Straight Talk, Pure Fantasy & Questions that Won't Go Away - September 21, 2007

The IBT's day two story following yesterday's ho-hum FedEx Corp quarterly conference call sure knocked the "FedEx reported..." articles off the charts.  As of 5:00, the Yahoo! finance page for FDX has two headlines about the IBT; the Money.cnn.com page for FDX has got six headlines and the News.google.com page for FDX has four headlines.

And in none of these articles will you find any FedEx spokes-podperson say what the incentives are.  They will say that the Teamsters' figures are pure fantasy.  But that is what is called a non-denial denial in the biz.

The unwillingness to come clean on how much money this illegal contractor model will cost FedEx is clear for all to see in the dismissive way that the company responded to the reporters following the IBT release.  And this unwillingness to come clean on the liabilities is precisely the point of the IBT's shareholder resolution at the annual meeting next Monday.  The lies, the secrecy, the delay deny and lose strategy are all issues that the Board of Directors should be handling on behalf of shareholders.

But CEO Fred Smith and Chairman of the Board Fred Smith agree that the IBT is out of line.  The FedEx Corporation official response in its proxy (warning: big PDF file) is:

Separation of the Chairman of the Board and Chief Executive Officer roles is not necessary to ensure that our Board provides independent and effective oversight of FedEx's business and affairs...

The Board of Directors and its committee vigorously oversee the effectiveness of management policies and decisions, including the execution of key strategic initiatives...

Finally, we take issue with the proponent's (read: Teamsters) irrelevant and clearly self-serving reference to the purported class-action lawsuits and other proceedings that claim that FedEx Ground's owner-operators should be treated as employees and not independent contractors.  Our Board of Directors has reveiwed FedEx Ground's independent contractor model and closely monitors the status of these proceedings...We strongly believe that FedEx Ground's owner-operators are properly classified as independent contractors and we continue to vigorously defend ourselves in these proceedings. 

(Emphasis added just for chuckles.  This proxy is from August 13.  Guess all that vigor of defending the model in CA just wore them out.)

We wonder what the CEO Fred Smith told the Chairman Fred Smith or the rest of the Board about the California changes. The math of the California Ultimatum when applied to the nation sure add up quickly - $25,000 times 1055 single vehicle contractors in CA = $25,000,000 minimum while $XX,000 times (say) 10,000 SVCs in USA = $XXX,000,000.

Oh, and Maury, try reading FedExaminer.  You might learn a thing or two.  Like how much the incentives are for the California Ultimatum.  Any CA driver who wants to contact the IBT should email to fedexwatch@teamster.org asap.