<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
FEDERAL EXPRESS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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> 2
[LOGO]
FEDERAL EXPRESS CORPORATION
2005 CORPORATE AVENUE
MEMPHIS, TENNESSEE 38132
---------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 29, 1997
-----------------------------------------------------------------------
To the Stockholders of Federal Express Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Federal
Express Corporation (the "Corporation") will be held at the Memphis Marriott,
2625 Thousand Oaks Boulevard, Memphis, Tennessee on Monday, September 29, 1997
at 10:00 a.m., Central Daylight Time, for the following purposes:
1. To elect the Class II Directors to serve for the next three years;
2. To approve an amendment to the Corporation's Restated Certificate of
Incorporation to increase the number of authorized shares of the
Corporation's Common Stock;
3. To approve the adoption of the Corporation's 1997 Stock Incentive Plan
reserving for issuance pursuant to stock options 3 million shares of Common
Stock of the Corporation (representing 2.6% of the shares outstanding as of
August 4, 1997);
4. To ratify the designation of Arthur Andersen LLP as independent auditors of
the Corporation for fiscal year 1998;
5. To consider and act upon a stockholder proposal concerning guidelines and
reporting provisions for certain political contributions made by the
Corporation;
6. To consider and act upon a stockholder proposal to declassify the
Corporation's Board of Directors; and
7. 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 4, 1997 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 7, 1997
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING. THE ENCLOSED RETURN ENVELOPE REQUIRES NO
ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES OR CANADA, AS APPLICABLE.
<PAGE> 3
FEDERAL EXPRESS CORPORATION
2005 CORPORATE AVENUE 1997 PROXY STATEMENT
MEMPHIS, TENNESSEE 38132
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Federal Express Corporation (the
"Corporation") for use at the Annual Meeting of Stockholders to be held
September 29, 1997. Shares represented at the meeting by the enclosed form of
proxy will be voted by Mr. Theodore L. Weise, Executive Vice
President -- Worldwide Operations, or Mr. Kenneth R. Masterson, Executive Vice
President, General Counsel and Secretary, in accordance with the directions
noted thereon. If no direction is given, the shares will be voted FOR election
of the Class II Directors, FOR proposals 2 through 4 and AGAINST proposals 5 and
6.
A stockholder giving a proxy may revoke it before it is voted by giving
written notice of such revocation to the Secretary of the Corporation or by
executing a later dated proxy. Attendance at the meeting by a stockholder who
has given a proxy will not have the effect of revoking it unless the stockholder
gives such written notice of revocation to the Secretary before the proxy is
voted.
The Corporation's confidential voting policy provides that stockholder
proxies, ballots and voting materials that identify the votes of specific
stockholders will be kept confidential, except (i) as required by law, including
in connection with the pursuit or defense of legal or regulatory actions or
proceedings; (ii) in the event a stockholder expressly requests disclosure; or
(iii) during a contested election for the Board of Directors. In addition, the
policy states that the tabulators and inspectors of election, who may be the
Corporation's transfer agent or its employees, shall be independent and not the
employees of the Corporation. As in the past, the Corporation's transfer agent,
First Chicago Trust Company of New York, will tabulate the votes, and a
representative of the transfer agent will serve as inspector of election.
Proxies will be returned in envelopes addressed to the transfer agent and,
except in the limited circumstances specified above, will not be seen by or
reported to the Corporation.
The Definitive Proxy Statement and accompanying form of proxy will be first
sent or given to stockholders on or about August 18, 1997.
The solicitation of proxies is made by the Corporation and the cost of
solicitation will be borne by the Corporation. In addition to the solicitation
of proxies by use of the mail and the Corporation's internal mail system,
proxies may be solicited by directors, officers and regularly engaged employees
of the Corporation. Brokers, nominees and other similar record holders will be
requested to forward solicitation materials and will be reimbursed by the
Corporation upon request for their out-of-pocket expenses. The Corporation has
retained Morrow & Co., Inc. to assist in the solicitation of proxies for a fee
of $8,000 plus reimbursement of expenses.
The Annual Report to Stockholders for the Corporation's fiscal year ended
May 31, 1997, including financial statements, is enclosed. Such Annual Report is
not a part of the proxy solicitation materials and is not incorporated herein by
reference.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
Only stockholders of record at the close of business on August 4, 1997 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 II Directors and for all
other matters before the meeting. As of August 4, 1997, the Corporation had
outstanding 115,011,018 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
1
<PAGE> 4
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 4, 1997.
Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------ -------------------- ----------
<S> <C> <C>
Smith, Frederick W................................... 10,185,496(1) 8.74%
Allen, Robert H. .................................... 21,408(2) *
Baker, Howard H., Jr. ............................... 18,000(2) *
Cox, Robert L. ...................................... 68,000(3) *
DeNunzio, Ralph D. .................................. 20,000(2) *
Estrin, Judith L. ................................... 16,000(4) *
Greer, Philip........................................ 59,931(2)(5) *
Hyde, J. R., III..................................... 56,000(2)(6) *
Manatt, Charles T. .................................. 19,000(2) *
Mitchell, George J. ................................. 7,000(7) *
Smart, Jackson W., Jr. .............................. 60,468(2)(8) *
Smith, Joshua I. .................................... 8,600(9) *
Walsh, Paul S. ...................................... 3,000(10) *
Willmott, Peter S. .................................. 103,900(2) *
Weise, Theodore L. .................................. 199,540(11) *
Masterson, Kenneth R. ............................... 108,050(12) *
Graf, Alan B., Jr. .................................. 161,951(13) *
Jones, Dennis H. .................................... 187,450(14) *
All Directors and Executive Officers as a group (30
persons)........................................... 11,947,798(1)(2)(3)(4) 10.25%
(5)(6)(7)(8)
(9)(10)(11)(12)
</TABLE>
- ---------------
(*) Less than 1% of issued and outstanding shares of Common Stock of the
Corporation.
(1) Includes 7,489,856 shares of Common Stock owned of record by Mr. Smith
(representing 6.43% 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 625,000 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 4, 1997 under the Corporation's 1987, 1989 and 1993 Stock
Incentive Plans. First Tennessee Bank, N.A., Memphis, Tennessee, as Trustee
of a trust of which Mr. Smith is the lifetime beneficiary, holds 55% of
Enterprise's outstanding stock and Mr. Smith owns 45% directly. Mr. Cox is
a director of Enterprise.
(2) Includes 10,000 and 6,000 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 4, 1997 under the
Corporation's 1989 and 1993 Stock Incentive Plans.
2
<PAGE> 5
(3) Includes 60,000 shares of Common Stock owned by RLC Family Partners Ltd., a
limited partnership of which Mr. Cox is the sole general partner and 2,000
and 6,000 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 4, 1997 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 6,000 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 4, 1997 under the Corporation's 1989 and 1993 Stock
Incentive Plans.
(5) Excludes 27,312 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 4,000 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 4, 1997 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 and 6,000 shares, respectively, of Common Stock as to which
Mr. Smith has the right to acquire beneficial ownership through the
exercise of stock options which are vested or will become vested within 60
days of August 4, 1997 under the Corporation's 1989 and 1993 Stock
Incentive Plans.
(10) Includes 2,000 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 4, 1997 under the
Corporation's 1993 Stock Incentive Plan.
(11) Includes 96,002 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 4, 1997 under the
Corporation's Stock Incentive Plans and 3,454 shares owned by members of
Mr. Weise's family.
(12) Includes 65,550 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 4, 1997
under the Corporation's Stock Incentive Plans.
(13) Includes 103,950 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 4, 1997 under the
Corporation's Stock Incentive Plans.
(14) Includes 137,750 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 4, 1997 under the
Corporation's Stock Incentive Plans.
(15) Includes 1,529,226 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 4, 1997 under the Corporation's
Stock Incentive Plans.
3
<PAGE> 6
Listed below are certain persons who owned beneficially, as of December 31,
1996, more than five percent of the Corporation's Common Stock. This information
is copied from the latest Schedule 13G filed by these beneficial owners with the
Securities and Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ -------------------- ----------------
<S> <C> <C>
Brinson Partners, Inc. ................................. 8,627,313(1) 7.6%
209 South LaSalle Street
Chicago, Illinois 60604
The Capital Group Companies, Inc. ...................... 9,768,850(2) 8.6
333 South Hope Street
Los Angeles, California 90071
PRIMECAP Management Company............................. 7,528,700(3) 6.6
225 South Lake Avenue
Pasadena, California 91101
Sanford C. Bernstein & Co., Inc. ....................... 9,055,446(4) 7.9
One State Street Plaza
New York, New York 10004
Southeastern Asset Management, Inc. .................... 9,117,170(5) 8.0
6075 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
</TABLE>
- ---------------
(1) Brinson Partners, Inc., a registered investment advisor, shared investment
discretion and voting power with respect to the shares with Brinson Trust
Company, Brinson Holdings, Inc., SBC Holding (USA), Inc. and Swiss Bank
Corporation, affiliates of Brinson Partners, Inc. Neither Brinson Partners,
Inc. or any of its affiliates disclaimed beneficial ownership of any such
shares.
(2) Certain operating subsidiaries of The Capital Group Companies, Inc.,
exercised investment discretion over various institutional accounts which
held shares of the Corporation. Capital Research and Management Company, a
registered investment advisor, had investment discretion with respect to
7,640,000 of the aggregate shares. The remaining shares reported as being
beneficially owned by The Capital Group Companies, Inc. are beneficially
owned by Capital Guardian Trust Company, Capital International Limited and
Capital International S. A., all subsidiaries of The Capital Group
Companies, Inc., none of which individually owns 5% or more of the
Corporation's outstanding shares. The Capital Group Companies, Inc. had
sole power to vote or direct the vote with respect to 1,667,630 shares.
Neither The Capital Group Companies, Inc. nor any of its subsidiaries had
the power to vote or to direct the vote of the remaining shares. The
Capital Group Companies, Inc. disclaimed beneficial ownership of all such
shares of the Corporation.
(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.
(4) Sanford Bernstein, a registered investment advisor, exercised sole
investment discretion with respect to the shares and sole voting power with
respect to 4,662,333 of such shares. Sanford Bernstein does not disclaim
beneficial ownership of any such shares.
(5) Southeastern Asset Management, Inc., a registered investment advisor,
exercised sole investment discretion over 5,809,470 of the aggregate
shares, and shared investment discretion with respect to 3,234,800 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
5,128,670 of the aggregate shares, and shared voting power over 3,234,800
shares with Longleaf Partners
4
<PAGE> 7
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.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the date of the Annual Meeting, the Board of Directors will consist of
fourteen members, divided into three classes. Five nominees (the "Class II
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 five Directors (the "Class III Directors") having terms
expiring at the 1998 Annual Meeting and four Directors (the "Class I Directors")
having terms expiring at the 1999 Annual Meeting. Each of the nominees for
election as Class II Directors are now directors of the Corporation. Each
nominee has consented to being named in this Proxy Statement and agreed to serve
if elected. The proxy holders will vote the proxies received by them for the
five Class II nominees or, in the event of a contingency not presently foreseen,
for different persons as substitutes therefor unless authority is withheld.
Pursuant to the Board's retirement policy for Directors, Mr. Baker, a Class III
Director, has indicated his intention to retire immediately before the
Corporation's Annual Meeting on September 29, 1997. No successor for Mr. Baker
has been identified yet.
The following sets forth, with respect to each nominee and each Director
continuing to serve, his or her name, age, principal occupation and employment
during the past five years, the year in which he or she first became a Director
of the Corporation and directorships held in other corporations.
NOMINEES FOR ELECTION AS
CLASS II DIRECTORS FOR A THREE-YEAR
TERM EXPIRING AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
-------------------- --- --------------------------
<S> <C> <C>
Ralph D. DeNunzio 65 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 61 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 63 Special Counsel to Verner, Liipfert, Bernhard, McPherson and
1995 Hand, a law firm, since January 1995; Member of the United
States Senate from May 1980 to January 1995. Director, The
Walt Disney Company, UNUM Corporation and Xerox Corporation.
Jackson W. Smart, Jr. 66 Chairman, Executive Committee, First Commonwealth, Inc., a
1976 managed dental care company, since January 1996 and Chairman
and Chief Executive Officer of MSP Communications, Inc., a
radio broadcasting company, since October 1988. Trustee,
Goldman Sachs Money Market Trust, Goldman Sachs Trust and
Goldman Sachs Equity Portfolios Inc. Director, First
Commonwealth, Inc. and Evanston Hospital Corporation.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
-------------------- --- --------------------------
<S> <C> <C>
Joshua I. Smith 56 Chairman, President and Chief Executive Officer of The
1989 MAXIMA Corporation, an information and data processing firm,
since 1978. Director, The Allstate Corporation, Caterpillar,
Inc. and Inland Steel Industries, Inc.
</TABLE>
CLASS III DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1998 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR, YEAR FIRST PRINCIPAL OCCUPATION,
ELECTED AS DIRECTOR AGE BUSINESS AND DIRECTORSHIPS
-------------------- --- --------------------------
<S> <C> <C>
Howard H. Baker, Jr. 71 Partner, Baker, Donelson, Bearman & Caldwell, a law firm,
1988 since February 1995; Partner, Baker, Worthington, Crossley &
Stansberry, a law firm, from July 1988 to February 1995.
International Advisory Board, Barrick Gold Corporation.
Director, Pennzoil Company and United Technologies
Corporation.
Judith L. Estrin 42 President and Chief Executive Officer of Precept Software,
1989 Inc., a computer software company, since March 1995;
Consultant from September 1994 to March 1995; Chief
Executive Officer and President of Network Computing
Devices, Inc., a 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 and Sun
Microsystems, Inc.
Philip Greer 61 Senior Managing Principal 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 54 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 52 Chairman, President and Chief Executive Officer of the
1971 Corporation since 1983; Chief Executive Officer of the
Corporation since 1977; Chairman of the Corporation since
1975; President of the Corporation from 1971 to 1975.
</TABLE>
6
<PAGE> 9
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 69 Private Investor and Managing Partner, Challenge Investment
1977 Partners, an investment firm, since May 1993. Director,
GeoQuest International Holdings, Inc., Gulf Canada Resources
Ltd., Nuevo Energy Company and University of Texas
Investment Management Company. Trustee, Baylor College of
Medicine. Regent, Texas A&M University System.
Robert L. Cox 61 Partner, Waring Cox, a law firm, for more than the past five
1993 years; Secretary of the Corporation from June 1971 to
September 1993. Director, Delta Life Corporation.
Paul S. Walsh 42 Chairman, President and Chief Executive Officer of The
1996 Pillsbury Company, a wholly-owned subsidiary of Grand
Metropolitan 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 Grand Metropolitan PLC.
Peter S. Willmott 60 Chief Executive Officer and President of Zenith Electronics
1974 Corporation, an electronics manufacturing company, since
July 1996 and Chairman and Chief Executive Officer of
Willmott Services, Inc., a retail and consulting firm, since
June 1989; President and Chief Operating Officer of the
Corporation from September 1980 to May 1983; Executive Vice
President of the Corporation from 1977 to 1980; Senior Vice
President -- Finance and Administration of the Corporation
from 1974 to 1977. Director, Zenith Electronics Corporation
and Security Capital Group Incorporated.
</TABLE>
MEETINGS AND COMMITTEES
The Board of Directors of the Corporation conducted six regular meetings
and one special meeting during fiscal 1997. Each Director attended at least 75%
of the meetings of the Board and any committees on which they served.
The Board of Directors has an Audit Committee and a Compensation Committee.
The members of the Audit Committee are Philip Greer (Chairman), Howard H. Baker,
Jr., 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
eight times during fiscal 1997.
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
7
<PAGE> 10
with respect to the Corporation's compensation policies. The Compensation
Committee held seven meetings in fiscal 1997. The Board of Directors does not
have a nominating committee.
COMPENSATION OF DIRECTORS
For fiscal 1998, 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
meeting of its Committees 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 1997 Plan by
the stockholders) for 2,000 shares of Common Stock on September 29, 1997 and on
the date of the Corporation's fiscal year 1998 Annual Meeting, and for 4,000
shares on each of the three 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 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 is 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, whichever is later. The benefit is an annual amount,
payable as a lump-sum distribution or in quarterly installments for no less than
ten years and no more than fifteen years depending on years of service, equal to
10% for each year of service up to 100% of the annual retainer fee being paid to
the outside Director at the time the Plan is frozen. Each outside Director
currently serving on the Board, who is not yet vested (three Directors), will
now receive a benefit equal to 10% for each year of service up to the date the
Plan is frozen. The remaining outside Directors will receive their benefits
based on their service and annual retainer at the time the Plan is 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 also adopted a guideline for stock ownership
establishing a goal that each outside Director own shares in the Corporation
valued at five times ($200,000) the annual retainer fee by the end of the first
quarter of fiscal year 2000. At current stock prices, this goal represents
approximately 3,300 shares. Vested stock options are not counted as stock
ownership under the guideline. Seven of the Corporation's outside Directors
already own sufficient shares to comply with the new guideline. The Board
believes significant stock ownership by outside Directors further aligns their
interests with that of the Corporation's stockholders.
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Corporation's chief executive officer and its four other most
highly-compensated executive officers for services rendered in all capacities
during the fiscal years ended May 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ----------------------- ---------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) SARS (#) ($) ($)(2)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick W. Smith 1997 805,000 213,000 221,359(3) -- -- 1,125,000 19,655
Chairman, President and 1996 745,833 -- 131,742(3) -- -- 1,200,000 24,174
Chief Executive Officer 1995 700,000 515,500 96,541(3) -- 50,000 -- 22,232
Theodore L. Weise 1997 569,896 147,705(4) 614,545(5) 838,000 30,000 329,531 14,024
Executive Vice President 1996 449,604 37,500(4) 974,734(5) 1,333,500 11,500 352,388 12,947
Worldwide Operations 1995 417,994 188,480(4) 58,016(6) -- 27,500 -- 12,021
Kenneth R. Masterson 1997 476,344 148,084(4)(7) 614,545(5) 838,000 25,000 342,000 11,487
Executive Vice President, 1996 396,688 37,500(4) 764,729(5) 1,044,500 11,500 364,875 10,743
General Counsel 1995 378,478 138,880(4) -- -- 22,500 -- 10,617
and Secretary
Alan B. Graf, Jr. 1997 451,526 102,970(4) 614,545(5) 838,000 45,000 334,269 10,304
Executive Vice President 1996 375,421 25,000(4) 843,160(5) 1,152,875 11,500 362,250 10,312
and Chief Financial Officer 1995 347,477 137,640(4) -- -- 25,000 -- 9,578
Dennis H. Jones 1997 421,998 101,580(4)(7) 614,545(5) 838,000 40,000 273,094 10,083
Senior Vice President and 1996 367,419 -- 658,956(5) 900,000 11,500 364,988 9,673
Chief Information Officer 1995 343,651 137,330(4) -- -- 29,000 -- 9,980
</TABLE>
- ---------------
(1) The amounts in the table represent the closing market value of the shares
awarded at the date of grant. At May 30, 1997, the number and value of the
aggregate restricted stock holdings of the named individuals were as
follows:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES HELD VALUE
- ---- --------------------- ----------
<S> <C> <C>
F.W. Smith......................................... -- --
T.L. Weise......................................... 43,600 $2,283,550
K.R. Masterson..................................... 36,000 1,885,500
A.B. Graf, Jr...................................... 39,600 2,074,050
D.H. Jones......................................... 34,000 1,780,750
</TABLE>
The restrictions on the shares awarded to Mr. Weise lapse ratably over five
years after the date of award with respect to 18,000 shares granted in
October 1995 and 9,600 shares granted in April 1996 and over four years with
respect to 16,000 shares granted in February 1997. The restrictions on the
shares awarded to Mr. Masterson lapse ratably over five years after the date
of award with respect to 18,000 shares granted in December 1995, and over two
years after the date of award with respect to 2,000 shares granted in April
1996 and over four years with respect to 16,000 shares granted in February
1997. The restrictions on the shares awarded to Mr. Graf lapse ratably over
five years after the date of award with respect to 18,000 shares granted in
October 1995 and 5,600 shares granted in April 1996 and over four years with
respect to 16,000 shares granted in February 1997. The restriction on the
shares awarded to Mr. Jones lapse ratably over five years after the date of
award with respect to 18,000 shares granted in October 1995 and over four
years with respect to 16,000 shares granted in February 1997.
Holders of restricted shares are entitled to receive any dividends declared
on such shares. The Corporation has never declared a dividend on its shares
because its policy has been to reinvest earnings in the business of the
Corporation.
9
<PAGE> 12
(2) These amounts represent profit sharing payments to the named executive
officers and contributions under the Corporation's Profit Sharing Plan.
(3) Of the amounts shown for 1997, 1996 and 1995, $152,528, $95,174 and $69,437,
respectively, represent personal use of corporate aircraft treated as
taxable income to Mr. Smith. Of the amount shown for 1997, $62,497 is for
financial counseling.
(4) The amounts shown for 1997 represent annual performance bonuses received by
each officer under the 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. The amounts shown for 1995 represent annual performance
bonuses received by each officer under the Corporation's annual performance
bonus plan.
(5) The amounts shown for Messrs. Weise, Masterson, Graf and Jones in 1997 and
1996 represent tax reimbursements related to restricted stock awards.
(6) Of the amount shown for 1995, $55,018 is for financial counseling.
(7) This amount includes $25,000 from a Five Star Award, the Corporation's
highest special achievement award, received by Mr. Masterson and Mr. Jones,
respectively.
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, 1997 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 $63.02 and $100.35, respectively, for the
options with an exercise price of $38.6875. No gain to the optionees is possible
without an increase in stock price which will benefit all stockholders
proportionately. These potential realizable values are based solely on
arbitrarily assumed rates of appreciation required by applicable Securities and
Exchange Commission regulations. Actual gains, if any, on option exercise and
common stock holdings are dependent on the future performance of the
Corporation's Common Stock and overall stock market conditions. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH)(*) DATE 5% ($) 10% ($)
- ---- ------------ ------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
F.W. Smith........... -- -- -- -- -- --
T.L. Weise........... 30,000 2.58 38.6875 7/12/06 729,975 1,849,875
K.R. Masterson....... 25,000 2.15 38.6875 7/12/06 608,313 1,541,563
A.B. Graf, Jr........ 45,000 3.87 38.6875 7/12/06 1,094,963 2,774,813
D.H. Jones........... 40,000 3.44 38.6875 7/12/06 973,300 2,466,500
</TABLE>
(*) The option exercise price of the options granted to the individuals shown
above was the fair market value of the Corporation's Common Stock at the
date of grant of the option. The options granted to Mr. Weise and Mr.
Masterson 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. Graf and Mr. Jones are subject
to a vesting schedule as follows: 25% after four years from the date of
grant; 50% after five years; 75% after six years; and 100% after seven
years. The options may not be transferred in any manner other than by
10
<PAGE> 13
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, 1997, options for a total of 1,162,000 shares were granted to
various employees of the Corporation.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table summarizes for each of the named executive officers
certain information relating to stock options exercised by them during the
fiscal year ended May 31, 1997. 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 30, 1997,
which was $52.3125 per share. These values, unlike the amounts set forth in the
column "Value Realized," have not been, and may never be, realized. Such options
have not been, and may not be, exercised; and actual gains, if any, on exercise
will depend on the value of the Corporation's Common Stock on the date of
exercise. There can be no assurance that these values will be realized.
Unexercisable options are those which have not yet vested.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.W. Smith........... -- -- 565,000 140,000 16,175,469 2,530,000
T.L. Weise........... 63,728 1,967,359 60,902 119,400 1,332,228 2,070,963
K.R. Masterson....... 57,400 1,604,725 34,600 102,000 637,819 1,754,613
A.B. Graf, Jr........ 24,200 674,956 76,000 142,600 1,608,525 2,468,025
D.H. Jones........... 19,000 510,469 109,800 139,200 2,574,781 2,401,750
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The following table sets forth estimates of the possible future payouts to
each of the named executive officers under the Corporation's long-term
performance bonus plans.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
NUMBER OF OTHER PERIOD UNTIL -----------------------------------
SHARES, UNITS OR MATURATION THRESHOLD TARGET MAXIMUM
NAME OTHER RIGHTS (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
- ---- ----------------- ------------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
F.W. Smith................ N/A 5/31/98 $500,000 $1,000,000 $1,500,000
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
T.L. Weise................ N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000
N/A 5/31/00 225,000 450,000 675,000
K.R. Masterson............ N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000
N/A 5/31/00 225,000 450,000 675,000
A.B. Graf, Jr............. N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000
N/A 5/31/00 225,000 450,000 675,000
D.H. Jones................ N/A 5/31/98 125,000 250,000 375,000
N/A 5/31/99 125,000 250,000 375,000
N/A 5/31/00 125,000 250,000 375,000
</TABLE>
11
<PAGE> 14
In 1996, the Compensation Committee established a long-term performance
bonus plan to provide a long-term cash bonus opportunity to members of upper
management, including executive officers, at the conclusion of fiscal year 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.
However, no amounts can be earned until fiscal 1998 because it is only after the
conclusion of that year that the Committee can determine the extent of
achievement of the three-year earnings per share objectives. The Committee has
established similar plans for the three-fiscal year periods 1997 through 1999
and 1998 through 2000 providing bonus opportunities for 1999 and 2000,
respectively, if certain earnings per share targets are achieved with respect to
those periods. No amounts can be earned for the 1997 through 1999 and 1998
through 2000 plans until 1999 and 2000, 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 13 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>
$ 400,000.............................. $ 80,000 $120,000 $160,000 $200,000 $200,000
500,000.............................. 100,000 150,000 200,000 250,000 250,000
600,000.............................. 120,000 180,000 240,000 300,000 300,000
700,000.............................. 140,000 210,000 280,000 350,000 350,000
800,000.............................. 160,000 240,000 320,000 400,000 400,000
900,000.............................. 180,000 270,000 360,000 450,000 450,000
1,000,000.............................. 200,000 300,000 400,000 500,000 500,000
1,100,000.............................. 220,000 330,000 440,000 550,000 550,000
</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 credited years of service achieved.
12
<PAGE> 15
<TABLE>
<CAPTION>
YEARS OF
NAME COVERED COMPENSATION SERVICE
- ---- -------------------- --------
<S> <C> <C>
F.W. Smith.................................................. $868,569 25
T.L. Weise.................................................. 518,044 25
K.R. Masterson.............................................. 459,230 17
A.B. Graf, Jr............................................... 408,283 17
D.H. Jones.................................................. 395,821 22
</TABLE>
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. In addition, the
Corporation utilizes compensation surveys published by three major consulting
firms of companies in general industry with $6 billion or more in annual sales.
The Committee believes that general industry is an appropriate comparison
category in determining competitive compensation because the Corporation's
executives can be recruited from, and by, businesses outside the Corporation's
industry peer group. In addition, in its 1997 executive compensation review, the
Committee considered compensation information on the five highest paid executive
officers of other companies available from the proxy statements of a group of 15
transportation companies and a group of 31 companies in general industry with
annual sales of $8-$12 billion. The transportation companies comprise most of
the companies in the Standard & Poor's Transportation Index and the Dow Jones
Transportation Average, but also include several other companies not in these
indices. Base salaries are generally targeted at the median (or 50th percentile)
of base salaries for comparable positions in the comparison surveys mentioned
above.
None of the factors mentioned above is given any particular weight in
determining base compensation. Other factors may also influence such
determination, such as the relative extent of an individual's experience or a
desire to retain a valuable executive. The Committee's target for Mr. Smith is
the 50th percentile as is the case with the other executive officers. Mr.
Smith's base salary was increased in 1997; however, his base salary remains at
about the 40th percentile of base salaries of chief executive officers in the
comparison surveys.
Performance Bonus Plans. Under the Corporation's annual performance bonus
plan, a bonus opportunity is established at the beginning of each fiscal year
for management and certain professional employees based on the degree of
attainment of both corporate and individual goals for the year. Each position
eligible for such bonus, including all executive officers but excluding Mr.
Smith, is assigned a number of points based on salary grade. Individual
objectives for each position are established and points are allocated to the
objectives by each participant and his or her immediate superior. A participant
earns points by achieving his or her individual objectives. The amount of a
participant's bonus is determined by the number of points earned, multiplied by
the dollar value, if any, assigned to each point by the Committee according to
the extent of achievement of plan objectives.
13
<PAGE> 16
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 1997, the threshold bonus target was
established at an amount which, when added to base salary, would be less than
the 50th percentile of total salary and bonus for comparable positions in the
comparison surveys discussed above under Base Salary. Thus, total salary and
bonus for executive officers (assuming achievement of all individual objectives)
is designed to range from less than the 50th up to the 75th percentile of total
salary and bonus for comparable positions in the comparison surveys according to
the degree to which plan objectives are met or exceeded.
The plan objectives established for 1997 were (i) a pretax income goal and
(ii) an internal measure reflecting a targeted level of service quality. Bonuses
were awarded for 1997 because plan targets for pretax income were achieved.
Mr. Smith's bonus is not determined by a number of points specifically
assigned to his position as is the case with other management personnel, but by
whether corporate business plan objectives are met or exceeded. If such
objectives are met, the Committee determines and recommends to the Board of
Directors a bonus which, when combined with base salary, may be up to the 75th
percentile of total salary and bonus for chief executive officers in the
comparison surveys discussed above under Base Salary. In addition to the
comparison surveys, the Committee also considered publicly available proxy
statement information on the compensation of chief executive officers of two
groups of other public companies, as described above under Base Salary, in
determining Mr. Smith's total salary and bonus. Mr. Smith received an annual
bonus of $213,000 for 1997.
In 1995, 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 1997 if the
Corporation achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1995 through 1997.
Bonuses were awarded under the long-term plan in 1997 to upper management,
including the named executive officers, based on achievement of maximum plan
targets for the three-fiscal year period. The Committee has established similar
plans for the three-fiscal year periods 1996 through 1998, 1997 through 1999 and
1998 through 2000 providing bonus opportunities for 1998, 1999 and 2000,
respectively, if certain earnings per share targets are achieved with respect to
those periods. The Long-Term Incentive Plans Table on page 11 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 1997 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
14
<PAGE> 17
promotion of an individual to a higher position, a desire to retain a valued
executive, a desire to recognize a particular officer's contribution to the
Corporation or the number of shares then available for award. In 1997, 201,900
shares of restricted stock were awarded. During 1997, Mr. Manatt abstained from
voting on awards, approved by the Committee, to the Corporation's executive
officers under the Corporation's Stock Incentive and Restricted Stock Plans.
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
<TABLE>
<S> <C>
Jackson W. Smart, Jr. -- Chairman
Robert H. Allen Ralph D. DeNunzio
J.R. Hyde, III Charles T. Manatt
Paul S. Walsh
May 31, 1997
</TABLE>
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, 1996 through August 4, 1997 and the
balance of such loans outstanding at August 4, 1997, for those executive
officers with loan balances which exceeded $60,000.
<TABLE>
<CAPTION>
HIGHEST BALANCE BALANCE AT
EXECUTIVE OFFICER DURING PERIOD AUGUST 4, 1997
- ----------------- --------------- --------------
<S> <C> <C>
Theodore L. Weise, Executive Vice President Worldwide
Operations................................................ $355,373 $355,373
</TABLE>
The law firm of Baker, Donelson, Bearman & Caldwell represented the
Corporation during fiscal year 1997. Mr. Baker, a Director, is a named partner
in that firm. Mr. Baker also represented the Corporation pursuant to a retainer
arrangement during fiscal 1997 for a fee of $200,000. The law firm of Waring Cox
represented the Corporation during fiscal year 1997. Mr. Cox, a Director, is a
named partner in that firm. The Corporation expects to utilize the services of
these firms during fiscal year 1998. Mr. Mitchell, a Director and nominee,
represented the Corporation pursuant to a retainer arrangement during fiscal
1997 for a fee of $100,000. Mr. Manatt, a Director and nominee,
15
<PAGE> 18
represented the Corporation pursuant to a retainer arrangement during fiscal
1997 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 Messrs. Baker, Manatt and Mitchell during fiscal 1998. The
Corporation is considering purchases of software from Precept Software, Inc.
valued at approximately $265,000 during fiscal 1998. Ms. Estrin, a Director, is
the President and Chief Executive Officer of Precept Software, Inc.
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, 1992 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)
[CHART]
<TABLE>
<CAPTION>
------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FDX 100 120 188 147 188 257
------------------------------------------------------------------------
S&P 500 Composite Index 100 112 116 140 180 232
------------------------------------------------------------------------
S&P Transportation Index 100 111 115 122 159 191
------------------------------------------------------------------------
</TABLE>
The total return assumes that all dividends were reinvested. No dividends
were paid on the Corporation's Common Stock during the period.
16
<PAGE> 19
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 RESTATED
CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
(PROPOSAL NO. 2)
The Board of Directors has authorized the submission to the stockholders
for their approval of an amendment to Article Fourth of the Corporation's
Restated Certificate of Incorporation to provide for an increase in the number
of shares of Common Stock authorized for issuance from 200,000,000 to
400,000,000. A copy of the revised Article Fourth is included in this Proxy
Statement as Exhibit A.
As of May 31, 1997, the Corporation had 114,906,753 shares of Common Stock
issued and outstanding and there were 7,218,819 shares of Common Stock reserved
for issuance under the Corporation's Stock Incentive and Restricted Stock Plans.
Although the Corporation has considered, and continues to consider from
time to time, opportunities which may involve the issuance of its Common Stock,
the Corporation has no present plans and has not entered into any contracts,
arrangements or understandings (except as noted above with respect to stock
option plans) concerning the issuance of any additional Common Stock. The Board
of Directors believes an increase in the maximum number of authorized shares of
Common Stock is advisable at this time to provide for the availability of shares
for issuance in the future if the need arises, such as in connection with stock
options, stock dividends, stock splits, possible acquisitions, financings,
public offerings and other appropriate corporate purposes.
The amendment, if approved, would not itself affect the relative equities
of present stockholders. However, if the amendment is approved, the Board of
Directors will not be required to obtain further stockholder approval prior to
the issuance of any such additional shares except in transactions legally
requiring stockholder approval under Delaware law, such as certain mergers to
which the Corporation might be a party. Stockholders do not have preemptive
rights to subscribe for or purchase additional shares of Common Stock and any
issuance of Common Stock on other than a pro-rata basis may dilute the ownership
interest of present stockholders. Approval of the amendment by the affirmative
vote of the holders of a majority of the Corporation's issued and outstanding
Common Stock at August 4, 1997 is required for its adoption.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
1997 STOCK INCENTIVE PLAN
(PROPOSAL NO. 3)
The use of stock incentives to secure and retain key employees of
outstanding ability, to further identify the interests of employees with the
interests of the stockholders, to encourage greater stock ownership by, and to
provide added incentive to, those individuals who carry a major part of the
responsibility for the success of the business has been and remains important in
American industry. In furtherance of these objectives, the Board of Directors
has adopted the 1997 Stock Incentive Plan
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(the "1997 Plan"), subject to approval thereof by the vote of the holders of a
majority of the Common Stock represented and voting at the 1997 Annual Meeting.
A copy of the 1997 Plan is attached hereto as Exhibit B and the statements made
in this Proxy Statement with respect to the 1997 Plan are qualified by and
subject to the more complete information set forth therein.
The 1997 Plan provides for the granting of options to purchase for cash an
aggregate of not more than 3,000,000 shares of the Common Stock of the
Corporation (subject to adjustments in the event of a consolidation or other
corporate reorganization in which the Corporation is the surviving corporation)
which represents 2.6% of the outstanding shares of Common Stock as of August 4,
1997. The 1997 Plan also provides for automatic grants, over the five-year
period beginning with the 1997 Annual Meeting, to Directors who are not
employees of the Corporation. During the term of the Plan, no person may be
granted options for more than 400,000 shares during any fiscal year.
Unless otherwise determined by the Committee, options may be granted to key
employees, including officers (approximately 115 as of August 4, 1997) of the
Corporation and its subsidiaries, as may be designated by those members, not
less than two, of the Compensation Committee of the Board of Directors, each of
whom is an "outside director" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and a "disinterested
person" as defined in Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Committee"). The Committee
will select persons to receive options from among the eligible employees,
determine the types of options and the number of shares to be awarded to
optionees, and set the terms, conditions and provisions of the options
consistent with the terms of the 1997 Plan. The Committee will also establish
rules for the administration of the 1997 Plan.
Under the terms of the 1997 Plan, the Committee may grant options to
purchase Common Stock of the Corporation at a price which may not be less than
the fair market value of the shares, as determined by the mean between the high
and low prices of the stock on the New York Stock Exchange on the date the
option is granted. In addition, the 1997 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 1997 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 fiscal year 1997 and 1998 Annual
Meetings, the option to Directors will be for 2,000 shares, and for the fiscal
year 1999, 2000 and 2001 Annual Meetings, the option will be for 4,000 shares.
Each person who is not also an employee of the Corporation and who is elected or
appointed a Director during such five-year period 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 Plan. The exercise price of
options granted to Directors under the 1997 Plan must be equal to the mean
between the high and low prices of the 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. As of August 4, 1997, the closing
price of the Corporation's Common Stock was $63.6875. The 1997 Plan does not
permit the repricing of options or the grant of discounted options.
Unless otherwise determined by the Committee, options may not be exercised
later than ten years after the date of grant. Subject to the limitations imposed
by the provisions of the Code, certain of the options granted under the 1997
Plan to key employees may be designated "incentive stock options." The
Corporation may make interest-free demand loans to holders of options not
designated as incentive stock options for the purpose of exercising such options
and paying any tax liability associated with such exercise.
Unless otherwise determined by the Committee, no option may be exercised
until the optionee has completed a year of service after the option is granted,
except in the case of termination of an employee's employment or a Director's
directorship because of death or disability, nor may an
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<PAGE> 21
option be exercised after termination of an employee's employment or a
Director's directorship for any reason other than death, disability or
retirement. Unless otherwise determined by the Committee, options may be
exercised within twenty-four months (i) after the optionee retires or (ii) after
termination of an employee's employment or a Director's directorship on account
of permanent disability (except that no option may be exercised less than six
months from the date of grant), and may be exercised within twelve months after
death when in the service of the Corporation or any of its subsidiaries. In the
event of death within the twenty-four month period following termination of an
employee's employment or a Director's directorship for retirement or permanent
disability, options may be exercised by the optionee's legal representative
within twelve months following the date of death, unless otherwise determined by
the Committee.
Since the contemplated options are to be granted as incentives, no cash
consideration will be received for the granting of the options. Payment in full
of the option price must be made upon exercise of any option. The options are
not transferable by the optionee except by will or by the laws of descent and
distribution, unless otherwise determined by the Committee.
The 1997 Plan provides for the use of authorized but unissued shares or
treasury shares. In the event of approval of the 1997 Plan, and to the extent
that treasury shares are not acquired for the purpose of the 1997 Plan,
authorized but unissued Common Stock of the Corporation will be issued upon
exercise of options granted under the 1997 Plan.
Unless otherwise determined by the Committee, no options or awards may be
granted under the 1997 Plan after May 30, 2007, but options or awards granted
prior to such date may extend beyond that date. The 1997 Plan may be
discontinued by the Board of Directors, but no termination may impair options or
awards granted prior thereto.
Upon the occurrence of a change in control of the Corporation, each holder
of an unexpired option under the 1997 Plan will have the right to exercise the
option in whole or in part without regard to the date that such option would be
first exercisable, and such right will continue, with respect to any such holder
whose employment with the Corporation or subsidiary or whose directorship
terminates following a change in control, for a period ending on the earlier of
the date of expiration of such option or the date which is twelve months after
such termination of employment or directorship.
The Committee may alter or amend the 1997 Plan at any time. No amendment by
the Committee, however, may (i) increase the total number of shares reserved for
purposes of the 1997 Plan, (ii) reduce the option price to an amount less than
the fair market value at the time the option was granted, (iii) increase the
maximum number of options which may be granted to an optionee under the 1997
Plan, or (iv) modify the provision for the automatic grant of options to
Directors, unless such amendment is approved by the stockholders. No amendment
or alteration may impair the rights of optionees with respect to options
theretofore granted, except the Committee may revoke and cancel any outstanding
options which, in the aggregate, would create a significant adverse effect on
the Corporation's financial statements in the event that the Financial
Accounting Standards Board issues a statement requiring an accounting treatment
which causes such adverse effect with respect to options then outstanding. The
Committee has the power to interpret the 1997 Plan and to make all other
determinations necessary or advisable for its administration.
Under current federal tax law, non-incentive stock options granted under
the 1997 Plan will not result in any taxable income to the optionee at the time
of grant or any tax deduction to the Corporation. Upon the exercise of such
option, the excess of the market value of the shares acquired over their cost is
taxable to the optionee as compensation income and is generally deductible by
the Corporation. The optionee's tax basis for the shares is the market value
thereof at the time of exercise.
Neither the grant nor the exercise of an option designated as an incentive
stock option results in any federal tax consequences to either the optionee or
the Corporation. At the time the optionee
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sells shares acquired pursuant to the exercise of an incentive stock option, the
excess of the sale price over the exercise price will qualify as a capital gain,
provided the applicable holding period is satisfied. If the optionee disposes of
such shares within two years of the date of grant or within one year of the date
of exercise, an amount equal to the lesser of (i) the difference between the
fair market value of the shares on the date of exercise and the exercise price,
or (ii) the difference between the exercise price and the sale price will be
taxed as ordinary income and the Corporation will be entitled to a deduction in
the same amount. The excess, if any, of the sale price over the sum of the
exercise price and the amount taxed as ordinary income will qualify as capital
gain if the applicable holding period is satisfied. If the optionee exercises an
incentive stock option more than three months after his or her termination of
employment due to retirement, he or she is deemed to have exercised a
non-incentive stock option.
The Corporation believes that compensation received by optionees on the
exercise of non-incentive stock options or the disposition of shares acquired
upon exercise of any incentive stock options will be considered
performance-based compensation and not subject to the $1,000,000 deductibility
limit of Section 162(m) of the Code.
For fiscal 1998, the amounts that may be received by the Directors as a
group under the 1997 Plan are set forth in the following table.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1997 STOCK INCENTIVE PLAN
-----------------------------------
NAME AND POSITION DOLLAR VALUE ($) 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
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 1997 Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
AUDITORS
(PROPOSAL NO. 4)
Arthur Andersen LLP have been the auditors for the Corporation since 1972.
Upon the recommendation of the Audit Committee, the Board of Directors has
designated Arthur Andersen LLP to be the independent auditors of the Corporation
for the year ending May 31, 1998. 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.
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STOCKHOLDER PROPOSAL -- POLITICAL CONTRIBUTIONS
(PROPOSAL NO. 5)
The Service Employees International Union (SEIU) Master Trust, 1313 L
Street NW, Washington, DC 20005, the beneficial owner of 12,200 shares of Common
Stock of the Corporation, and the Southwest Ohio Carpenters District Council
Pension Fund, 130 Tri-County Parkway, Suite 403, Cincinnati, Ohio 45246, the
beneficial owner of 3,400 shares of Common Stock of the Corporation, have
submitted the following proposal.
PROPONENT'S STATEMENT IN SUPPORT
Whereas: The American political election process is the cornerstone of
the country's democratic system of government, serving as the central means
by which all citizens can participate in the public debate of ideas and
elect representatives to protect and promote our collective interests; and
Whereas: The integrity of the American political election process is
of critical importance to all citizens; and
Whereas: There has been a significant increase in the amount of money
injected into the political election process in the form of "soft dollar"
contributions from private sector contributors. ("Soft dollar"
contributions are those financial contributions given by individuals or
institutions to national and state political parties for "party building"
purposes); and
Whereas: The significant increase in the amount of money injected into
the political election system in the form of "soft dollar" contributions
from private sector contributors has contributed to increasing public
cynicism towards an electoral process in which a declining percentage of
citizens are participating; and
Whereas: The direct contribution of corporate assets, held in the
collective interests of all corporate shareholders, into the political
election process without written contribution guidelines or contribution
reporting to shareholders is inappropriate; therefore, be it
RESOLVED, that the shareholders of Federal Express Corporation
("Company") urge the Board of Directors to establish corporate political
contribution guidelines and reporting provisions that include the following
features:
1. Contribution Guidelines: The Board of Directors would present
written contribution guidelines in the Company's annual report and Form
10-K that clearly define the issues and interests that the Corporation
is seeking to promote with its "soft dollar" political contributions;
and
2. Contribution Reporting: Comprehensive political contribution
reporting would be provided in the Company's annual report and Form 10-K
documenting all the entities that were the recipients of the Company's
political "soft dollar" contributions during the previous twelve month
period.
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
Legally permitted contributions are made by the Corporation from time to
time in support of, or in opposition to, specific ballot issues, where a
substantial interest to the Corporation exists. The Corporation has, where
lawful, also made modest contributions to individual candidates in state
elections and may do so in the future. In addition, the Corporation has
infrequently made legally permitted "soft money" contributions to the national
political parties in modest amounts to stimulate individual political activities
by the general population. Under current federal law, the national party
committees publicly disclose all such "soft money" contributions.
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<PAGE> 24
The Corporation has authorized the formation of an employee political
action committees (PAC) through which individuals may, on an entirely voluntary
basis, contribute personal funds to candidates and political committees. The
Corporation assumes the small administrative cost associated with this PAC.
The Corporation and the PAC comply with all federal and state reporting
requirements which have been established to ensure public disclosure of
political contributions. Information regarding all federal contributions is
available to the public and may be obtained by contacting the Federal Election
Commission. These reports include public disclosure of "soft money"
contributions.
In addition, the information required to be disclosed in the Corporation's
Annual Report on Form 10-K is governed by the Securities Exchange Act of 1934,
as amended, and the regulations thereunder. These rules do not require
disclosure of the Corporation's political contributions in the Form 10-K;
therefore, including this information will require additional preparation time
and unnecessary expense to the Corporation.
For these reasons, the Board of Directors believes that no useful purpose
would be served by taking the further actions envisioned by this Proposal.
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.
STOCKHOLDER PROPOSAL -- DECLASSIFY BOARD
(PROPOSAL NO. 6)
The Amalgamated Bank of New York LongView Collective Investment Fund, 11-15
Union Square, New York, New York 10003, the beneficial owner of 28,000 shares of
Common Stock of the Corporation, has submitted the following proposal:
RESOLVED, the stockholders of Federal Express 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.
The Federal Express Board of Directors is divided into three classes
serving staggered, three-year terms. We believe that the Company's
classified Board of Directors maintains the incumbency of the current
Board, and therefore of current management, which in turn limits the
Board's accountability to stockholders.
The elimination of Federal Express's classified Board would require
each director to stand for election annually and allow stockholders an
opportunity to register their views on the performance of the Board
collectively and each director individually. We believe this 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.
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We believe that concerns expressed by companies with classified boards
that the annual election of all directors could leave companies without
experienced directors in the event that all incumbents are voted out by
stockholders are unfounded. In our view, in the unlikely event that
stockholders vote to replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors and reflect the
need for change.
WE URGE YOU TO VOTE FOR THIS RESOLUTION!
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
At the 1989 Annual Meeting of the Corporation's stockholders, the
stockholders approved an amendment to the Corporation's By-laws to 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 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 creates 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 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, we believe 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.
With respect to proponent's claim that the classified board has maintained
the incumbency of the current Board or entrenched management, it should be noted
that since 1989 (the year the Board was classified), six new individuals have
joined the Corporation's Board of Directors as a result of the Board's
retirement policy for Directors and the addition of new directorships created by
the Board. During the same period, most of the Corporation's senior management
has changed.
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, in accordance with the terms approved by the
Corporation's stockholders in 1989, 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 10% of the
outstanding shares of the Corporation. This group together with approximately
10% of the other stockholders could defeat such a proposal.
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.
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STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Corporation's
1998 Annual Meeting of Stockholders must be received by the Corporation on or
prior to April 8, 1998 to be eligible for inclusion in the Corporation's proxy
statement and form of proxy to be used in connection with the 1998 Annual
Meeting of Stockholders.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
at the meeting. If, however, other matters are properly presented, the persons
named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.
By order of the Board of Directors,
/s/ Kenneth R. Masterson
KENNETH R. MASTERSON
Secretary
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<PAGE> 27
EXHIBIT A
AMENDMENT TO THE FEDERAL EXPRESS CORPORATION
RESTATED CERTIFICATE OF INCORPORATION
If approved by the stockholders of the Corporation, delete Article Fourth
and substitute in lieu thereof the following:
ARTICLE FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 404,000,000 shares
consisting of 4,000,000 shares of Series Preferred Stock, no par value
(herein called the "Series Preferred Stock"), and 400,000,000 shares of
Common Stock, par value $0.10 per share (herein called the "Common Stock").
A-1
<PAGE> 28
EXHIBIT B
FEDERAL EXPRESS CORPORATION
1997 STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of the Federal Express Corporation 1997 Stock Incentive Plan
(the "Plan") is to aid Federal Express Corporation (the "Corporation") and its
subsidiaries in securing and retaining key employees and directors of
outstanding ability and to provide additional motivation to such employees and
directors to exert their best efforts on behalf of the Corporation and its
subsidiaries. The Corporation expects that it will benefit from the added
interest which such employees and directors will have in the welfare of the
Corporation as a result of their ownership or increased ownership of the
Corporation's Common Stock.
2. STOCK SUBJECT TO THE PLAN
The total number of shares of Common Stock of the Corporation that may be
optioned under the Plan is 3,000,000 shares, which may consist, in whole or in
part, of unissued shares or treasury shares. Any shares optioned hereunder that
are canceled or cease to be subject to the option may again be optioned under
the Plan.
3. ADMINISTRATION
The Plan shall be administered by those members, not less than two, of the
Compensation Committee of the Board of Directors, each of whom is an "outside
director" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), and a "disinterested person" as defined in Rule
16b-3 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Committee"). Members of the Committee shall be eligible
for participation in the automatic grant of options to directors hereunder.
The Committee shall have the sole authority to grant options under the Plan
and, consistent with the Plan, to determine the provisions of the options to be
granted, to interpret the Plan and the options granted under the Plan, to adopt,
amend and rescind rules and regulations for the administration of the Plan and
generally to administer the Plan and to make all determinations in connection
therewith which may be necessary or advisable, and all such actions of the
Committee shall be binding upon all participants. Committee decisions and
selections shall be made by a majority of its members present at the meeting at
which a quorum is present, and shall be final. Any decision or selection reduced
to writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly held.
4. ELIGIBILITY
Unless otherwise determined by the Committee, key employees, including
officers, of the Corporation and its subsidiaries (but excluding members of the
Committee except as provided in paragraph 7) who are from time to time
responsible for the management, growth and protection of the business of the
Corporation and its subsidiaries are eligible to be granted options under the
Plan. The employees who shall receive options under the Plan shall be selected
from time to time by the Committee in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares to be covered by the option or options granted to each such employee
selected, subject to the maximum number of stock options which may be granted to
an optionee under the Plan.
B-1
<PAGE> 29
5. LIMIT ON AWARDS
Unless otherwise determined by the Committee, no option may be granted
under the Plan after May 30, 2007, but options theretofore granted may extend
beyond that date.
No optionee shall receive options for more than 400,000 shares of the
Corporation's Common Stock during any fiscal year under the Plan.
6. TERMS AND CONDITIONS OF STOCK OPTIONS
All options granted under this Plan shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith as the Committee
shall determine.
(a) Option Price. The option price per share for options granted to
employees shall be determined by the Committee, but shall not be less than
100% of the fair market value at the time the option is granted. The fair
market value shall, for all purposes of the Plan, be the mean between the
high and low prices at which shares of such stock are traded on the New
York Stock Exchange on the day on which the option is granted. In the event
that the method for determining the fair market value of the shares
provided for in this paragraph (a) shall not be practicable, then the fair
market value per share shall be determined by such other reasonable method
as the Committee shall, in its discretion, select and apply at the time of
grant of the option concerned.
(b) Time of Exercise of Option. Unless otherwise determined by the
Committee, each option shall be exercisable during and over such period
ending not later than ten years from the date it was granted, as may be
determined by the Committee and stated in the option.
Unless otherwise determined by the Committee, no option shall be
exercisable during the year ending on the first anniversary date of the
granting of the option, except as provided in paragraphs 6(d) and 14 of the
Plan.
(c) Payment. Each option may be exercised by giving written notice to
the Corporation specifying the number of shares to be purchased and
accompanied by payment in full (including applicable taxes, if any) in cash
therefor. No option shall be exercised for less than the lesser of 50
shares or the full number of shares for which the option is then
exercisable. No optionee shall have any rights to dividends or other rights
of a stockholder with respect to shares subject to his or her option until
he or she has given written notice of exercise of his or her option, paid
in full for such shares and, if requested, given the representation
described in paragraph 11 of the Plan.
(d) Rights After Termination of Employment. Unless otherwise
determined by the Committee, if an optionee's employment by the Corporation
or a subsidiary or if a director's directorship terminates by reason of
such person's retirement, the optionee's option may thereafter be exercised
to the extent to which it was exercisable at the time of retirement but may
not be exercised after the expiration of the period of twenty-four months
from the date of such termination of employment or directorship or of the
stated period of the option, whichever period is the shorter; provided,
however, that if the optionee dies within twenty-four months after such
termination of employment or directorship, any unexercised option, to the
extent to which it was exercisable at the time of the optionee's death, may
thereafter be exercised by the legal representative of the estate or by the
legatee of the option under a last will for a period of twelve months from
the date of the optionee's death or the expiration of the stated period of
the option, whichever period is the shorter.
Unless otherwise determined by the Committee, if an optionee's
employment by the Corporation or a subsidiary or if a director's
directorship terminates by reason of permanent disability, the optionee's
option may thereafter be exercised in full (except that no option may
B-2
<PAGE> 30
be exercised less than six months from the date of grant) but may not be
exercised after the expiration of the period of twenty-four months from the
date of such termination of employment or directorship or of the stated
period of the option, whichever period is the shorter; provided, however,
that if the optionee dies within a period of twenty-four months after such
termination of employment or directorship, any unexercised option, to the
extent to which it was exercisable at the time of the optionee's death, may
thereafter be exercised by the legal representative of the estate or by the
legatee of the option under a last will for a period of twelve months from
the date of the optionee's death or the expiration of the stated period of
the option, whichever period is the shorter.
Unless otherwise determined by the Committee, if an optionee's
employment by the Corporation or a subsidiary or if a director's
directorship terminates by reason of the optionee's death, the optionee's
option may thereafter be immediately exercised in full by the legal
representative of the estate or by the legatee of the option under a last
will, and for a period of twelve months from the date of the optionee's
death or the expiration of the stated period of the option, whichever
period is the shorter.
Unless otherwise determined by the Committee, if an optionee's
employment or if a director's directorship terminates for any reason other
than death, retirement or permanent disability, the optionee's option shall
thereupon terminate.
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 1997 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 1997 and 1998 Annual
Meetings, and 4,000 shares, for the fiscal year 1999, 2000, and 2001 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
2,000 shares, if elected or appointed before the 1997 or 1998 Annual
Meetings, and 4,000 shares, if elected or appointed after the 1998 Annual
Meeting but before the 1999, 2000 or 2001 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.
8. TRANSFERABILITY RESTRICTION
Unless otherwise determined by the Committee, the option by its terms shall
be personal and shall not be transferable by the optionee otherwise than by will
or by the laws of descent and
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<PAGE> 31
distribution. During the lifetime of an optionee, the option shall be
exercisable only by the optionee, or by a duly appointed legal representative,
unless otherwise determined by the Committee.
9. DESIGNATION OF CERTAIN OPTIONS AS INCENTIVE STOCK OPTIONS
Options or portions of options granted to employees hereunder may, in the
discretion of the Committee, be designated as "incentive stock options" within
the meaning of Section 422 of the Code. In addition to the terms and conditions
contained in paragraph 6 hereof, options designated as incentive stock options
shall also be subject to the condition that the aggregate fair market value
(determined at the time the options are granted) of the Corporation's Common
Stock with respect to which incentive stock options are exercisable for the
first time by any individual employee during any calendar year (under this Plan
and all other similar plans of the Corporation and its subsidiaries) shall not
exceed $100,000.
10. LOANS TO OPTIONEES
The Corporation may make interest-free demand loans to holders of options
which are not designated or qualified hereunder or by the Code as "incentive
stock options" for the purpose of exercising such options or for the purpose of
enabling optionees to pay any tax liability associated with the exercise of any
such option. Such loans shall be fully secured by shares of Common Stock of the
Corporation and shall in any event be repayable upon the termination of the
optionee's employment or directorship with the Corporation for any reason. The
Committee shall establish written procedures concerning the application for and
making of such loans.
11. INVESTMENT REPRESENTATION
Upon any distribution of shares of Common Stock of the Corporation pursuant
to any provision of this Plan, the distributee may be required to represent in
writing that he or she is acquiring such shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof. The certificates for such shares may include
any legend which the Corporation deems appropriate to reflect any restrictions
on transfers.
12. TRANSFER, LEAVE OF ABSENCE, ETC.
For the purpose of the Plan: (a) a transfer of an employee from the
Corporation to a subsidiary, or vice versa, or from one subsidiary to another,
and (b) a leave of absence, duly authorized in writing by the Corporation, shall
not be deemed a termination of employment.
13. RIGHTS OF EMPLOYEES AND OTHERS
(a) No person shall have any rights or claims under the Plan except in
accordance with the provisions of the Plan.
(b) Nothing contained in the Plan shall be deemed to give any employee
the right to be retained in the service of the Corporation or its
subsidiaries.
14. CHANGES IN CAPITAL OR CONTROL
If the outstanding Common Stock of the Corporation subject to the Plan
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation or
other corporate reorganization, the number and kind of shares subject to this
Plan and the option prices shall be approximately and equitably adjusted so as
to maintain the option price thereof. Notwithstanding any other provision of the
Plan, upon the occurrence of a Change in Control, as hereinafter defined, each
holder of an unexpired option under the Plan shall have the right to exercise
such option in whole or in part without regard to the date that such option
would be first exercisable, and such right shall continue, with respect to any
such
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<PAGE> 32
holder whose employment with the Corporation or subsidiary or whose directorship
on the Board of Directors terminates following a Change in Control, for a period
ending on the earlier of the date of expiration of such option or the date which
is twelve months after such termination of employment or directorship.
For purposes of the Plan, a "Change in Control" of the Corporation shall be
deemed to have occurred if:
(a) any person, as such term is used in Sections 13(d)(3) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended, becomes a beneficial
owner (within the meaning of Rule 13d-3 under such Act) of 20% or more of
the Corporation's outstanding Common Stock;
(b) there occurs within any period of two consecutive years any change
in the directors of the Corporation such that the members of the
Corporation's Board of Directors prior to such change do not constitute a
majority of the directors after giving effect to all changes during such
two-year period unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(c) the Corporation is merged, consolidated or reorganized into or
with, or sells all or substantially all of its assets to, another
corporation or other entity, and immediately after such transaction less
than 80% of the voting power of the then-outstanding securities of such
corporation or other entity immediately after such transaction is held in
the aggregate by holders of the Corporation's Common Stock immediately
before such transaction.
In addition, if the Corporation enters into an agreement or series of
agreements or the Board of Directors of the Corporation adopts a resolution
which results in the occurrence of any of the foregoing events, and the
employment or directorship of a holder of an option under the Plan is terminated
after the entering into of such agreement or series of agreements or the
adoption of such resolution, then, upon the occurrence of any of the events
described above, a Change in Control shall be deemed to have retroactively
occurred on the date of entering into of the earliest of such agreements or the
adoption of such resolution.
15. USE OF PROCEEDS
Proceeds from the sale of shares pursuant to options granted under this
Plan shall constitute general funds 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:
(a) Except as provided in paragraph 14 of the Plan, increase the total
number of shares reserved for the purposes of the Plan;
(b) Decrease the option price of an option to less than 100% of the
fair market value on the date of the granting of the option;
(c) Increase the maximum number of options which may be granted to an
optionee under the Plan; or
(d) Amend or modify paragraph 7 of the Plan.
Neither shall any amendment, alteration or discontinuation impair the
rights of any holder of an option theretofore granted without the optionee's
consent; provided, however, that if the Committee after consulting with
management of the Corporation determines that application of an accounting
standard in compliance with any statement issued by the Financial Accounting
Standards Board
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<PAGE> 33
concerning the treatment of employee stock options would have a significant
adverse effect on the Corporation's financial statements because of the fact
that options granted before the issuance of such statement are then outstanding,
then the Committee in its absolute discretion may cancel and revoke all
outstanding options to which such adverse effect is attributed and the holders
of such options shall have no further rights in respect thereof. Such
cancellation and revocation shall be effective upon written notice by the
Committee to the holders of such options.
17. REPRICING RESTRICTION
Options granted under this Plan shall not be repriced by the Corporation
for any reason.
18. EFFECTIVE DATE OF PLAN
This Plan shall be effective upon its approval by the Corporation's Board
of Directors and stockholders.
19. COMPLIANCE WITH SECTION 16(b)
The Plan is intended to comply with all applicable conditions of Rule 16b-3
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended. All transactions involving the Corporation's directors and executive
officers are subject to such conditions, regardless of whether the conditions
are expressly set forth in the Plan. Any provision of the Plan that is contrary
to a condition of Rule 16b-3 shall not apply to directors and executive officers
of the Corporation.
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<PAGE> 34
PROXY Appendix A
FEDERAL EXPRESS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 29, 1997
The undersigned hereby constitutes and appoints KENNETH R. MASTERSON and
THEODORE L. WEISE, and each of them, his or her true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned
and to vote all of the shares of stock of the undersigned in Federal Express
Corporation at the Annual Meeting of Stockholders of said Corporation to be
held at the Memphis Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee
on Monday, September 29, 1997, and at any adjournments thereof, on items 1
through 6 as specified on the reverse side hereof (with discretionary
authority under Item 1 to vote for a new nominee if any nominee has become
available) and on such other matters as may properly come before said meeting.
ELECTION OF CLASS II DIRECTORS, NOMINEE COMMENTS
Ralph D. DeNunzio _______________________
Charles T. Manatt _______________________
George J. Mitchell _______________________
Jackson W. Smart, Jr. _______________________
Joshua I. Smith _______________________
(If you have written in
the above space, please
mark the corresponding
box on the reverse side
of this card).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. MR. MASTERSON AND MR. WEISE
CANNOT VOTE YOU SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
[SEE REVERSE SIDE]
===============================================================================
FOLD AND DETACH HERE
1997 ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following
guidelines will apply for Federal Express 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 7, 1997 and will be published
in the Program for the meeting. If you do not return your proxy 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 subject 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> 35
6408
[X] Please mark your
votes as this example
<TABLE>
<CAPTION>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN, IF NO DIRECTION IS MADE THIS PROXY
WILL BE VOTED FOR SELECTION OF THE CLASS II DIRECTORS FOR PROPSALS 2 THROUGH 4 AND AGAINST PROPSALS 5 AND 6
- -----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 THROUGH 4 AND A VOTE AGAINST ITEMS 5 AND 6
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1 ELECTION OF [ ] [ ] 2. APPROVAL OF [ ] [ ] [ ] 5. STOCKHOLDER [ ] [ ] [ ]
CLASS II INCREASE OF PROPOSAL-
DIRECTORS AUTHORIZED POLITICAL
FOR EXCEPT VOTE WITHHELD FROM THE SHARES CONTRIBUTIONS
FOLLOWING NOMINEE(S )
3. APPROVAL OF 1997 6. STOCKHOLDER [ ] [ ] [ ]
STOCK INCENTIVE [ ] [ ] [ ] PROPOSAL -
PLAN DECLASSIFY BOARD
4. APPROVAL OF [ ] [ ] [ ] ( )COMMENTS ON [ ] I REQUEST MY NAME BE
INDENDENT REVERSE SIDE DISCLOSED WITH MY
ACCOUNTANTS VOTE AND COMMENTS
IF ANY.
SIGNATURE(S)_______________________________________________________________________________________________DATE____________________
The signer hereby revokes all proxies heretofore given by the signer to vote of 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
</TABLE>
LOCATION OF 1997 ANNUAL MEETING
Memphis Marriott
2625 Thousand Oaks Boulevard
Memphis, Tennessee
Monday, September 29, 1997 at 10:00 a.m. CDT
[MAP]
