FEDEX CORPORATION Item 2.06. Material Impairments.
On
The goodwill impairment charge was recognized based on declining print revenue
and temporary store closures at FedEx Office during the fourth quarter of fiscal
2020 resulting from the COVID-19 pandemic. The COVID-19 pandemic is expected to
continue to negatively impact FedEx Office's near-term operating
performance. The goodwill impairment charge of
Total asset impairment charges for the fourth quarter ended
All of these charges are noncash, and FedEx does not expect to be required to make any current or future cash expenditures as a result of these impairments.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
FY21 Annual Incentive Compensation Plan for Executive Officers
Given the current economic and business uncertainty resulting from the COVID-19 pandemic, there will not be an annual incentive compensation plan for executive officers for fiscal 2021.
FY21 Equity Awards to Executive Officers
The Compensation Committee of the Company's Board of Directors (the "Committee")
generally grants stock options and restricted stock to executive officers on an
annual basis. For fiscal 2021, in addition to the annual grants, the Committee
approved a one-time, special restricted stock grant to each of the Company's
executive officers, other than the Chairman and Chief Executive Officer, that
approximates 50% of such executive officer's annual restricted stock grant. The
restricted stock will vest ratably over four years beginning on
In addition, the Committee approved a one-time, special stock option grant for
each of the Chairman and Chief Executive Officer and the President and Chief
Operating Officer. The stock options have an exercise price of
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FY21-FY23 Long-Term Incentive Plan
On
EPS has historically been the sole metric for the Company's LTI plans. The Committee and Board determined that EPS was still an appropriate financial metric for the FY21-FY23 LTI Plan given that growth in the Company's EPS strongly correlates to long-term stock price appreciation. The EPS performance goals under the FY21-FY23 LTI Plan are consistent with the EPS goals in current LTI plans: there will be no payout under the EPS component of the plan unless the three-year average annual EPS growth rate is at least 5%; a target payout if the three-year average annual EPS growth rate is 12.5%; an above-target payout if the growth rate is above 12.5%, up to a maximum amount (equal to 150% of the target payout) if the growth rate is 15% or higher; and a below-target payout if the growth rate is below 12.5%, down to a threshold amount (equal to 25% of the target payout) if the growth rate is 5%.
The baseline EPS for purposes of the FY21-FY23 LTI Plan will be final fiscal 2020 EPS, adjusted to exclude (i) the effect of the mark-to-market retirement plan accounting adjustment ("MTM Adjustment") for fiscal 2020 and (ii) fiscal 2020 TNT Express integration expenses (including any restructuring charges at TNT Express). For purposes of determining payouts under the FY21-FY23 LTI Plan, EPS for fiscal years 2021, 2022, and 2023 will exclude the annual MTM Adjustment for such year.
The second metric, CapEx/Revenue, was chosen to incent management to further optimize capital deployment and efficiency over the three-fiscal-year period. For the CapEx/Revenue component of the FY21-FY23 LTI Plan, there will be no payout unless CapEx/Revenue is at or below 8.5%; a target payout if CapEx/Revenue is at 7%; an above-target payout if CapEx/Revenue is below 7.0%, up to a maximum payout (equal to 150% of the target payout) if CapEx/Revenue is at or below 6.0%; and a below-target payout if CapEx/Revenue is above 7.0%, down to a threshold amount (equal to 25% of the target payout) if CapEx/Revenue is at 8.5%. The following chart illustrates the relationship between CapEx/Revenue and payout opportunities for the CapEx/Revenue component:
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Forward-Looking Statements
Certain statements in this report are "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
our financial condition, results of operations, cash flows, plans, objectives,
future performance and business. Forward-looking statements include those
preceded by, followed by or that include the words "will," "may," "could,"
"would," "should," "believes," "expects," "anticipates," "plans," "estimates,"
"targets," "projects," "intends" or similar expressions. Such forward-looking
statements are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from historical experience or from
future results expressed or implied by such forward-looking statements.
Potential risks and uncertainties include, but are not limited to, the factors
that can be found in FedEx's and its subsidiaries' press releases and FedEx's
filings with the
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