The main US transport industry union, the Teamsters, has called again on FedEx shareholders toback its request for an independent board chairman at the annual meeting on Sept. 24 to reduce the
power of company founder Fred Smith as both CEO and chairman.The International Brotherhood of Teamsters said it has received increased support from FedExinvestors since its proposal was first introduced in 2007 and had been rejected for several years. “ Last year, 42% of outside investors supported the resolution for an independent chairman of theboard,” the union said. The figure was about 26% back in 2007.
Ken Hall, the union’s General Secretary-Treasurer, said: “Having Smith as CEO and chairman ofthe board has lead to excessive executive pay and poor performance over the long term forinvestors.”
The union claimed that FedEx stock underperformed both the S&P 500 index and its main rivalUPS during the past three and five-year periods. “Yet, as the company seeks to cut costs across thecompany, Fred Smith’s pay increased from $7.26 million in fiscal 2011 to $13.68 million, driven bymassive non-equity incentive compensation that jumped $6.2 million over the prior year,” Hallstated.
“Shareholders need a strong and independent voice in the boardroom to hold managementaccountable and provide proper strategic oversight and guidance. While the company’s focus has beento reduce costs by restructuring and cutting jobs, it seems the sky is the limit when it comes toCEO pay,” he added.
The Teamsters said the shareholder support for its proposal reached an all-time high when theboard introduced a “presiding director” role instead of an independent board chairman before lastyear’s meeting. It cited the company’s current proxy statement that Nominating & GovernanceCommittee Chairperson Shirley Ann Jackson is now also the board’s lead independent director.
The union claims, however, that she cannot be regarded as a proper independent board chair as an“overcommitted, long-serving director”. Reflecting the growing concern on the part of the FedExboard, she received less support in the last year’s board election results than all otherdirectors, it said.
FedEx, however, says that the board believes the company is well-served by having founder FredSmith in the positions of chairman and CEO.
