The main US transport industry union, the Teamsters, has called on FedEx shareholders to split upthe role of company founder Fred Smith as both CEO and chairman of the board. FedEx rejects the
proposal.The Teamsters have written to FedEx shareholders asking for support for their proposal for anindependent board chairman at FedEx’s upcoming annual meeting, which is set for September 28 inMemphis. A similar proposal failed last year after gaining just 34% of shareholder votes.
Teamsters General Secretary-Treasurer C. Thomas Keegel claimed that Fred Smith’s dual role aschairman and chief executive of FedEx has resulted in a CEO-dominated board incapable of providingthe rigorous, independent oversight of management that investors require.
“FedEx’s lack of independent board leadership, compromised board independence andeffectiveness, chronic poor performance, excessive executive pay, and questionable businessstrategies underscore the urgent need for an independent chairman to lead FedEx’s board in holdingmanagement accountable and providing strategic oversight and guidance,” Keegel said.
The union claimed that FedEx had significantly underperformed compared to competitors,resulting in a 50% drop in shareholder value, while Smith had earned more than $84 million over thepast three fiscal years, including taking up stock options.
The Teamsters also said that the FedEx board had “rubber-stamped” the “unlawful” businessmodel at the group’s second-largest business, parcels delivery unit FedEx Ground. There is along-running legal dispute between the union and the company over the status of FedEx Grounddrivers. The union claims they are employees, while the company maintains that they areself-employed, independent contractors.
“Many FedEx shareholders have already joined our call for independent board leadership, with34 percent of the vote by shareholders supporting the Teamsters’ independent board chairmanproposal in 2008,” Keegel said. “We believe that now, more than ever, an independent chairman isnecessary for the company to successfully navigate the extraordinary legal, regulatory, reputation-and recession-related challenges facing FedEx.”
But FedEx rejected the demand in its official invitation to shareholders, filed as a proxystatement with the SEC. Eleven of the 12 board members meet the independence requirements of theNew York Stock Exchange, the board stated in its formal rejection of the proposal.
“The Board has given careful consideration to separating the roles of Chairman and ChiefExecutive Officer and has determined that FedEx and its stockholders are best served by havingMr. Smith, FedEx’s founder, serve as both Chairman of the Board of Directors and ChiefExecutive Officer. Mr. Smith’s combined role as Chairman and Chief Executive Officer promotesunified leadership and direction for the Board and executive management and it allows for a single,clear focus for the chain of command to execute FedEx’s strategic initiatives and business plans.”
