Teamsters demand independent chairman on FedEx board
The Teamsters in the United States are once again urging FedEx shareholders to back its demands for an independent chairman at the Memphis-based integrator at this month’s annual meeting. As they have since 2007, the International Brotherhood of Teamsters argues that FedEx founder Frederick W Smith should relinquish his role as chairman after 40 years, and stick to his chief executive duties.
They say FedEx stock has “underperformed” over the past five years compared to rivals UPS and the S&P 500 stock index, while Smith’s pay packet has “skyrocketed” from fiscal year 2011 to $13.68m this year.
The International Brotherhood of Teamsters, which represents 1.4m workers in the US and Canada and has been engaged in a long-running battle for union recognition within FedEx, wrote to major FedEx shareholders yesterday to urge support for a resolution to end Smith’s dual role and bring in an independent chairman “to hold management accountable and provide proper strategic oversight and guidance”.
The Teamsters said yesterday that support among investors for its demand has increased over the past five years from the 26.48% of investors backing the proposal in 2007 to 42% last year, not including shares held by Smith and his family. The figure was 36.32% when including the Smith family block.
Advisory services ISS and Glass Lewis are recommending shareholders vote for the proposal at the annual meeting on 24th September, the Teamsters said.
“After more than 40 years, its time Fred Smith loosen his grip on the FedEx board,” said Ken Hall, General Secretary-Treasurer of the International Brotherhood of Teamsters. “Having Smith as CEO and chairman of the board has lead to excessive executive pay and poor performance over the long term for investors.”
“Accountable”
The FedEx board does have a lead independent director, Shirley Ann Jackson, president of the Rensselaer Polytechnic Institute, but the Teamsters said Dr Jackson was “no substitute” for an independent chair, and was “overcommitted” in other roles to focus on her FedEx role.
A FedEx spokesperson said the company’s current corporate guidelines and independent directors provide the central oversight necessary for the “highest quality” corporate governance.
FedEx has been restructuring its air fleet over the summer to respond to difficult trading conditions, and last month announced plans to downsize its workforce in the United States.
Last week the company warned investors that share earnings will not be quite as promising as hoped in the three months ending 31st August 2012, with growth being constrained by “weakness” in the global economy.
In its letter to shareholders, The Teamsters also cited the uncertainty around whether FedEx would be able to renew its $1.5bn contract with the US Postal Service next year, with rivals UPS keen to win the transportation deal.
“Shareholders need a strong and independent voice in the boardroom to hold management accountable and provide proper strategic oversight and guidance,” Hall added. “While the company’s focus has been to reduce costs by restructuring and cutting jobs, it seems the sky is the limit when it comes to CEO pay.”
