Proxy advisers divided on FedEx CEO Smith’s pay decision
Proxy advisers Institutional Shareholder Services Inc (ISS) and Glass Lewis & Co gave diverging recommendations to investors on voting on FedEx Corp CEO Fred Smith’s $54 million pay package, after a labor union challenged the plan.
The pay package for Smith, a billionaire, faces a challenge at FedEx’s annual shareholder meeting later this month after labor union the International Brotherhood of Teamsters said the company’s decision to cancel a bonus program while giving him an option award instead, only to then re-instate the bonus program, amounted to double-dipping.
ISS said in a report released on Sunday that “cautionary support” was warranted because Smith’s awards have not led to a misalignment of pay and performance. Glass Lewis recommended last week that shareholders vote down the pay plan because it reflects a reversal in how the company initially structured executive compensation.
The shareholder vote on Sept. 27 is advisory and not binding on FedEx. The Memphis, Tennessee-based company did not immediately respond to a request for comment.
“People are grappling with how to assess the ad hoc adjustments and bonuses around COVID-19, and I think FedEx is an example of how not to do it and Glass Lewis’s recommendation supports that,” said Michael Pryce-Jones, senior corporate governance analyst at the Teamsters, who are bargaining on behalf of FedEx employees at a freight facility.
ISS said the re-instatement of the bonus raises some concern but that other awards to Smith have rigorous financial goals. FedEx’s shares during its last fiscal year, ending at the end of May, more than doubled as the economy rebounded from the pandemic and more people shipped and received items.
Many U.S. companies adjusted the pay of executives during the coronavirus outbreak, easing performance targets and even giving them pay rises. Investors voted down a record number of CEO pay packages at their annual shareholder meetings earlier this year.
Most companies take investor opposition to CEO pay into consideration when drafting executive compensation arrangements. Some will tweak pay for executives also, as Walt Disney Co did for then-CEO Bob Iger in 2018.
(Reporting by Jessica DiNapoli in New York City, Editing by Nick Zieminski)