FedEx (FDX): How I Voted – Proxy Score 69%

FedEx ($FDX) is one of the stocks in my portfolio. Their annual meeting is coming up on 9/24/2012. ProxyDemocracy.org had collected the votes of four funds when I voted on 9/18/2012.  (A fifth fund is now reporting.) I voted with management 69% of the time.

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions where something obviously warrants different treatment. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay, Oxford Review of Economic Policy, Vol. 21, Issue 2, pp. 283-303, 2005), aggregate compensation by public companies to NEO increased from 5 percent in 1993-1995 to about 10 percent in 2001-2003.

Few firms want to admit to having average executives. They survey executive compensation at corporations and then set compensation packages that are above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average and their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third-world.

FDX’s SummaryCompensation Table (see page 45) shows Fredrick W. Smith, Chair and Chief Executive Officer, was the highest paid named executive officer (NEO) at over $7.26M in fiscal 2011. I’m using Yahoo! Finance to determine market cap and Wikipedia’s rule of thumb regarding classification. According to those sources, at about $27.6B FDX is a large-cap company. According to the United States Proxy Exchange (USPX) guidelines (pages 9&10), using data from Equilar, the median CEO compensation at large-cap corporations was $10.8 million in 2010, so FDX’s pay is below that median. However, three out of four funds reporting on ProxyDemocracy.org voted against the pay package so I am inclined to do the same.

My policy is that when I vote against the pay plan I also vote against the compensation committee members, in this case: Steven R. Loranger, Shirley Ann Jackson, Susan C. Schwab, and Paul S. Walsh. I also voted in favor of measures to split the chair/CEO positions and report political contributions.

# PROPOSAL TEXT McRitchie CBIS CALVERT SOCIAL INDEX AFSCME TRILLIUM
1 Elect Director James L. Barksdale For For For Against Against
2 Elect Director John A. Edwardson For For For For Against
3 Elect Director Shirley Ann Jackson Against For Against Against Against
4 Elect Director Steven R. Loranger For For For For Against
5 Elect Director Gary W. Loveman For For For For Against
6 Elect Director R. Brad Martin For For For For Against
7 Elect Director Joshua Cooper Ramo For For For For Against
8 Elect Director Susan C. Schwab Against For For For Against
9 Elect Director Frederick W. Smith For For For Against Against
10 Elect Director Joshua I. Smith For For For Against Against
11 Elect Director David P. Steiner For For For For Against
12 Elect Director Paul S. Walsh Against Against Against Against Against
13 Ratify Auditors For Against For Against For
14 Advisory Vote to Ratify Named Executive Officers’ Compensation Against For Against Against Against
15 Require Independent Board Chairman For For For For For
16 Report on Political Contributions For For For For For

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