Teamsters Call for Independent Board Leadership at FedEx; Urge Investor Support

Last update: 11:26 a.m. EDT Sept. 2, 2008

WASHINGTON, Sept 02, 2008 /PRNewswire-USNewswire via COMTEX/ -- Teamsters Cite FedEx's Poor Performance, Oversight Failures

12:55pm 09/03/2008

FDX 84.22, -0.45, -0.5%) to support the union's proposal for an independent board chairman at FedEx's annual meeting being held later this month.

In a letter to shareholders, Teamsters General Secretary-Treasurer, C. Thomas Keegel, said that Frederick W. Smith's dual role as chairman and chief executive of FedEx has resulted in a CEO-dominated Board incapable of providing the rigorous, independent oversight of management that investors require. FedEx's annual meeting is being held Sept. 29 in Memphis, Tenn.

"With Smith at the helm, FedEx's Board has presided over poor corporate performance, excessive CEO pay, and an unlawful and unsustainable business model that could cost FedEx billions," Keegel said.

In fiscal year 2008 despite the company's disappointing returns, Smith accrued more than $42 million in total actual compensation according to data from The Corporate Library (TCL), a leading provider of independent corporate governance research and analysis. TCL data reveals that FedEx has significantly underperformed the Trucking and Shipping industry and the S&P 500 Index on a one-year, three-year, and five-year total shareholder returns basis.

The letter also raised concerns that Smith's controlling influence on a Board rife with conflicts of interest has led to the Board's rubber-stamping of an unlawful and unsustainable business model at the company's second-highest revenue generating business segment, FedEx Ground, which has exposed the company to staggering legal and financial risks.

The FedEx Ground business model, which relies on the misclassification of employee drivers as "independent contractors," has allowed FedEx to evade expenses like payroll taxes, overtime pay, and benefits. Numerous state courts and government agencies are now finding that FedEx Ground's contractor model is a sham and are looking to collect the money workers and states have been denied. According to recent news reports, the pre-tax liability from unpaid payroll taxes alone could reach as high as $2.5 billion.

"With no independent Board leadership and management firmly entrenched, we believe shareholders face a 'perfect storm' as FedEx undergoes heightened legal, regulatory, and public scrutiny regarding FedEx Ground's driver misclassifications," Keegel said. "Last year 27 percent of the vote by investors supported our call for independent Board leadership ... now, more than ever, an independent chairman is necessary to ensure that our Board confronts these escalating challenges with rigorous, independent oversight of management."

Founded in 1903, the International Brotherhood of Teamsters represents over 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.

SOURCE International Brotherhood of Teamsters