Fred Smith Pay and FedEx Corporate Governance Criticized - September 12, 2006

With less than two weeks to go before the FedEx Corporation annual shareholders' meeting in Memphis, professional proxy advisory firms are beginning to issue their reports on corporate governance and performance at FedEx.  First out of the gate, Proxy Governance has recommended that shareholders withhold votes on all members of the FedEx Corporation's Compensation Committee.  The Compensation Committee is charged with reviewing and approving the pay packages for top executives including Fred Smith.  Proxy Governance recommends withholding votes for board nominees James Barksdale, August Busch IV, Philip Greer, Charles Manatt and Paul Walsh.

Proxy Governance calculates that Fred Smith's compensation was "150 higher than the median executive pay from 20 companies with similar market capitalization."  The research group further estimated that Fred Smit'ss average compensation package over the past three years was $17 million per year.

Proxy Governance and other firms of its kind advise shareholders on whether a company meets standards on corporate governance.  These firms generally look at a company's overall performance, its stock performance, the independence of the board of directors from management and oversight of management behavior and compensation by the board of directors.  Since FedEx Corporation does not allow for 'no' votes in its corporate governance, a 'withhold' recommendation is essentially a vote of no confidence in this group of nominees for the FedEx Board of Directors.

The International Brotherhood of Teamsters are sponsors of a shareholder proposal to be voted on at the shareholders' meeting on Sept. 25.  The IBT proposes  to change FedEx's governance to provide that nominees must achieve a majority of votes to be elected as board members.  FedEx Corporation present by-laws allow for a nominee to be elected with a plurality of votes cast.