Ex-10.38



 





Exhibit 10.38




Compensation
Arrangements with Named Executive Officers




Base
Salaries




     The following table sets forth the fiscal 2008 annual base salaries of FedEx’s named executive
officers, other than Daniel J. Sullivan, who retired as FedEx Ground’s President and Chief
Executive Officer on December 31, 2006:



	 	 	 	 	 
	Name and	 	 
	Current Position	 	Base Salary
	Frederick W. Smith 
	 	$	1,434,840	 
	Chairman, President and

Chief Executive Officer
	 	 	 	 
	 
	 	 	 	 
	Alan B. Graf, Jr.
	 	$	902,784	 
	Executive Vice President and

Chief Financial Officer
	 	 	 	 
	 
	 	 	 	 
	David J. Bronczek 
	 	$	942,756	 
	President and Chief Executive Officer –

FedEx Express
	 	 	 	 
	 
	 	 	 	 
	T. Michael Glenn
	 	$	802,188	 
	Executive Vice President,

Market Development and

Corporate Communications
	 	 	 	 
	 
	 	 	 	 
	Robert B. Carter 
	 	$	736,596	 
	Executive Vice President,

FedEx Information Services and

Chief Information Officer
	 	 	 	 







     
Mr. Smith’s annual base salary was increased by 2.5%. Each
other named executive officer’s annual base salary was increased
by 3.5%. Mr. Smith’s new base salary is effective as of
July 16, 2007. The new base salaries of the other
named executive officers are effective as of July 1, 2007.



FY2008 Annual Incentive Compensation Plans




     Chairman, President and Chief Executive Officer



     Frederick W. Smith’s fiscal 2008 annual bonus will be determined by the achievement of
corporate objectives for consolidated pre-tax income for fiscal 2008. The Compensation Committee
may adjust Mr. Smith’s bonus amount upward or downward based on its consideration of several
factors, including: FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite
Index, the Dow Jones Transportation Average and the Dow Jones Industrial Average; FedEx’s revenue
and operating income growth relative to competitors;



 









 




FedEx’s cash flow; FedEx’s return on invested capital; FedEx’s U.S. and international revenue
market share; FedEx’s reputation rankings by various publications and surveys; and the Compensation
Committee’s assessment of the quality and effectiveness of Mr. Smith’s leadership during fiscal
2008. None of these factors will be given any particular weight by the Compensation Committee in
determining whether to adjust Mr. Smith’s bonus amount. Mr. Smith’s annual bonus target for fiscal
2008 is 130% of his base salary, with a maximum payout of 300% of his target bonus.




     Non-CEO Named Executive Officers



     Messrs. Graf, Glenn and Carter participate in the fiscal 2008 annual incentive cash bonus plan
for headquarters employees. Under this plan, the annual bonus target for each executive is 90% of
his base salary, with a maximum payout of 240% of the target bonus. A threshold payout of
up to 30% of the target bonus is based on the achievement of individual objectives established at
the beginning of the fiscal year for each executive. Mr. Smith will determine the achievement
level of each executive’s individual objectives at the conclusion of fiscal 2008. The balance of
the bonus payout is based on FedEx’s consolidated pre-tax income for fiscal 2008 and ranges, on a
sliding scale, from a minimum amount if the plan’s pre-established consolidated pre-tax income
threshold is achieved up to a maximum amount if such financial performance goal is substantially
exceeded.



     Mr. Bronczek participates in the fiscal 2008 annual incentive cash bonus plan sponsored by the
FedEx Express segment. Mr. Bronczek’s target annual bonus is 100% of his base salary, with a
maximum payout of 240% of his target bonus. A threshold payout of up to 30% of the target bonus is
based on his achievement of individual objectives established at the beginning of the fiscal year.
Mr. Smith will determine the achievement level of Mr. Bronczek’s individual objectives at the
conclusion of fiscal 2008. The balance of the bonus payout is based on FedEx’s consolidated
pre-tax income for fiscal 2008 and ranges, on a sliding scale, from a minimum amount if the plan’s
pre-established consolidated pre-tax income threshold is achieved up to a maximum amount if such
financial performance goal is substantially exceeded.



Long-Term Incentive Cash Bonus Program




     The Compensation Committee has established long-term performance bonus plans for the
three-fiscal-year periods 2006 through 2008, 2007 through 2009 and 2008 through 2010, providing
long-term cash bonus opportunities to members of upper management,
including the named executive officers,
for fiscal 2008, 2009 and 2010, respectively, if certain aggregate earnings-per-share goals
established by the Compensation Committee are achieved with respect to those periods. No amounts
can be earned for the fiscal 2006 through 2008, 2007 through 2009 and 2008 through 2010 plans until
2008, 2009 and 2010, respectively, because achievement of the earnings-per-share goals can only be
determined following the conclusion of the applicable three-fiscal-year period.



     The following table sets forth estimates of the possible future payouts to each of FedEx’s
named executive officers under FedEx’s long-term performance cash bonus plans. Mr. Sullivan, who
retired on December 31, 2006, is eligible for payouts under the fiscal 2006 through 2008



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and 2007 through 2009 plans based on the proportion of the applicable three-fiscal-year period
during which he was employed.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Estimated Future Payouts
	 	 	Performance	 	Threshold	 	Target	 	Maximum
	Name	 	Period	 	($)	 	($)	 	($)
	Frederick W. Smith
	 	FY2006 – FY2008	 	 	625,500	 	 	 	2,500,000	 	 	 	3,750,000	 
	 
	 	FY2007 – FY2009	 	 	875,000	 	 	 	3,500,000	 	 	 	5,250,000	 
	 
	 	FY2008 – FY2010	 	 	875,000	 	 	 	3,500,000	 	 	 	5,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Alan B. Graf, Jr.
	 	FY2006 – FY2008	 	 	187,500	 	 	 	750,000	 	 	 	1,125,000	 
	 
	 	FY2007 – FY2009	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	FY2008 – FY2010	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	David J. Bronczek
	 	FY2006 – FY2008	 	 	250,000	 	 	 	1,000,000	 	 	 	1,500,000	 
	 
	 	FY2007 – FY2009	 	 	375,000	 	 	 	1,500,000	 	 	 	2,250,000	 
	 
	 	FY2008 – FY2010	 	 	375,000	 	 	 	1,500,000	 	 	 	2,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	T. Michael Glenn
	 	FY2006 – FY2008	 	 	187,500	 	 	 	750,000	 	 	 	1,125,000	 
	 
	 	FY2007 – FY2009	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	FY2008 – FY2010	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert B. Carter
	 	FY2006 – FY2008	 	 	187,500	 	 	 	750,000	 	 	 	1,125,000	 
	 
	 	FY2007 – FY2009	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	FY2008 – FY2010	 	 	300,000	 	 	 	1,200,000	 	 	 	1,800,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Daniel J. Sullivan
	 	FY2006 – FY2008	 	 	92,167	 	 	 	368,666	 	 	 	553,000	 
	 
	 	FY2007 – FY2009	 	 	48,333	 	 	 	193,333	 	 	 	290,000	 







     The estimated individual future payouts set forth in the table above are set dollar amounts
ranging from threshold amounts, if the earnings-per-share goal achieved is less than target, up to
maximum amounts, if the plan goal is substantially exceeded. There can be no assurance that the
estimated future payouts shown in this table will be achieved.



Other Arrangements




     FedEx’s named executive officers are eligible to receive certain other annual compensation,
including certain perquisites and other personal benefits, such as personal use of corporate
aircraft, security services and equipment (pursuant to FedEx’s executive security procedures) and
tax return preparation and financial counseling services.



     In addition, FedEx’s named executive officers receive tax reimbursement payments relating to
restricted stock awards, certain business-related use of corporate aircraft and certain
perquisites.




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