 1998 Annual Meeting, the
option to Directors will be for 2,000 shares, and for the fiscal year 1999,
2000, 2001 and 2002 Annual Meetings, the option will be for 4,000 shares. If
the Amendment is approved by the stockholders of the Corporation at the 1998
Annual Meeting, the Directors of the Corporation will be entitled to receive
annually the same number of options that they had been entitled to receive as
a result of the approval by the stockholders of Federal Express Corporation of
the September Plan. The Amendment does not increase the annual
18
<PAGE>
number of options to be granted to Directors as previously approved by the
stockholders, but it does extend the period during which such grants will be
made for one additional year.
Each person who is not also an employee of the Corporation and who is
elected or appointed a Director during the five year period beginning with the
1998 Annual Meeting other than at an annual meeting will, upon such election
or appointment, be granted an option to purchase shares of Common Stock.
Currently there are 12 Directors eligible to receive automatic grants of
options under the 1997 Stock Incentive Plan. The exercise price of options
granted to Directors under the 1997 Stock Incentive Plan must be equal to the
mean between the high and low prices of the Common Stock on the New York Stock
Exchange on the date of grant of the option and, the right to exercise such
options will vest one year from the date of the grant. On August 3, 1998, the
closing price of the Corporation's Common Stock was $60.3125. The 1997 Stock
Incentive Plan does not permit the repricing of options or the grant of
discounted options.
Unless otherwise determined by the committee administering the 1997 Stock
Incentive Plan, the options may not be exercised later than ten years after
the date of grant.
Under current federal tax law, non-incentive stock options granted under the
1997 Stock Incentive Plan will not result in any taxable income to the
optionee at the time of grant or any tax deduction to the Corporation. Upon
the exercise of such option, the excess of the market value of the shares
acquired over their cost is taxable to the optionee as income and is generally
deductible by the Corporation. The optionee's tax basis for the shares is the
market value thereof at the time of exercise.
The Amendment also restores a provision to the "Amendments" paragraph of the
1997 Stock Incentive Plan which was included in the September Plan. This
provision prohibits any amendments or modifications of the paragraph for
automatic grants of options to Directors without the approval of the
stockholders of the Corporation.
The Amendment does not affect any other provisions of the 1997 Stock
Incentive Plan. All other provisions of the 1997 Stock Incentive Plan will
remain the same.
For fiscal 1999, the amounts that may be received by the Directors as a
group, assuming approval of the Amendment by the stockholders at the 1998
Annual Meeting, under the 1997 Stock Incentive Plan are set forth in the
following table.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1997 STOCK INCENTIVE PLAN
--------------------------------
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
- ----------------- ---------------- ---------------
<S> <C> <C>
Non-Executive Director Group................... NA 24,000
</TABLE>
The amounts that may be received by the other participants under the 1997
Stock Incentive Plan are not included in the table because such amounts are
not currently determinable.
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 Amendment.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
19
<PAGE>
AUDITORS
(PROPOSAL NO. 3)
Arthur Andersen LLP has been the auditors for Federal Express Corporation
since 1972 and the Corporation since its inception. 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 fiscal year ending
May 31, 1999. 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.
STOCKHOLDER PROPOSAL--DECLASSIFY BOARD
(PROPOSAL NO. 4)
The Amalgamated Bank of New York LongView Collective Investment Fund, 11-15
Union Square, New York, New York 10003, the beneficial owner of 36,800 shares
of Common Stock of the Corporation, has submitted the following proposal:
RESOLVED, the stockholders of FDX Corporation request that the Board of
Directors take the necessary steps in accordance with Delaware law to
declassify the Board of Directors so that all directors are elected
annually, such declassification to be carried out in a manner that does not
affect the unexpired terms of directors previously elected.
PROPONENT'S STATEMENT IN SUPPORT
The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable
for its implementation of those policies. We believe that the
classification of the Board of Directors, which results in only a portion
of the Board being elected annually, is not in the best interests of our
Corporation and its stockholders.
We therefore urge our fellow stockholders to support declassification of
the FDX Corporation's Board. Last year, 42% of the voting shares were cast
in favor of this declassification resolution.
The FDX Corporation Board of Directors is divided into three classes
serving staggered, three-year terms. Eliminating this classification system
would require each director to stand for election annually and would give
stockholders an opportunity to register their views on the performance of
the Board collectively and each director individually. We believe that
electing directors in this manner is one of the best methods available to
stockholders to ensure that the Corporation will be managed in a manner
that is in the best interest of stockholders.
A number of companies have declassified boards. We regard as unfounded
the concern expressed by some that the annual election of all directors
could leave companies without experienced directors in the event that all
incumbents are voted out by stockholders. In our view, in the unlikely
event that stockholders do vote to replace all directors, such a decision
would express stockholder dissatisfaction with the incumbent directors and
reflect the need for change.
WE URGE YOU TO VOTE FOR THIS RESOLUTION!
20
<PAGE>
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Corporation's By-laws provide for the classification of the Board of
Directors into three equal or nearly equal classes, each to serve for a term
of three years, with one class being elected each year. The classified board
of the Corporation is a continuation of a By-law provision adopted by the
stockholders of Federal Express Corporation in 1989. When the Corporation
became the holding company for Federal Express Corporation in January 1998,
the provisions of Delaware law which governed the holding company formation
required that the Certificate of Incorporation and By-laws of the Corporation
be identical to those of Federal Express Corporation.
The Board of Directors believes that the longer period of time required to
elect a majority of a classified board of directors helps to assure the
continuity and stability of the Corporation's management and policies in the
future, because a majority of the Directors at any given time will have prior
experience as Directors of the Corporation. Continuity and quality of
leadership that results from the classified board create long-term value for
the stockholders.
The Board of Directors believes a classified board reduces the possibility
of a sudden and surprise change in majority control of the Board of Directors.
The Board of Directors also believes a classified board has the effect of
impeding disruptive and inequitable tactics that are relatively common
corporate takeover practices. In the event of a hostile takeover attempt, the
Board of Directors believes the fact that approximately two-thirds of the
Board members have tenure for more than a year would encourage a person
seeking to gain control of the Corporation to initiate arms-length discussions
with management and the Board of Directors, who are in a position to negotiate
a transaction that is most favorable to the Corporation and the stockholders.
For these reasons, the Board of Directors continues to believe that the
Corporation's classified board promotes the best interests of the
stockholders.
If approved, this proposal would serve as a recommendation to the Board of
Directors to take the necessary steps to eliminate the classified board. Such
steps would, if taken, include repealing the classified board provisions in
the Corporation's By-laws which requires the affirmative vote of the holders
of at least 80% of the voting power of all shares of the Corporation entitled
to vote generally in the election of directors. Therefore, stockholders owning
20% plus one share could defeat a proposal to amend the Corporation's By-laws
to declassify the Board. Frederick W. Smith and the other Directors and
executive officers of the Corporation own beneficially approximately 7% of the
outstanding shares of the Corporation. This group together with approximately
13% of the other stockholders could defeat such a proposal. Last year, prior
to the formation of the Corporation, the proponent submitted the same proposal
to declassify the Board of Directors at the annual meeting of the stockholders
of Federal Express Corporation. At that meeting approximately 58% of the votes
cast voted against the proposal. The size of this vote would have been
substantially more than sufficient to defeat a proposal to formally amend the
Corporation's By-law provision to eliminate its classified Board of Directors.
If the stockholder proposal is properly presented at the meeting, 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
adoption of the resolution.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THIS
PROPOSAL.
21
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Corporation's Directors
and executive officers are required to report their initial ownership of the
Corporation's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established by the Commission and the Corporation is required to disclose
in this Proxy Statement any late filings or failure to file. Mr. Manatt made a
late filing of a Form 4 because of a failure to file one Form 4 involving one
transaction in the Corporation's Common Stock.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Corporation's 1999
Annual Meeting of Stockholders must be received by the Corporation on or prior
to April 20, 1999 to be eligible for inclusion in the Corporation's proxy
statement and form of proxy to be used in connection with the 1999 Annual
Meeting of Stockholders. If proposals of stockholders intended to be presented
at the Corporation's 1999 Annual Meeting are received by the Corporation after
July 5, 1999, the proxy to be solicited by the Board of Directors for the 1999
Annual Meeting of Stockholders will confer authority on the holders of the
proxy to vote the shares in accordance with their best judgment and discretion
if the proposal is presented at the 1999 Annual Meeting, without any
discussion of the proposal in the proxy statement for such meeting.
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
22
<PAGE>
EXHIBIT A
AMENDMENT TO THE FDX CORPORATION
1997 STOCK INCENTIVE PLAN
[7. AUTOMATIC GRANT OF OPTIONS TO DIRECTORS
Notwithstanding any other provision of the Plan, the grant of options
hereunder to directors who are not also employees of the Corporation shall be
subject to the following terms and conditions:
(a) Immediately following each of the five consecutive Annual Meetings of
the Stockholders of the Corporation beginning with the 1998 Annual Meeting,
each director of the Corporation who is then incumbent and is not also an
employee of the Corporation shall be granted a non-incentive stock option
to purchase 2,000 shares, for the fiscal year 1998 Annual Meeting, and
4,000 shares, for the fiscal year 1999, 2000, 2001, and 2002 Annual
Meetings, of the Common Stock of the Corporation.
(b) If a person who is not also an employee of the Corporation is elected
or appointed a director other than at an Annual Meeting, such person shall
thereupon be granted a non-incentive stock option to purchase 4,000 shares,
if elected or appointed after the 1998 Annual Meeting but before the 1999,
2000, 2001 or 2002 Annual Meetings, of the Common Stock of the Corporation.
(c) Each option granted to directors under this paragraph 7 shall be
exercisable at an exercise price equal to 100% of the fair market value of
the price of the Common Stock on the date of the grant, as determined in
accordance with the second sentence of paragraph 6(a) hereof.
(d) Each option granted to directors under this paragraph 7 shall be
exercisable on and after the first anniversary of the date of grant.
(e) Unless otherwise provided in the Plan, all provisions with respect to
the terms of non-incentive stock options hereunder shall be applicable to
stock options granted to directors.
(f) The automatic grants described in this paragraph 7 shall constitute
the only grants under the Plan permitted to be made to directors who are
not also employees of the Corporation.]
* * *
16. 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:
[(d) Amend or modify paragraph 7 of the Plan.]
New language is [bracketed].
# # #
A-1
<PAGE>
PROXY
FDX CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 28, 1998
The undersigned hereby constitutes and appoints KENNETH R. MASTERSON and ALAN
B. GRAF, JR., 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 FDX 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
28, 1998, 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. This card also constitutes voting
instructions for any shares held for the undersigned in any employee benefit
plan of FDX Corporation or its subsidiaries.
ELECTION OF CLASS III DIRECTORS. NOMINEES: COMMENTS
(1) Judith L. Estrin ------------------------------------------
(2) Philip Greer ------------------------------------------
(3) J.R. Hyde, III ------------------------------------------
(4) 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 SEE REVERSE
THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED SIDE
NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. MR.
MASTERSON AND MR. GRAF CANNOT VOTE YOUR SHARES UNLESS
YOU SIGN AND RETURN THIS CARD OR VOTE THROUGH THE
INTERNET OR THE TELEPHONE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
1998 ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following
guidelines will apply for FDX Corporation's Annual Meeting of
Stockholders.
1. The business of the meeting is set forth in the Notice of Annual
Meeting of Stockholders and Proxy Statement dated August 13, 1998
and will be published in the Program for the meeting. If you do not
return your proxy or vote through the Internet or the telephone
prior to the meeting you may sign, date and hand your proxy card to
the Inspector of Election or any of the individuals at the
registration table. If you wish to change your vote or vote by
ballot, a ballot will be distributed to you during the meeting.
2. If you wish to comment on any of the proposals which will be voted
on at the meeting or ask an appropriate question about the business
of the Corporation at the end of the meeting, please register your
intention to do so on the sign-up sheet at the registration table.
3. Please register your attendance at the meeting on the sign-up sheet
at the registration table. Briefcases, purses and parcels may be
examined or searched before you are admitted to the meeting. No
signs, placards, banners or similar materials may be brought into
the meeting.
4. The use of cameras or sound recording equipment of any kind is
prohibited, except those employed by the Corporation to provide a
record of the proceedings.
5. Time has been reserved at the end of the meeting for stockholder
questions that relate to the business of the Corporation. After you
have registered and at the appropriate time, please go to the
microphone, state your name and confirm that you are a stockholder
or employee before asking your question. Please direct all comments
or questions to the Chairman. Comments or questions from the floor
are limited to two minutes to provide an opportunity for as many
stockholders as possible.
6. Personal grievances or claims are not appropriate subjects for the
meeting.
7. The Chairman in his sole discretion shall have authority to conduct
the meeting and rule on any questions or procedures that may arise.
Voting results announced by the Inspector of Election at the meeting are
preliminary. Final results will be included in the summary of the results
of the meeting included in the Corporation's first quarter Report on Form
10-Q.
<PAGE>
[X] Please mark your 2743
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF THE
CLASS III DIRECTORS, FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSAL 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 THROUGH 3.
1. Election of Class III Directors. FOR WITHHELD
For, except vote withheld from the following nominee(s): [_] [_]
2. Approval of Amendment to 1997 Stock Incentive Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Approval of Independent Accountants
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 4.
4. Stockholder proposal--declassify board.
FOR AGAINST ABSTAIN
[_] [_] [_]
I request my name be disclosed with my [_]
vote and comments, if any.
Comments on reverse side [_]
SIGNATURE(S) ____________________________________________________ DATE_________
THE SIGNER HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY THE SIGNER TO VOTE AT
SAID MEETING OR ANY ADJOURNMENTS THEREOF. 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.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
FDX CORPORATION
Dear Stockholder:
FDX Corporation encourages you to take advantage of new and convenient
ways by which you can vote your shares. You can vote your shares through
the Internet or the telephone. This eliminates the need to return the
proxy card.
To vote your shares through the Internet or the telephone you must use the
control number printed in the box above, just below the perforation. The series
of numbers that appear in the box above must be used to access the system.
1. To vote over the Internet:
. Log on to the Internet and go to the Web site HTTP://WWW.VOTE-BY-
NET.COM
2. To vote over the telephone:
. On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683) 24 hours
a day, 7 days a week
Your Internet or telephone vote authorizes the named proxies in the same manner
as if you marked, signed, dated and returned the proxy card.
IF YOU CHOOSE TO VOTE YOUR SHARES THROUGH THE INTERNET OR THE TELEPHONE, THERE
IS NO NEED FOR YOU TO MAIL BACK YOUR PROXY CARD.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
